In his new book about the stock-market crash of 1929, the journalist Andrew Ross Sorkin recounts a scene from a summer day that year in Manhattan. The dining room of the Plaza Hotel came to attention, he writes, when top figures from Wall Street and the business world trickled in for Saturday lunch. The presence of such a crowd might not have created a stir at another historical moment, but these were not typical times. The nation was infatuated with the market, which was showering wealth on investors big and small.
Several of these boldface names, including the esteemed leaders of big banks, had a history of joining forces in market-manipulation schemes that were not a well-kept secret. Together, major players would form a pool and bid up a stock through “wash trades” with one another, creating the appearance of high demand, before they all sold, cratering the price and devastating the dupes who had followed their lead.
One might think that some of these men would have faced consequences, or at least lived in fear of exposure, even though their conduct was technically legal at the time. But they were well connected. One of them, John J. Raskob, was the chair of the Democratic National Committee and a prominent political donor; his biggest beneficiary, the former New York governor and presidential candidate Al Smith, was dining with him that day. Another, William Durant, had secretly met with President Herbert Hoover earlier in the year, to lean on him to stop the Federal Reserve Board from curbing Wall Street’s excesses.
In his book 1929: Inside the Greatest Crash in Wall Street History—And How It Shattered a Nation, Sorkin refers to “remarkable parallels” between the run-up to that crisis and today’s political and economic climate, but he doesn’t elaborate on the notion; his account is essentially a straight history, written in a journalistic register. Yet some revealing parallels do emerge from beneath the surface, and they don’t reflect well on our current path. In addition to the greed and “this time is different” hubris that precedes every stock-market tumble, the 1929 collapse was powered, it seems to me, by a more insidious and pervasive force that is in fact everywhere in evidence today.
The 1920s were, as Sorkin shows, an era in which Wall Street largely got its way and Washington kept its hands off, a precursor to President Donald Trump’s tax cuts and regulatory rollbacks. More interesting to examine, in light of the present day, is how the environment became so perilously friendly to Wall Street in the ’20s—and how it stayed that way even as red flags began to appear. The key element, I would argue, was the phenomenon known in regulatory circles as “capture”: Wall Street and Big Business managed to co-opt the other centers of power in society. Those with clout in various spheres coalesced into one clubby circle, and fell prey to a groupthink that foresaw riches for everyone, without consequences. The regulatory bodies, the political and judicial apparatus, the press—nearly all of the mechanisms of correction in our system were either enfeebled or so aligned with the bullish and wealthy that it didn’t occur to them to use what muscle they still had.
Some critics did raise alarms, most notably Senator Carter Glass, but the banking elite and their well-placed friends could safely ignore the skeptics, who would get swept away by the prevailing current. (Only after everything fell apart was the senator able to rein in banks with the Glass-Steagall Act.)
Financiers organized press offensives and enlisted top reporters as allies, offering lucrative jobs or outright bribes. Private-sector titans took on quasi-governmental roles—for instance, advising the president and negotiating deals with other nations—or they became actual federal officials. The investor and industrialist Andrew Mellon enjoyed a lengthy tenure as Treasury secretary—a forerunner to Trump’s Treasury appointees, Steven Mnuchin and Scott Bessent, both of them recruited straight from Wall Street. The joke about Mellon’s influence, Sorkin tells us, was that three U.S. presidents served under him.
This kind of crossover calls to mind Elon Musk, who, like the J.P. Morgan chairman Thomas Lamont and other ’20s moguls, became a player in public policy without going through the trouble of getting elected or being empowered by Congress. During Joe Biden’s presidency, Musk made the decision to provide Ukraine and its troops with crucial access to his satellite-internet service, Starlink. After backing Trump with his considerable clout in the 2024 election cycle, he got himself tapped by the president to slash the federal bureaucracy through DOGE, in a rather blatant example of political capture. The fact that Musk and his giant businesses stood to benefit from severe cuts to the regulatory state did not go unnoticed (Senator Elizabeth Warren, a Carter Glass–like critic, issued a report on the subject), but resistance had little effect.
No 1920s figure is so reminiscent of Musk as Raskob, the DNC chair, whose rise to great influence figured centrally in the crash. Raskob was an auto executive who fathered 13 children and became a wildly ambitious entrepreneur. He could move the market with an offhand comment about General Motors, where he was a director, much the way Musk tweeted about taking Tesla private and saw its stock promptly shoot up by more than $20 a share; the transaction never happened. Raskob took his own leap into the political fray by bankrolling Smith and using the DNC to settle scores—with the help of a pliant press.
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Musk hasn’t co-opted the news media to nearly the same degree as did Raskob and his ilk in the ’20s; reporters behind the typically sunny coverage of the time were widely believed to be on the take, Sorkin writes, and J. Pierpont Morgan “was known to have countless journalists in his pocket.” Now many of the traditional press outlets are not so much corrupt as they are impoverished and weak, and their corporate owners have shown a willingness to knuckle under if enough force is applied. While vilifying the press, Trump has skillfully leveraged podcasters and streamers, and Musk was able to literally capture Twitter—by buying the company—and thereby covertly shape the news and opinion that reaches the masses. Meanwhile, the best legacy outlets are far less influential than they once were. It’s difficult to believe any longer that the next New York Times exposé is going to take down or even contain the president. After all, he was already indicted four times, with help from reporters—and then won the popular vote.
Trump’s own story represents the ultimate capture. In his administration, Big Money interests and political power are effectively fused within one person: the president himself. He doesn’t always take the side of financiers and moguls, but when he does, he becomes not just their enabler but also their bullying representative. Bankers needn’t meet with Trump in secret to lobby him to neuter the regulatory state; he’ll do that himself. He has relentlessly assailed the putatively independent Federal Reserve Board, worked to weaken the Dodd-Frank Act and the Consumer Financial Protection Bureau, and fired the commissioner of the Bureau of Labor Statistics after the agency released a worrying jobs report. His administration has also forged deals that give the government some stake in companies such as Intel, Nvidia, and U.S. Steel, further blurring the line between the public and private sectors.
Just before Trump’s second inauguration, he issued his own Trump meme coin, which surprised no one by immediately exploding in value, directly benefiting his family. He thus became a major cryptocurrency entrepreneur days before taking office and launching a volley of crypto-friendly initiatives, pleasing an industry that had donated heavily to his campaign. Trump’s Securities and Exchange Commission promptly put on hold a case against the crypto billionaire Justin Sun. (The suit accuses Sun of, among other things, creating a wash-trading pool, in an echo of the ’20s.) Months later, Sun, a top investor in the Trump meme coin, attended a dinner with the president at one of his golf courses.
Trump’s leniency toward dubious white-collar figures also extends well beyond the crypto realm. The president granted clemency to the fraudster Carlos Watson of Ozy Media, saving him from a 10-year prison term; commuted the sentences of Jason Galanis and George Santos after they won his favor; and pardoned the former Nikola CEO Trevor Milton, who was convicted of ripping off his investors. Trump explained himself by saying of Milton, “He supported Trump.”
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Moves such as these undermine the integrity of the wider financial system. Yet the danger of capture is not just that it can lead to a recession or even a depression. The danger is also moral. Capture can dramatically alter a society’s conception of what qualifies as acceptable. In sober retrospect, it seems inconceivable that brokers during the ’20s boom allowed customers to buy stock with borrowed money and only 10 percent down; if a share price dips by just 10 percent in this scenario, the trader is wiped out. The most prominent bankers in the country were unembarrassed to defend the practice by arguing that if the common person can buy a refrigerator on credit, why not a stock? The comparison is absurd, but the important point is that it didn’t necessarily appear that way at the time. Neither did the notion of top financiers colluding to bolster the price of certain stocks.
Now we face a situation in which President Trump sets pro-crypto policy while his family businesses reap the rewards; the president fires officials who bring bad news; and convicted scammers are pardoned without even a fig-leaf rationale. Opponents have filed a number of lawsuits challenging the Trump administration, and some of them have found traction (a federal appeals court blocked for now Trump’s order to fire Federal Reserve Board Governor Lisa Cook). But the Supreme Court has largely sided with Trump in his second term, the pardons are irrevocable, and the sheer volume of attacks on our financial system seems to ensure that many will prevail or, worse, be ignored or accepted. In contrast to 1929, when capture was not a well-publicized phenomenon, ignorance is an even less plausible excuse. The parties poised to check state power over our economy are well aware of the grifts and the graft, but they appear to have lost the capacity to act.
The term moral hazard entered the popular lexicon during the 2008 global financial crisis, which Sorkin chronicled in his hit book Too Big to Fail, to explain the widespread fear that bailing out banks would set a damaging precedent by rescuing them from the consequences of their own actions. In 2025, there is a twist: The moral hazard is plain as day before any large-scale consequences have even come. What was once beyond the pale has little by little become accepted. In that sense, the collapse has already begun.
