Why did Washington respond to the 2008 financial crisis by pushing even more wealth and power into the hands of the same people that caused it? The answer is partly rooted in the legacy of the angry young Democrats who entered Congress in the wake of the Watergate scandal and unwittingly loosened the chains of concentrated corporate power.

Mary Russell of The Washington Post called them the “Red Guard of the Revolution.” In January of 1975, a giant crop of angry and newly elected Democrats—nicknamed “Watergate Babies”—came to Washington, DC. They were long-haired, young, aggressive, and progressive, determined to clean up government and stop the war in Vietnam and they flooded into Congress. The raw number of pickups understated the change to the Democratic Party itself. Due to retirements, there were seventy-five new Democrats in the House of Representatives alone, many young, eager, and disdainful of the party hierarchy. More than 40 percent of all Democrats in the House had served for less than six years.

The white whale of liberals, Richard Nixon, had resigned a few months earlier, but these newcomers hadn’t just campaigned against the Republicans. They were after the Democratic establishment as well. “We were a conquering army,” said George Miller, the twenty-nine-year old congressman from California. “We came here to take the Bastille.”

One of the first people this group targeted was an old man from rural Texas, a former tenant cotton farmer named Wright Patman, the head of the House Banking and Currency Committee who had first been elected to Congress in 1928. Antiwar liberals saw that the key to power in the House was through committees, with the flow of legislation controlled by committee chairmen picked based on length of service.

Old men—often southern reactionaries—had used this seniority system to do terrible things, such as bottle up civil rights legislation. So existing liberals in office, with votes from the new radicals, demanded that the full Democratic Caucus get a say on who ran what committee.

Ironically, Patman had a lot in common with the incoming class. He was, for instance, the very first Democrat to investigate Watergate. But he was vulnerable to the new liberals he had helped elect. They were young, he was old. They were vehemently opposed to the war in Vietnam, he had voted for it. They were a TV generation, and knew affluence and campus politics. He was rural, southern, without a college degree, and had gone through the crucible of the 1930s. By contrast, as Watergate Baby Paul Tsongas observed, “Our generation did not know the Depression.”

And yet, something else was going on. Liberals were the face of the coup, but bankers were quietly organizing the rebellion from behind the scenes. For forty-five years, Patman had fought concentrated financial power and monopolies, part of a politics that stretched back to the founding of the country. He was the living embodiment of an American tradition, the last populist. And it was a tradition the financiers sought to kill.

Wright Patman

The Watergate Babies didn’t understand they were being manipulated. They were antiwar, not anti-bank. Some had even been bankers. “His economic ideas were not in pace with modern concepts,” said liberal congressman Pete Stark. Stark had been elected just two years before, becoming famous by putting a giant peace sign on his bank. Enemies of Patman told the newcomers that to be important, they had to make a mark. Nothing would do that like getting rid of the genial old man. Toby Moffett, another young congressman, bought into this. He called Patman “a terrific fighter,” but, he said, “it seemed time to move on.” Patman’s politics, which focused on financial and monopoly power, was irrelevant.

The Texas delegation rose up in defense of the old man. Barbara Jordan, the star of the impeachment against Nixon and one of the few black women in Congress, supported Patman. His defenders were led by powerful Texas Democrat Jim Wright, who pleaded with the new members not to “depose the one man who has been our most  inveterate, most persistent, most consistent and most outspoken foe of monopoly, exorbitant interest rates, and special privileges of all sorts.”

In what one young member called the greatest political speech he had ever heard, Wright asked, must we commit “patricide”? When it came time for the vote, Patman’s loss was a foregone conclusion. He was crushed. It was indeed, as The Washington Post put it, “a revolution.”

A short time later, Patman died of pneumonia. His body was flown back to Texarkana in a United States Air Force transport plane, and his body taken through the district, stopping at a catfish restaurant in the African American section of town he frequented when he returned to the district. As the hearse passed, his constituents, whom he had called the “plain people,” lined the streets several deep. More than a thousand people packed the church at his funeral.

Jim Wright, later Speaker of the House, eulogized Patman’s life. “He often comforted the afflicted and afflicted the comfortable,” talking of Patman’s fights against big business, banks, and the Klan. “Well done.”


For two hundred years, Americans had fought concentrated power, relying on leaders like Patman. But now there was no one left to carry on the tradition. The new generation had, unwittingly, committed patricide. Almost immediately, the liberal-led Congress was confronted with a mess of incomprehensible economic problems. The American economic engine was supposed to produce an endless surfeit of goods, services, and jobs, automatically. But now it was sputtering, with inflation, oil shocks, corporation bankruptcies, deep recession.

Without guidance, the new generation panicked. Rudderless and afraid, they turned to a group of scholars who promised them efficiency, progress, and freedom. All they had to do was undo the chains on concentrated power that men like Patman had spent their lives securing. And so they did. They released the beast of monopoly upon the land. The revolution was here.

For two hundred years, Americans had fought concentrated power, relying on leaders like Patman. But now there was no one left to carry on the tradition

During the most recent financial crisis, in 2009–2010, I was a congressional staffer working for a member of Congress on the Financial Services Committee, what I would learn was Patman’s old stomping grounds. I kept getting calls from constituents in foreclosure, in crisis, and nothing that my government and my party offered could help them, or was designed to help them. In aggregate, from 2008 to 2012, during the crisis, the American middle class lost roughly $6 trillion.

The assets of the powerful recovered value quickly, those of the middle class did not. Meanwhile, political leaders rewarded the so-called Too Big to Fail banks with bailout money, and bank executives, far from being punished, would be rewarded with large bonuses. All over the world, the story was pretty much the same. Bonuses for bankers, little for the rest of us.

It was in that period that I began to ask myself a question, a question that turned into this book. The question was as follows. Our leaders responded to a financial collapse caused by a concentration of wealth and power by pushing even more wealth and power into the hands of the same people that caused it. Why?

Answering that question—why did our leaders help confiscate the basis of American stability—was surprisingly difficult. Was it purely protecting the rich? That seemed unlikely; there were ways to make sure the rich did well while not undermining everyone else. Was it corruption? I didn’t think so. There were some payoffs, but from what I saw, bribery really did not drive policy. Was it poor strategy or partisanship? I doubted it. There were political fights and recriminations, but both parties came to agree on the need to seize the wealth of the middle class and protect a concentrated financial apparatus. Was it personal immorality? No. Many of our political leaders felt they had a moral obligation to do what they did, that it might be sad, but it was necessary and inevitable. The concentration of wealth and power that I saw, with terrible consequences, occurred largely due to the actions of well-meaning technocrats who did not understand what they were doing.

The more I thought about the question, the more difficult it became to answer. The policy choices around the financial crisis were odd because they were destabilizing. Making sure people owned homes has been a core way to stabilize our society since the 1930s. The original modern housing finance system was designed with political goals in mind. In the words of William Levitt, the founder of the first postwar suburb, “No man who owns his own house and lot can be a Communist. He has too much to do.”

This was a literal statement. People with a stake in society—a bit of property—do not rebel. People with no stake have nothing to lose. It seemed clear to many of us during the bailouts that the public would turn vehemently against the political establishment for taking their property, their stake in America, and so it has. After years of research, I came to believe that the answer to the question is ideology, and in particular, turning our back decades ago on an old populist way of organizing our culture. But in 2009, I didn’t know this older tradition had existed. The first hint it was there was when an economist, Jane D’Arista, told me how and why the financial system was blowing up, almost in real time. At the time, no one else, not the bankers or lobbyists or government officials, had any idea what the system they had constructed was doing. But she did, and pointed me to old papers she had written on why the system would blow up.

Her ability to see clearly when everyone else was panicking seemed a bit like magic, so I asked her how she knew all about these problems before anyone else did. D’Arista told me that she learned how the system worked when she was a staffer for a congressman named Wright Patman in the 1970s, a congressman who had helped structure parts of the New Deal. I had never heard of Patman, but D’Arista told me about how he had tried to impeach Andrew Mellon in 1932 and had in turn been overthrown in 1975.

A few years later, I read a book by a journalist named Barry Lynn, the founder of what was becoming a new antimonopoly movement. In that book, Lynn wrote about the Robinson-Patman Act, a law written by Patman designed to constrain chain stores in the 1930s. Somehow, one man had been involved in dealing with the giant threats of his day, banks and chain stores, that paralleled the threats of our day, banks and Walmart. And I had no idea who he was. Patman’s role in the twentieth century was the key to answering the question.

To understand what was in the mind of policymakers from 2008 to 2010, I had to see how they learned to think about the world. There was an entirely different set of stories and traditions in the heads of policymakers before the 1970s than there was after the 1970s. And it was these differing approaches to power that explains why we took such dissimilar approaches during the New Deal and the Obama era.

Foreclosed home in Salinas, California. Photo by Brendel [CC-BY-SA-3.0], via Wikimedia Commons

Barack Obama and his generation had learned their politics from the Watergate Babies, a generation born in rebellion against Patman’s populism. Policymakers in 2009 didn’t understand this at the time; few of them had ever heard of Patman, and few were aware of the origins of their own intellectual traditions. They believed, proudly, that they were non-ideological and pragmatic. But most of these officials had a visceral reaction toward populism. They wore the armor of Ivy League degrees, believing that being an economist or having some sort of widely respected credential offered them the divine right to rule. Voters might have formal mechanisms of democracy, but real decisions should be made by experts in opaque institutions like the Federal Reserve, the courts, the Congressional Budget Office, the Office of Information and Regulatory Affairs, and so forth.

Toward the end of the Obama administration, a left-wing type of criticism emerged, an argument that the financial crisis and the response to it was all just an inevitable unspooling of capitalism with booms and busts and rampant inequality, a simple fact of life under a free market system. This critique, though appearing to present a radical challenge to the status quo, actually bore the same logic of the officials in charge during the financial crisis. It had an elitism of its own, a naïveté similar to that of the Watergate Baby generation, an unwillingness to think hard about commerce and markets. Inevitabilism, whether oriented around the sin of capitalism or the glory of it, reflects a refusal to entertain free will.

For much of this time, I felt alone, frustrated, angry. The financial crisis of 2008 was not a technocratic problem that happened in the banking system. It was a political crisis that happened everywhere. It was not a result of a few bad actors, it was a broad sweeping restructuring of our culture, the result of forty years of political choices, the same misfiring of institutions that led to the second war in Iraq, and an endless series of gruesome social consequences. The men in suits told us Saddam Hussein had weapons of mass destruction, just as they told us taxpayer-funded bank bonuses were essential to the economy.

Even political leaders I respected did not seem to understand how to make democracy work. But still, I believed that we could have done better. Our political leaders, and we ourselves, can and do make choices. I was not naive, but I looked around and saw tremendous hard-earned wisdom, inculcated in our science, our arts and songs, our bridges, our technology, our medicines, our societies. We didn’t always organize our world around the ideas of highly educated technocrats with bad judgment. We once could do greatness in our politics. So where was a tradition I could honor?

And then I found Wright Patman, and I saw through his eyes. Going through hearings, archives, letters, he helped teach me about the vitality, the energy, the love, the beauty, the fear of what it means to live in a democracy. I saw the coldness of Andrew Mellon, the vibrancy and error of the Watergate Baby class, the intensity of Citibank leader Walter Wriston, the tragedy and racism of Woodrow Wilson, the narcissism and violence of Teddy Roosevelt, the elitist cunning of Aaron Director, the genius and spirituality of Louis Brandeis. This was the tradition I had missed, a battle that took place over how our banks and corporations would be run, a battle over America and the world. This is the tradition that finally made sense. This is the tradition that, if we had known about it in 2008, would have helped us restore our democracy, or at least given us a shot to do so.

Copyright © 2019 by Matt Stoller. Excerpted from Goliath: The 100-Year War Between Monopoly Power and Democracy, published by Simon & Schuster. Reprinted by permission. Matt Stoller is a fellow at the Open Markets Institute.

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