By Leah McGrath Goodman
In April 2008, David Einhorn of Greenlight Capital gave a speech decrying privatized profit and socialized risk, calling Wall Street on its “reverse Robin Hood system.” As the market unraveled later that year, hedge fund manager Andrew Lahde blasted “corporate America, which owns Congress” in a farewell missive announcing the closure of his wildly successful Santa Monica, California, fund, Lahde Capital Management, and his early retirement to a Caribbean island. “Institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen,” he wrote. “This is an outrage, yet no one seems to know or care about it.”
It’s safe to say the common citizen has since caught on. Today, the Occupy Wall Street protest movement, which blasts corporate greed and government-sponsored bank bailouts, has spread to an estimated 1,500 cities around the world since its first demonstration in lower Manhattan on September 17. Could it be that some of the movement’s staunchest supporters are hedge funders — in essence, the very individuals who make up the nation’s top 1 percent of earners the movement claims to be fighting?
Indeed, financial support has been so strong for Occupy Wall Street in New York City that it was forced to erect the kind of mini-bureaucracy it says it despises around its war chest of more than $600,000 in donations. For expenses above $100, the protesters distributed a flyer showing a graphic with multiple arrows pointing out how to get an expenditure approved in just 11 “easy” steps.
According to protester Justin Stone-Diaz, the movement has been approached by more than 40 individuals looking to be long-term donors in New York alone, without the help of fund drives. Donations are made mostly online, through the Alliance for Global Justice, a Washington, D.C., think tank, and deposited at the Amalgamated Bank, the only wholly owned union bank in the U.S., and the Lower East Side People’s Federal Credit Union. A working group in charge of finance authorizes OWS transactions once they’ve been approved by consensus at a daily assembly.
Even hedge funders who have not offered any money have given the movement advice. “I went down there and told them, ‘If you really want to freak Wall Street out, start putting up signs that say, ‘Reinstate Glass-Steagall,’ ” one hedge funder says. “A week later I saw them doing it.”
Among the most prominent donors to the movement has been 52-year-old Robert Halper, a self-described member of the nation’s richest 1 percent who made his fortune trading futures and options on the floor of the New York Mercantile Exchange. Last June, Halper, a former vice chairman of the exchange, wrote a $20,000 check to the Vancouver anticorporate magazine, Adbusters, which sent out a mass e-mail urging readers to occupy Wall Street, starting with an August 2 meeting at Bowling Green. That meeting sparked the nationwide movement.
Halper carries with him a sheaf of paper he’s unfolded and refolded many times containing quotes from Pope Pius XI, who spoke at length on Wall Street greed at another turbulent period in the nation’s history — 1931. “What will it profit men to teach them sound principles of economic life if, in unbridled and sordid greed, they let themselves be swept away by their passion for property?” is among the papal lines. In Halper’s copy, the words “unbridled and sordid greed” are italicized and bolded.
Halper, who did not return requests for comment, is not the only trader who empathizes with the protesters. Mike Masters, who has testified ten times before Congress in defense of sweeping financial reforms and heads up Masters Capital Management, a $200 million fund, says the disconnect between the nation’s top 1 percent and the average worker is palpable.
“Even casinos have rules and regulations,” says Masters. “People go to casinos expecting not to be cheated. We’ve got a casino here that doesn’t really have any rules. I don’t think many of the Occupy Wall Streeters even know why they’re upset, but they are right that something is wrong and nobody likes to feel cheated.”
With the occupiers no longer allowed to camp in Zuccotti Park, their immediate plans, to some extent, have been dashed, but don’t confuse ouster with disbandment, says Dan Thorsen, a former Zuccotti occupier who recently landed a job — on Wall Street, no less, partly because of his proximity to work. “We have a winterization committee that’s consulting with world-class mountain climbers and meteorologists,” he says. OWS is still allowed to gather in Zuccotti Park.
So what, exactly, do Occupy Wall Street’s protesters want? Nothing less than an end to capitalism. The time for reform has come and gone, they say, and the government has shown its utter lack of interest in the plight of the ordinary citizen, as evidenced by some of the bloodier brawls between protesters and police. “Many of us are convinced capitalism is historically doomed,” says David Graeber, the 50-year-old American anthropologist, anarchist and professor at Goldsmiths, University of London, who serves as the intellectual mastermind behind the OWS movement. “It’s become technologically stagnant, socially regressive, and it’s destroying the planet. It’s no longer even trying to convince anyone it’s a particularly good economic system.”
Clearly, mainstream America has not caught on to the “end capitalism” message yet. So far, Occupy Wall Street has been touted by everyone from hip-hop star Kanye West to Princeton professor Cornel West. Whether the unions attracted to OWS know that many of the protesters profess to be anarchists is not certain. “We consider anarchy a concept under which everyone wields equal power,” Thorsen says. “ ‘Anarchy’ literally means no monarch; there is no one above us.”
To be sure, many hedge funders do not support OWS. Some of the most prominent financiers on Wall Street have bristled at the movement, particularly during the “Millionaires March” through New York’s Upper East Side, which prompted heavy police protection. (According to the New York Police Foundation, Paul Tudor Jones of Tudor Investment Corp., Steve Cohen of SAC Capital, Dan Loeb of Third Point and Carl Icahn of Icahn Capital are all big NYPD donors.) John Paulson drew ire from protesters for a tin-eared statement chiding them for not appreciating that “the top 1 percent of New Yorkers pays over 40 percent of all income taxes.”
The OWS movement faces high hurdles, but it is bent on being heard — even if that means walking straight into traffic. In September protesters marched across the Brooklyn Bridge (and again on the two-month anniversary on November 17), leading to the arrest of more than 700 people. OWS members have repeatedly charged up Broadway — a one-way street — chanting, “Our street, our street.” In mid-November, they unsuccessfully tried to shut down the New York Stock Exchange.
The group has suffered from image and messaging issues, projecting what appears to be a hodgepodge of progressive ideals; the only thing that appears to be consistent about OWS is that nothing is consistent. The group has declined to elect a leader (with the exception of Occupy Denver, which smirkingly appointed a border collie, Shelby, to that position), provide a list of demands or fashion itself into anything to which the wider world can relate.
Says Sean McGillivray, vice president at Medford, Oregon–based CTA and brokerage firm Great Pacific Wealth Management: “Here’s the problem with Occupy Wall Street. The average citizen doesn’t relate. If you check them out, they do look a lot like dirty hippies.”
Superseding capitalism with what the movement hopes might be a new brand of “direct democracy” will be, even Occupy Wall Streeters concede, a human experiment of epic proportions that could take generations. “My reading of history is that such groups tend to be infectious, powerful and scare the pants off the people running this country, who fear an outbreak of real democracy,” Graeber says.
Whatever Occupy Wall Street’s immediate challenges, one thing is certain: The movement is in no danger of being overleveraged. As of November, it had spent only $50,000 of its funds, “mostly on food, medical care and laundry cleaning.” AR