Remembering Wally Turbeville

It is with great sadness that we announce the passing of Senior Fellow Wallace C. Turbeville, a beloved member of the Demos family since 2012. Wallace “Wally” Turbeville was among our country’s most respected and influential thought leaders and advocates for systemic financial reform as a core fight in the struggle for economic and racial justice. His passing is a great loss for progressives and working people everywhere.

Wally had a 30-year career in investment banking, but in the wake of the financial crisis, he rededicated his life to reforming Wall Street, becoming a prominent voice on financial system failures and solutions. Demos and I first encountered Wally when we were colleagues at Americans for Financial Reform during the battle to create the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. As a former Goldman Sachs investment banker, Wally was an essential counterweight to the anti-reform lobbyists who outnumbered us in congressional and Treasury Department meetings, but he also had a rare gift for helping ordinary activists understand how complex Wall Street transactions were shaping their lives. He was often a one-man policy shop advising AFR on derivatives regulation and systemic risk. It is no overstatement to say that the financial system is safer, fairer and more transparent today because of Wally’s singular contributions to that bill and the ensuing regulations.

I recruited Wally to join Demos after the passage of Dodd-Frank; he became a consultant and eventually a Senior Fellow on staff. His first contribution was the milestone Cracks in the Pipeline Series, where he argued that finance should serve as a pipeline for productive investment in the real economy, but Wall Street practices and financial “innovations” such as derivatives and high frequency trading were siphoning off value to the detriment of the economy. Through influential reports and articles, Wally developed an original and powerful analysis of structural flaws in our financial system, which, he argued persuasively, lay at the root of wage stagnation, diminishing job quality, rising inequality, and decelerating innovation and business growth over the last several decades. While much of the financial reform debate launched by the financial crisis focused on regulatory reforms to reduce systemic risks and prevent future “too big to fail” scenarios with the big banks, Wally put a spotlight much more squarely on how the financial system was negatively impacting the wider economy and particularly working families. As he wrote in his seminal study, Financialization and Equal Opportunity:

Many forces contribute to growing inequalities of income and wealth, but the financial system is the medium through which they work and has become a controlling factor. To illuminate this economic transformation, our analysis departs from previous discussions of financial reform by assessing how the evolution of the financial sector since 1980, and its expanding role in the economy, interact with other forces in the economy so that wealth is no longer cycled into well-paying jobs that raise average living standards and provide security for ordinary Americans. Instead, wealth increasingly grows only itself, for the benefit of a tiny minority of business owners and managers and to the detriment of the non-financial economy of production, jobs, household earnings and real economic growth.

The crux of Wally’s radical analysis is that our deregulated financial system has become dominated by trading markets, rather than more traditional financial functions such as lending to business. Traders earn their incomes by betting on short-term asset price volatility, while long-term value growth is not similarly tradable and is therefore ignored and pushed out of the models and the larger system. Businesses, in turn, no longer invest in long-term value growth because such valuation is not perceivable through a lens of short-term price volatility. The resulting disinvestment in long-term value and business growth takes the form, first and foremost, of capping or cutting labor costs, thus driving up inequality between working families and the financial and corporate elites who benefit from the financial system’s rampant short-termism. The same structural flaws are also undermining the long-term sustainability of our macro-economy, socially and environmentally, as Wally demonstrated in a working paper for the United Nations Environmental Programme’s Inquiry into the Design of a Sustainable Financial System.

In 2013, Wally became inspired to do a deep investigation into the Detroit municipal bankruptcy crisis, which threatened steep pension cuts for city employees and service shortages for residents. In a blockbuster report that made front page news nationwide, Wally demonstrated that Detroit’s insolvency was driven, not by pension costs, but by a collapse of public revenue due to the financial crisis, lack of state revenue-sharing, and shockingly bad Wall Street municipal finance deals, as he cogently explained on All In with Chris Hayes at the time. Wally’s research galvanized Detroit activists and turned the tide in the bankruptcy court, influencing a settlement that required Wall Street banks to take a substantial reduction when terminating several exorbitant contracts with the city. Meanwhile, in the midst of the bankruptcy fight, tens of thousands of Detroit residents with delinquent water bills had their water shut off. Wally called out this cruel and cowardly plan for what it was: balancing the books of Detroit’s public water authority on the backs of black people, in order to set the stage for privatization.

In the end, though, Wally’s work for the people of Detroit was vindicated with the final bankruptcy settlement, which made city workers’ pensions reasonably whole with an $800 million infusion of public and private money.

In 2015 and 2016, Wally produced a steady stream of hard-hitting commentaries aiming to elevate real financial reform in the 2016 election cycle. But he has devoted most of his energy and time recently to deepening his research and analysis on financialization as a driver of inequality, and to a groundbreaking policy proposal, the Financial Infrastructure Exchange, which aims to powerfully leverage pension fund capital and other institutional investment into the clean energy/clean economy transformation—a proposal chosen for the Democracy Journal’s best new ideas symposium for 2016. Wally’s analytical work recently culminated in a major working paper, “Financial Markets and Inequalities of Income and Wealth,” soon to be released by the Levy Institute of Bard College.

Most recently, filming was just underway featuring Wally and his life story and ideas in a new Harold Crooks documentary on finance and inequality, something of a sequel to his award-winning film The Price We Pay.

Before he passed, Wally said that Demos had given him his best years. Wally gave all of us at Demos the best of himself, too. Our beloved colleague made friends across the organization and often across lines of race, age, gender and class. He had a wicked sense of humor, rooted in his experience yet always marked by self-awareness and humility about his own fortunate pathway through life. We will miss Wally so very much, but his work and his character are fixed in our minds and hearts. He changed the way we saw the world we live in, and gave us the power to envision a new one. We will carry on his dedication to an economy in which finance serves people and the planet, not the other way around.

Among the many friends and family mourning his loss are his wife, Marianne Eggler; his children, Geoffrey and Kelsey Turbeville; and his stepson, Maximilian Gerozissis.

For more information about Wally’s work, please see his contributor page.