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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsFailure To Prosecute Banking THIEVES Legitimizes The Revolutionary Worldview
The failure to hold any of these egregious thieves accountable is fraying the social contract. It legitimizes the revolutionary worldview.
Part of the decision not to prosecute them has undoubtedly been (apart from pure corruption and the difficulty and expense involved in the prosecutions) the desire not to do anything too divisive. But the fact is that not prosecuting them has led to increasing political division in this country, as groups on both the left and the right believe the system incapable of dispensing justice. That in turn leads to a revolutionary theory of change, which (each in their own characteristic way) is what binds Tea Partiers with guns at congressional rallies promising "second Amendment remedies," and Occupiers illegally shutting down ports, declaring basic city zoning laws unconstitutional, and demanding the right to pitch tents on public property for years on end if need be to accomplish undefined goals.
Don't blame the Tea Partiers or the Occupiers for this state of affairs. Blame the elected officials who have refused to the prosecute the people responsible for the economic crisis. If people thought the system was working the way it should be and prosecuting the right people, it would do a lot to pull the release on the political pressure valve.
http://digbysblog.blogspot.com/2011/01/failure-to-prosecute-bankers-leads-to.html
banned from Kos
(4,017 posts)prosecuted.
SomethingFishy
(4,876 posts)Wall Street execs and no Bush Administration people were charged with a crime?
Wow thanks, I had no idea they had so much power. It must be frustrating as hell to see a group of people that stupid with so much power
banned from Kos
(4,017 posts)2008/09.
Again, your fantasy about fake prosecutions will never happen. How long will you be doing this? 8- 10 years?
abelenkpe
(9,933 posts)Regulations and policies are what caused the financial crisis. By not investigating and prosecuting bankers/wall street the administration makes it possible to perpetuate that idea. Not that that's where I'd place the blame.
JoePhilly
(27,787 posts)This is the rub.
In 1999, the Gramm-Leach Bliely Act was passed making pretty much all of the actions the financial companies took to cause the collapse LEGAL.
So, while we'd like to throw them in jail, they had protected themselves by getting a law passed back in 1999 that allowed them to do what we all wish they could now be prosecuted for doing.
That is the crux of the problem.
dreamnightwind
(4,775 posts)He helped prosecute the crimes of the 80's S & L crisis, and he says there is plenty to prosecute now, but no willingness to do it.
http://neweconomicperspectives.blogspot.com/2011/09/william-black-why-nobody-went-to-jail.html
And even if I grant you the main premise of your post (which I don't), that they made all of this legal before doing it, why is most of it still legal? Why is Tim Geithner still working for this administration? Eric Holder?
I've heard the argument you're presenting, that it was all or mostly all legal, plenty of times, including from Obama himself. It's just not true. Fraud all over the place. And the modifications made to prevent it from happening again are pretty much a joke. If it was mostly legal then (it wasn't) it's still mostly legal, thanks to Obama's Treasury and Justice Departments.
I liked the comment in Suskind's book on the Obama administration (haven't read the book, have just seen and read excerpts), where Dick Durbin, shortly after Obama's inauguration, said of his cabinet picks, "you've picked the wrong people!". They were the wrong people if you assume his goal was to reign in the financial crooks, They were the right people if you assume his goal was to placate the masses while making as few substantive changes as possible.
JoePhilly
(27,787 posts)And the article you posted basically says so.
Black describes going after 10,000 potential cases of fraud, and obtaining only 1,000 convictions. That's a very low rate. Then he goes on to describe how many FBI agents you'd need to investigate even one firm ... let alone what he describes as millions of liar loans.
He spends much of the article describing what should have happened in the 20 years prior to Obama taking office, and then, all most as an after thought, mentions the GOP's efforts to water down Dodd-Frank. This is relevant because it goes to my point ... that the existing legislation is insufficient to prevent actions that should be illegal, but are not.
this part of the article is important ... Black says ... "Now step back and ask yourself, many of these guys who are loan brokers, their previous job was literally flipping burgers, right. So are you going to leave it up to the borrower to come up magically with the right income and the right appraisal when they dont even know what the magic numbers are and cannot inflate the appraisal? Of course not. You are going to do it as the loan broker. You are going to tell the borrower to write in a greatly inflated income number, or maybe you are afraid that they are too honest, so you may simply write it in yourself, which happened in many cases."
To prosecute this, you have to start here, with the loan / mortgage broker. And that's why you need so many agents, more than actually exist. Back in 2001, I bought my current home, and my mortgage broker was a close friend of over 20 years. She told me that at my income, her company was willing to loan me MUCH more than I needed to purchase the home I wanted. Much much more. She said that lots of the brokers were encouraging their clients to take "as much as you can", because they made more commission, and as far as they knew, you always want to buy as much house as you can get because "the value of a home will always go up." The mortgage brokers actually believed this.
She quit about a year later because she wouldn't inflate loans or recommend that clients take more than she thought they could afford just to get more commission. As a result, her relative performance suffered, her loans were smaller.
Importantly, she saw the actions of the other brokers as uninformed, or perhaps unethical, but not illegal. And Black gets close to this part of the issue in the quote I reference above. Most of the mortgage brokers weren't financial experts (my friend had a degree in finance). And so, they BELIEVED that they were helping people buy a bigger house, which would then grow in value over time AND they would get a bigger commission ... in their mind, it was a WIN for the customer and WIN for themselves ...
And that's the rub .. to prove fraud, you have to prove an intent to defraud the "victim". The majority of mortgage brokers didn't think they were tricking the customer. And so they may have been stupid, or just bad at their job, but that's not a crime .. at least its not fraud, because its not intentional.
dreamnightwind
(4,775 posts)It looks like you just found a few quotes that you could use to support the viewpoint you already held. This is an amazing article, and it says nothing similar to what you are saying. You're so far off I hardly know where to start, or if it's worth my time.
You said "To prosecute this, you have to start here, with the loan / mortgage broker."
There is no support for that in the article, in fact quite the opposite. Black goes to great length to explain just how futile that approach is. And the brokers were not the problem, they were the little guys implementing the fraud desired by their employers.
Black: "Remember I told you there were over a million cases of mortgage fraud a year and that overwhelmingly its lenders who foot the fraud, the lie in the liars loan. But the FBI couldnt and didnt investigate any of the major lenders. So it is looking at these relatively small folks, and that is what it reports back. The FBI decides you know, as I said, this cannot work. This is like going to a beach in San Diego and throwing handfuls of sand in the Pacific Ocean and wondering when you are going to be able to walk to Hawaii. Every year, with a million plus cases of fraud a year, if you prosecute a thousand of them or two thousand of them or three thousand of them, you are a million cases further behind every year, right. It is just insane. So the FBI says we got to start going after the big guys at which point Bushs Attorney General Mukasey says no, he refuses to even create a National Task Force against mortgage fraud"
Jim Puplava: "What about the Obama Administration?
William Black: They never did it. They didnt even back off. They never, you can tell from the numbers that they have, in how many FBI personnel it takes to do a really sophisticated, large institutional investigation. They have never done what would have been considered a real investigation in the Savings and Loan era of any, any of the major fraudulent lenders and investment banks that created the worthless financial derivatesnot worthless, but not worth very muchfinancial derivatives.
Jim Puplava: What about the Obama Administration? Had they came in, they continued with the same policy basically, they ignored it. Where they could have had let us say, an opportunity. Is it because Professor, that the process is you know, some have said that Congress is bought and paid for by the financial industry. I mean, is that part of the reason?
William Black: Well, its not just Congress of course. The President has said that he wants to raise a billion dollars in the reelection effort and despite all the press you may have heard about how the White House is despised by financein fact, last I read, a bigger percentage and a bigger absolute dollar amount of contributions in this effort, than in the original effort had come from finance. And so both parties are tremendously beholden to finance. That is part of it but again, the Obama Administration was better than the Bush Administration. The Obama Administration was willing to create a task force and its the numbers of FBI Agents have been increased, but they are still looking at relatively small cases. And they are nowhere near the numbers required and so unless something dramatic or radical changes, this is going to be the greatest case of elite fraud with impunity in the history of the world. And it is only going to change if we express our outrage as the people and demand that it is changed. Let me tell you how bad it is. The Federal Housing Finance Administration, has just last week, or about ten days ago now, filed fifteen hundred plus pages of complaints against seventeen financial entities. And about ten of them are among the biggest financial entities in the world saying, every investigation has found repeated enormous fraud at these entities. So, and there is a track record, a paper trail of that fraud. But these entities got reports saying these assets were trash and that they lied and then sold the assets to Fannie and Freddie by making acts of deceit, which is of course, the key element of fraud.
So, now that this has happened, there are really only two possibilities. Either the Federal Housing Finance Administration has gotten all those documents wrong, and there is no such record, or there is such a record in which case, where is the Justice Department, why is it not bringing criminal prosecution against most of the largest banks in the world.
Jim Puplava: not one single prosecution was brought in this entire situation, what is probably the largest fraud committed in history. And yet it still goes on Professor, we still have the financial industry contributing large amounts of money to politicians in both parties, both at the national level, the local level, and so basically, what you have is influence buying here. ... I thought my goodness, there was enough evidence to go after but not one thing was done. And even when a lot of these firms went under, as the shareholders lost everything, the taxpayers losing everything, the guys at the top walked away with some of the biggest bonus packages Ive seen in my investment career.
William Black: ... The firm failed because you followed the fraud recipe that I gave you, which causes catastrophic losses but their CEOs and other Senior Officers can walk away incredibly rich. ... So again, if people, I do not understand who have never done this, how absolutely critical the criminal referrals are.
...
The Administration is not necessarily fighting strong for any, the Dodd Frank Bill was not created and designed to deal with the actual causes of the crisis. And so it most likely will not stop the next crisis. But the focus on legislation is a bit misleading. Under the existing laws and regulation, this was an easy crisis to prevent.
...
Bernanke was reappointed by President Obama. You know, I tried as little, what one little person could, to stop that. We need to have a complete new crew. Geithner needs to go, Attorney General Holder needs to go, and Bernanke needs to go and we need to put people in who will make a high priority ending the ability to loot institutions with impunity.
abelenkpe
(9,933 posts)but we could certainly go after banks for all the robo signing business. It is still illegal to forge signatures and falsify documents yeah?
JackRiddler
(24,979 posts)JackRiddler
(24,979 posts)There is no doubt the ratings agencies participated in fraud to label as AAA securities the banks knew would fail and they were paid to not evaluate. Their "freedom of opinion" defense can be overcome. Fraud is always presumed to be creative. (Read the Black stuff.)
In fact, these disgusting SEC settlements in the Goldman/Paulson and recent Citi cases, wherein the animals intentionally packaged and sold securities they knew would fail and also bet against them, are all about letting the criminals go free without acknowledging what they've done for a tiny fraction of their winnings.
Then there are the millions of frauds with mortgage title through MERS. Once again, many AGs are moving to let them get away with it by allowing a "settlement" for a tiny fraction of the damage done.
The authorities in the US arrest thousands of people every year on suspicion of having small quantities of drugs. If $500,000 of marijuana was thought to be at Goldman Sachs, the place would be raided and a whole bunch of people who would later get off altogether would in the meantime be hogtied and spend a night or two in jail. This can be a life-changing experience. The presumption of the police and prosecutors would be that the whole place is a criminal organization; let the courts sort out who gets a presumption of innocence. That's how it works in real life with minor drug cases. Yet frauds worth trillions emanated from these places and they are treated with extreme deference and respect. Even small punishments for these criminals would mean so much, compared to that. It really doesn't take much of a punishment to deter a great many white-collar criminals. But when instead you rescue their criminal enterprises and make sure they get their bonuses and invite them to continue their plunder operations, they will do worse every time.
SomethingFishy
(4,876 posts)you let criminals go, you get MORE CRIME. It's not rocket science.
MFrohike
(1,980 posts)The unwillingness to at least pursue an investigation by DOJ, like the cops are supposed to do, makes the call for removing government from the playing field more viable. After all, government can't fail to investigate or prosecute if there are no laws prohibiting the conduct and no regulators or cops to keep the game honest, can it?
Bonobo
(29,257 posts)What did THAT do to the beautiful US of A and its good name and reputation (to the extent that such a thing still exists at all).
MrMickeysMom
(20,453 posts)Absolutely right, too.
What was it in 1992 that was the most important issue politically? Why, campaign finance reform, of course!
If we had decided to put an end to Reagan's Ruling Class of people leaving office while people who ran for office actually gave a shit about the office and our three branches of federal government, we'd have put an end to what became K Street and everything that Wall Street begat... certainly corporatism. This is everything to do with the state of affairs today. We lost the ability to perp walk the banksters, didn't we? Or... DID WE?
And, we didn't listen to (rest his soul) Paul Tsongas. We didn't care if the kind of government was the best that could be bought. It represents no real persons, but the "personhoods" manipulating all those strings above all the marionettes on both sides of the isle.
Blame the elected officials right after you get through blaming all of us. That's gonna task. Putting up a mirror and saying, "we should have known".
malaise
(268,717 posts)but the Judicial Branch of government is just as complicit.
freshwest
(53,661 posts)One of William Black's contentions was that there were many more people at the agencies for prosecution and it allowed him to get his job done. Reagan and every Republican since have hollowed out those agencies, but they were still powerful even at that time. And Reagan still had to deal with a mostly Democratic Congress and Senate that opposed him. That has not been the case since the early 1990s.
Donald Ian Rankin
(13,598 posts)The economic crisis was *not*, in the main, caused by individuals breaking the law, or even breaking the rules.
It happened because the rules were relaxed to the point that banks taking excessive risks was entirely legitimate.
If you can find *specific* examples of individuals who have broken laws, by all means prosecute them. But calling for "bankers" to be prosecuted is both unjust and foolish.
Taitertots
(7,745 posts)By actively misrepresenting what they knew or should have known about off the balance sheet operations and mortgage backed security risks. Lying to other people with the intention of taking their money is absolutely illegal.
"If you can find *specific* examples of individuals who have broken laws, by all means prosecute them. But calling for "bankers" to be prosecuted is both unjust and foolish."
Fabrice Tourre, wow that didn't take any effort.
getdown
(525 posts)um no
Donald Ian Rankin
(13,598 posts)getdown
(525 posts)"not entirely illegal"
Donald Ian Rankin
(13,598 posts)getdown
(525 posts)they should have conscience...
and regulation
Donald Ian Rankin
(13,598 posts)getdown
(525 posts)even if you like their faces
Donald Ian Rankin
(13,598 posts)getdown
(525 posts)Donald Ian Rankin
(13,598 posts)getdown
(525 posts)and you're pretending i didn't, to your specifications. read and learn
fascisthunter
(29,381 posts)pretty incredible folks would so openly support actions that create a corrupt system.
getdown
(525 posts)put in charge to fix the financial crisis by the Obama admin?
treestar
(82,383 posts)That someone committed an act of theft for which there is enough evidence to try them, and they are not.
How do we know that this is so?
We need at least a name in order to consider prosecuting someone.
JackRiddler
(24,979 posts)These scams relied on diffusion of responsibility. Participants expect to get away with it because they're each doing only one part of it that can be passed off as innocent in the process, long as they can pretend they don't know about the other stages: only selling mortgages, only packaging them, only rating the securities, only selling the securities, only betting against the securities. Where you've seen settlements for the basic scam of selling off toxic assets and betting against them at the same time (as with Magnetar, Paulson/Goldman, and the current Citi settlement delayed by the courageous Judge Rakoff) is precisely where they had enough evidence to proceed with criminal investigation. The SEC is complicit in helping the worst criminals escape.
At this point what's essential in keeping the rage alive over this criminality, even if the criminals get away with their past crimes, they're still in the same offices committing their current crimes, and setting up the next crash. It's guaranteed: the big banks are still insolvent, holding much the same toxic assets and living as zombies thanks to "mark-to-model" and unlimited Fed loans at near-zero percent. This edifice will tumble, almost did when Greece came close to a disorderly default. It's far too unstable. When the next crash hits, from whatever direction, it's essential then that the people not passively accept (even as they grumble) the next rescue effort. That's when everyone has to hit the streets and demand the liquidation of the zombie banks, debt cancellations, public banking and a new financial beginning.
Fire Walk With Me
(38,893 posts)blindpig
(11,292 posts)The politicians are but their servants, such is unavoidable when one class has all of the real power.