WikiLeaks plans to release thousands of internal documents from a major U.S. bank in early 2011, Forbes magazine reported on Monday. Julian Assange, the founder of the self-proclaimed whistleblower website, told Forbes: "We have one related to a bank coming up, that's a megaleak. "It's not as big a scale as the Iraq material, but it's either tens or hundreds of thousands of documents depending on how you define it." He compared the planned release to emails unveiled after the collapse of energy giant Enron Corp. … "You could call it the ecosystem of corruption," Assange told Forbes during an interview in London, but refused to provide details about the bank. "It's also all the regular decision making that turns a blind eye to and supports unethical practices: The oversight that's not done, the priorities of executives, how they think they're fulfilling their own self-interest." Forbes, which described Assange as a moral ideologue, a champion of openness and a control freak, said he pondered on a "cute name" for these "big-package releases," finally settling for "megaleaks." "These megaleaks … they're an important phenomenon. And they're only going to increase," he claimed. – TheHindu.Com
Dominant Social Theme: The banks are the problem. Re-regulate private industry and do it fast.
Free-Market Analysis: We really want to give Julian Assange the benefit of the doubt. We want him to be heroic, someone who is singlehandedly turning around the authoritarian trend that is sweeping the world. We believe he could be the courageous man he seems to be. But here at the Bell, we are professional meme watchers, and we can't help but be contrarian.
So … as much as we want to believe that Julian Assange is a freedom's avenger, we continue to be nagged by alternative scenarios. Now we read (see excerpt above) that Assange will soon release documents from a major US bank. We think we know what this could mean. The private sector (what's left of it) in the US could come in for the "WikiLeaks treatment."
Could it be the Federal Reserve itself? (That would be preferable.) But strictly speaking the Fed is not a bank, but a central bank, and thus not entirely part of the "private sector." That leaves a very large bank like Citibank or Bank of America. Here's one scenario that was recently suggested to us. It's very far-fetched, and we pass it on in part as an illustration of the kind of paranoia that Assange is now inspiring even amongst the constituency that should provide the bulk of his support.
Do we believe it is at all a possibility? Well, let's just say we continue to have doubts about Assange. We hope we're wrong; yes, again, we would like to admire Julian Assange without reserve; we hope he is what he seems to be. Anyway, here's the (admittedly fanciful and simplified) scenario. It's been exaggerated (and the timeline condensed) to make a point …
WikiLeaks releases documents from a bank (a very big commercial bank) showing that many abuses have taken place on purpose; mortgage-holders, for instance, have been abused purposefully. The documents are quite clear. Any one of a number of laws has been broken and people, hundreds of thousands, have lost their homes illegally. From an unknown location, Assange gives interviews explaining the immorality of the banking sector generally – and explaining how the banking sector cooperated with Wall Street to ruin Americans' hopes and dreams. When asked about his thoughts regarding a solution, he blurts out: "Oversight. These people simply cannot be trusted to monitor themselves. The whole financial sector – it's all about self-interest and greed. These people are pigs."
Now the ball is rolling. The US Congress, whipped up by the media, is soon in full cry; Assange's damaging military and diplomatic leaks are seemingly forgotten. He is no longer seen by the political establishment as an enemy now that he is attacking the (quasi) private sector. Barack Obama himself mentions Assange's perspective and calls for renewed hearings on financial reform. "This young man, Julian Assange," he says in his measured way, "has the courage of his convictions. He was a formidable adversary when he was leaking the nation's secrets, but we're glad to have him on our side now. It was fortunate we didn't find him, or arrest him. Welcome home, Julian."
Even though Congress is actively hostile to more regulation, House Speaker John Boehner gets behind the idea. Wiping his eyes, his voice hoarse, he speaks to the media movingly of the free-market system that has made America great, but also of the many displaced families that have been damaged by banks and banking. He quotes Assange, saying, "We thought we finished financial regulation last year. But as Julian has shown us, it's an ecosystem of corruption. The American people want us to cooperate here in Congress. They want us to solve problems, not make them."
Hearings begin and bank executives, large and small, are called in from all over the country. Some bankers weep in public. Meanwhile, the WikiLeaks megaleak continues to receive coverage nearly 24/7. The cable TV programs cover it and the newspapers as well – for weeks. (Drip, drip, drip.) Several top bankers try to commit suicide. A whistleblower steps forward to confirm much of what Assange has released. "It's worse than you can imagine," she says. "The banking sector is nothing but a culture of corruption, especially the smaller banks."
Gradually, a new American consensus emerges. (The mainstream media reports this firmly.) "Look Barney Frank did a pretty good job in 2010," Boehner admits, with Nancy Pelosi (pictured above left) standing at his side in a power red suit. The two are holding hands in a show of solidarity. Boehner adds, "What we've seen and heard in the past two months – and what has been revealed by WikiLeaks – makes it clear that more regulation of the private sector is needed."
Nancy Pelosi steps forward and makes a brief statement as well. "What we've done now, thanks especially to Julian Assange and WikiLeaks, is agree to the most expansive set of regulations ever drawn up by Congress. The US is leading the way into the future for the entire Western world." She will not say much more. She turns to walk away and then adds, "No, we can't tell you what's in the bill. We'll have to wait until it's passed, and then you'll know."
See what the ramifications might be – if WikiLeaks turns on what is left of America's private sector? Assange is one of the most famous people in the world right now; despite backlash, he likely has enormous credibility because he is seen as standing up to the powers-that-be. (He is becoming a phenomenon, in fact, like the Beatles or Lady Gaga.)
Certainly, America does not need more regulation in our view. Regulation centralizes marketplaces. The last thing the US needs is more centralization. Wall Street's biggest scam is not "banks" or "short-selling" or "front-running" or "insider trading." Wall Street's biggest (secret) scam is order flow. The aggregation of securities in one place.
The aggregation of securities actually began after the Civil War when the NYSE went on a buying binge and consolidated most New York stock exchanges under one roof. In fact, pre-Civil war, there were dozens and dozens of stock exchanges around the country. This made sense because most industry was local or regional and so were the (often illiquid) private securities (there was no such thing as a public security then, which is a made-up, regulatory status.)
Stock trading in the 1800s was a way of buying and selling shares. It was a simple, auction style system (developed in France, long ago), maybe once or twice a day (or even once or twice a week). But with the aggregation of order flow in the late 1800s, due to the NYSE's hyperactive consolidation of trading marts, what was a way of disposing shares became, more and more, a kind of casino. Once share-trading was centralized, (and trading became continuous) all sorts of market manipulation sprang up because the rewards were monumental. The phrase "robber barons" was born and great swathes of railroad stock were turned into speculative fodder. In fact, it was said that railroads were being built for the paper rather than any industrial need. It was the dawn of the Age of Order Flow; a systemic manipulation based on America's new post-Civil War authoritarianism. Centralization, deliberately introduced, created the corruption.
In 1929, due to Federal Reserve manipulation of currency and the massively leveraged and consolidated trading mart, the NYSE/Dow crashed. In the 1930s, under Franklin Delano Roosevelt, Congress created the SEC, the NASD and the concept of public shares. The public was assured these moves would protect the stock market from further manipulation. They did not. Regulation further centralized order flow, making the NYSE, especially, a tempting target for yet more manipulation. When stock trading bounced back in the 1950s and 1960s, centralized order flow turned small Wall Street houses into the most dominant aggregate industry in the country.
The Anglosphere – the Western power elite – likely expected that the crash of 2008 would allow for yet more hyper-regulation and more aggregation of order flow, leading to a single centralized world market. But the truth-telling of the Internet has made it difficult for power elite plans to proceed with the same efficacy as in the 1930s. People don't believe in regulation, in our view, with quite the same feverishness.
This is a problem for money power that depends on regulation to increase the opportunities for mercantilism. Hypothetically, someone like Assange is the answer. Let Assange begin to attack the private sector (or what passes for the private sector, especially in the US) with vigor, and more regulation may soon be justified. He is growing in power as he is growing in notoriety. Assange has characterized himself in interviews as "neither left nor right" and suggested that "what matters first and foremost is getting the information out." Here he is in an interview with the website IRC:
"First the facts, ma'am," is how he summarises his philosophy to me. "Then we'll get down to what we want to do about it. You can't do anything sensible until you know what the situation is that you're in." But while he rejects political labels, he says WikiLeaks does have its own ethical code. "We have values. I am an information activist. You get the information out to the people. We believe a richer intellectual and historical record that is fuller and more accurate is in itself intrinsically good, and gives people the tools to make intelligent decisions."
Let us return to our forecasting … Nancy Pelosi and John Boehner have become the odd couple of Washington DC, forging a "tremendous partnership" (in the words of the Washington Post) that has led to truly monumental legislation. Facing the photographers snapping away, Minority Leader Pelosi says quietly but with a big smile, "This is truly a historic occasion. People have been so outraged by the documents that Julian Assange leaked that we have been able to negotiate a bill to establish a Department of Underwriting and Securities Trading (DUST). Henceforth, I'm pleased to announce, all trading of securities will be run through Washington DC. Barney Frank and myself will run the Mutual Fund subsidiary.
"The SEC will provide integrated policing, as well, under John Boehner's direction. For the first time, regulation is actually integrated into the active trading process. Hedge funds that want to participate in American markets will also have to send their orders through DUST. This has all been done with the active input and approval of Wall Street itself, which will now function as the financial arm of the SEC. We have no doubt that once these changes are implemented, the greed and corruption that has characterized so much of Wall Street will be a thing of the past."
Shouting. Confusion. "What about the Federal Reserve, Madame Minority Leader?" one media maven cries out. Pelosi looks puzzled. "What about the Fed? As Julian has shown us, the problems lie with the greed and corruption of the private sector. These banks have simply grown too large. They are predators. The Fed is a quasi-governmental body and almost by definition it cannot be corrupt, given the oversight that Congress provides. But if you must know, our bill does authorize the Fed to have more extensive oversight over US banking …
Edited on date of publication
"In fact, we are with the Chinese here. The Fed is basically taking the banking industry under its wing and henceforth all commercial banking decisions will have to be approved from the top down. Ben Bernanke himself, through a complex software facility will be able to review virtually all the nation's private loans and mortgages on a day-to-day basis. This kind of public-private partnership will surely stamp out corruption, and just as importantly, it is what the American people want. And you know … we couldn't have done it without Julian Assange and WikiLeaks!"