What Bibi Could Teach Obama About Regulating Banks and Saving Democracy

There was a little business story in today’s Haaretz that you probably overlooked. It’s a real eye-opener. It’s about steps being taken by Israeli Prime Minister Netanyahu to reform the regulation of the finance industry. But what it’s really about is how a determined political system can stop bankers from taking over, wrecking the economy and ruining everyone else’s lives.

The issue Bibi is looking at is the growing control by investment banking and the finance industry over the rest of the Israeli economy, and the damage that does to democracy. The similarities to our own situation here are creepy. The eagerness of the very conservative Netanyahu and company to deal with it in advance makes a striking contrast to the caution of Obama and the Democrats.

The decision comes after months of discussion. The fact that it took several months to convene the meeting and reach a decision is itself a scary comment on the influence of the financial world over the government, as this story from yesterday’s Haaretz explains in very readable detail.

The reason, the story says, is clear:

Who are these 20-odd people who pull the strings? That was spelled out in an accompanying news analysis. Among the suspects: Nochi Dankner, head of the IDB (Israel Discount Bank) Group as well as Coor insurance; Yitzhak Teshuva, head of the Delek Group (as in Delek petroleum) plus Phoenix Insurance and our own Plaza Hotel; Shari Arison, who heads Bank Hapoalim (“The Workers’ Bank,” ironically founded by the Histadrut and for years Israel’s most successful bank) and is the sister of Mickey Arison of Miami, head of Carnival Cruise Lines and No. 69 on the new Forbes 400 list of wealthiest Americans; the Ofer family, owners of Bank Mizrahi-Tefahot and the Israel Corporation; and a few others.

Why is it a problem? The story gives examples of major economic decisions that affect the well-being and future of the entire country, made by a handful of people who have a direct stake in the outcome. For instance,

The story quotes from a 2003 speech by the then-governor of the Bank of Israel, David Klein, who compared the interlocking ownerships of banks, insurance, industry and retail to family incest.

For a crystal-clear visual explanation of how these incestuous relationships interconnect, check out this brief YouTube selection:

Written by

J.J. Goldberg

J.J. Goldberg

Jonathan Jeremy “J.J.” Goldberg is editor-at-large of the Forward, where he served as editor in chief for seven years (2000-2007).

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What Bibi Could Teach Obama About Regulating Banks and Saving Democracy

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