Why Isn’t Wall Street in Jail?
An explosive new essay by Matt Taibbi details the egregious wrongdoings of the major Wall Street banks, and how they never ever seem to face the consequences. We are not talking just about greed here, but actual crimes – cooking the books, insider trading, blatant lying, cheating investors. You name did, they did it, and on a huge scale. And it went unpunished. In fact, the political cloak of protection surrounding these bankers made them almost invincible. Any foolhardy junior investigator who had the peculiar idea of actually doing his job would end up marginalized, or (as happened), fired. As Taibbi puts it, “financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them”.
This is telling on so many levels. It points to the danger of political capture by the financial sector, a problem fingered early on by Pope Pius XI in the 1930s. It points to a culture of greed that poisons the social, economic, and juridical order. It points to a violation of subsidiarity, where excessively large financial institutions use their muscle to trample upon human dignity. It points to a growing gulf between the haves and have-nots that corrodes society. It points to the domination of the economy by an elite cadre of aggressive gamblers with no economic or social value added. It points to the biased nature of the law, which breaks the back of the poor while winking at the rich. Taibbi says it best:
“Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would “demean the seriousness” of the offenses.
So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It’s not a crime. Prison is too harsh. Get them to say they’re sorry, and move on. Oh, wait — let’s not even make them say they’re sorry. That’s too mean; let’s just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don’t make them pay it out of their own pockets, and don’t ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What’s next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?”
In Ireland, the crooked bankers that brought down the economy are in hiding. In the United States, they are being welcomed into the halls of power, given jobs in the administration, and toasted at elite gatherings like Davos. Why is this happening?
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Wait, are you serious? Read a little Marx and Lenin. That’ll explain everything.
The more interesting question is why conservative, liberal, and moderate pundits who would otherwise have the police thump on evil-doers lie down and say nothing about such epically destructive white collar crime? Why is it that normally Christian people can scapegoat people risking their lives to cross the border to wash dishes, people who sell illegal substances to pay the rent, and a mother who lies on a document, yet when it comes to the rich and the powerful, those who have the ability to hurt entire countries with a few clicks of their mouse, they pretend that forgiving them is virtuous, or at the very least look the other way? Why isn’t the Catholic blogosphere up in arms about mass theft and fraud the scale of which has not yet been topped by man? I have some theories:
1. Reverse envy: These Catholic and conservative bloggers would love to get away with these crimes if they could. All their valiant defenses of capitalism are in the hope that some of the crumbs of robber baron capital will fall into their laps, and that from there they can live a reasonably comfortable life. Don’t bite the hand that feeds you, buys your books, and potentially reads your website. The best way they cover up this ideology is the line: “don’t punish success”. Which really means: “I’m a winner like them, maybe not as rich or powerful, but I fantasize that I am, and no, don’t try to pull me back to reality…” This is basically why Fox News makes a jillion dollars a year.
Fear: The way Fox News makes its other jillion dollars. The way conspiracy theories work is that the most obvious answers are never the right ones. When you ask, “why have we no money?”, and then find all the people with the money (much of it yours), you have been trained by the dominant ideology to think: “Nah, it can’t be because of the guy who has all the money and the power. The fault must lie with the Mexican washing my dishes. Get him!” Or as another person put it: a Wall Street banker, a middle class business owner, and a union member were sitting around the table in front of a pie. The banker cuts the pie in ten pieces, takes nine of them, looks at the business owner, and say, “Careful, that trade unionist wants your piece of the pie.” Fear: it works, and it makes you stupid, even when you feel smart.
Genuine religious feeling: Don’t be covetous. Thou shalt not covet thy neighbors ox, nor his 401k, nor his seven figure bonus, nor his yacht, etc. The world is the world, and we must fight against it, the flesh, and the devil. I believe this only from people who have taken a vow of poverty. If they are living in a half million dollar home, drive a functioning car, and ever whine about their taxes, I regard them as being insincere. Besides, this is not a question of some having a little more: it ends up being a question of those who end up having nothing. What’s the point of reverencing the poor if all you do is treat them like sh*t, and feel justified in doing so?
Personally, I think things would change if we start portraying white collar crime in another way, sort of like this.
Really, last time I checked, the Gospel was all about absolving the sins of the rich and powerful. Or at least I think that’s what it was about. I’m Catholic, so the Bible isn’t my strong suit.
“…financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them”.
“The math makes sense only because the politics are so obvious.”
This of course makes sense given how much Wall Street contributed to Obama’s 2008 campaign:
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=n00009638
Correct, and after the meager attempts at regulation contained in Dodd-Frank, Wall Street money is now almost completely directed at Republicans, who are are trying to do their bidding at every turn. What is the solution to this?
More money is being funneled now to Repubs. That is till the next election when they gauge who is likely to win and, if that be Obama, they will funnel more to him. But the problem is the govt. now and who helped elect the current administration but those who are now being helped by it.
So how do we limit this relationship? More subsidiarity. That includes less govt. such as Fannie Mae and Freddie Mac and people like Dodd-Frank who opposed regulation of this, govt. example of non-subsidiarity.
Oh, I agree it is an issue of subsidiarity. But subsidiarity is completely (and sometimes wilfully) misunderstood by the the American liberals who dominate the tea party and the Republican party (plus some Catholic groups like the Thomas Peters Short Pants Magisterium). The real violation of subsidiarity comes from the private sector. It comes from institutions like Goldman Sachs, JP Morgan Chase, Bank of America, and Morgan Stanley – institutions that use their enormous size to capture the political system and extort the taxpayer.
Fix what’s wrong with Fannie and Freddie? Sure, why not? The cult of greed and corruption touched them too. But these entities did not cause the crisis. They are only a small part of a larger problem, a problem that is predominantly a problem of the private financial sector.
Would one of my conservative friends like to defend the GOP’s support for federal pre-emption of banking regulation?
“It comes from institutions like Goldman Sachs, JP Morgan Chase, Bank of America, and Morgan Stanley…”
Exactly, the institutions that primarily donated to Obama, and Democrats, in the last elections.
Not the last elections. In 2008, perhaps, but in 2010 the Wall Street money went straight to the GOP, which is now intent on rolling back the minimal regulations of Dodd-Frank.
But I ask again – what do you think should be done about this? I believe the banks should be broken up, regulated like utilities, and I also believe that politicians should be forbidden to accept all corporate cash.
Yes, I misspoke. In 2010 it was Repubs. In 2008 it was defintely, not perhaps, the Dems including Obama.
I don’t have a problem with politicians being forbidden to accept corporate and union cash. I think making banks more locally based would be fine. I think regulating more won’t work and will expand an already dysfunctional federal regulatory system that can’t apply the laws it has now effectively. And of course shut down Fannie and Freddie and other such programs that seek to socially engineer the housing market.
Financial oligopolies always give a lot to anyone who appears headed for victory. They want to co-opt all victors. And they have a better track record at that than either party.
Most large groups give though not necessarily those who are headed towards victory. I think companies do so because they seek access to maintain their position via political efforts. The hope being that the politician will reward their contribution.
Of course politicians accept this money as it is a means for them to maintain their political position. Then they generally are obliged at least to listen, if not give in to the contributor.
This becomes the problem with Public sector unions. Those who seek to maintain their position, use dues to influence elections. Those elected, in turn reward those who contributed to their election. Of course when it comes to unions, the the one the union elected is also the “employer.” But the money isn’t. That belongs to the people who aren’t necessarily getting the pay and benefits.
You knew change would not occur when Obama had essentially the same financial people as Bush had. Not good. It really shows that both Dems and Repubs are the problem. We need a radical change in this country.
The answer is simple: Because these bankers have a hand in over 70% of the GDP. These people essentially control the economic destiny of the United States. Lock these people up and you’re losing some of the sharpest financial minds that drive the American economy. You can be above the law when the country depends on you.
Of course, it’s a complete travesty that this is the way it is, but it’s hardly surprising that they got off with a slap on the wrist.
“Lock these people up and you’re losing some of the sharpest financial minds that drive the American economy. You can be above the law when the country depends on you.”
That’s a nice shot of Kool-Aid. I’m not drinking. Anybody else?