PBS Frontline: The Untouchables
Interesting Frontline investigation into how Wall Street has escaped any criminal prosecutions related to the housing crisis. In addition to some completely ludicrous assertions by Lanny Breuer, there are also some nice interviews with former senator Ted Kaufman, and Jeff Connaughton. Both Kaufman and Connaughton left Washington when it became blatantly clear that the Justice Department had no real interest in going after the executives on Wall Street who enriched themselves in this massive fraud fest. As professor William Black will attest, the resources directed at the supposed investigative effort paint a clear picture of priorities. Connaughton has since gone on to write a book about his experiences: The Payoff – Why Wall Street Always Wins. As Connaughton explains in no uncertain terms, lady justice put her blinders on to protect the elites running show in Washington and New York. The video below contains an informative interview with William Black explaining why the crimes have gone unpunished.
As highlighted in the Fronline piece there were recent comments by Breuer which provide insight into the protection scheme offered to big finance. It’s all about protecting the BLS employment numbers you know. This is an excerpt from comments Breuer made in September 2012 when addressing the NY Bar.
“To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct. I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake. And, in some cases, the health of an industry or the markets are a real factor. Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.”
The remarks by Breuer, while surprising, corroborate the themes expoused by other knowledgable insiders like Black, Connaughton, and Neil Barofsky who have shown that too-big-to-fail/too-big-to-jail is indeed the reality in our current regulatory reality. Banks and their executives are looting the Treasury with impunity, and they know it. Earlier this month we learned of yet another settlement with banks, this time $8.5 billion for years of wide-scale foreclosure abuses, which as Yves Smith clearly discredited as a widespread coverup. Her interviews with contract employees involved in the Bank of America reviews show that the entire foreclosure review effort was a sham. Moreover, the supposed landmark settlements which the regulators like Lanny tout as “tough” on the banks they settled with are being deducted by the same firms from their tax bills as a cost of doing business. I’m not sure how much more evidence we need to realize this “tough on fraud” meme from Wall Street’s enablers is a comical farce.
Glenn Greenwald, a former constitutional lawyer, makes no bones about it either. Having seen the Frontline segment as well, he details How The Obama Administration Protected Wall Street From Prosecutions. Greenwald notes that it has been Obama officials who have both shielded and feted these corporate oligarchs. Greenwald knows more than most about America’s two-tiered justice system, having written a book about it With Liberty and Justice for Some: How the Law is Used to Destroy Equality and Protect the Powerful.
Greenwald remarks on two important issues in the Frontline story. Number one is that the investigation revealed widespread support for prosecutions by the American public. The time was ripe for reform, as bankers and their lawyers even expected investigations and at least some prosecutions, yet nothing happened. Instead, Obama and team Geithner made a calculated decision to throw money at the crooks instead. I know it sounds extremely painful, doesn’t it. Those poor bankers must have been quaking in their boots when they started tapping the Fed discount window for $trillions in stimulus to rebuild the same banks they blew up. The second question posed by Greenwald is why there hasn’t been more social unrest. For me at least, that seems to be a matter of if; not when. We’ve built a system of bread and circuses here in the U.S. where the threshold of pain has been slow to manifest itself as Americans are falling off the highest perch. The fact remains however, that there will come a point at which more food stamps and reality TV won’t be enough to suppress a growing hatred for the stench that surrounds the Wall Street/Washington elite.
The Frontline story showed what many people are coming to understand; There is gross inequity in the U.S. justice system. As Harvard law professor Larry Lessig put it, “we live in a world where the architects of the financial crisis regularly dine at the White House.” This is where crony capitalism lives, and currently thrives. Justice Louis D. Brandeis understood our current predicament all too well:
“The government is the potent omnipresent teacher. For good or ill it teaches the whole people by its example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy. To declare that the end justifies the means — to declare that the government may commit crimes — would bring terrible retribution.”
Bill Black explains why there have been no prosecutions….
Remember Lehman? Yes, the Lehman that went bankrupt? Anton Valukas and others looked into Repo 105 violations and a host of other issues. Despite mounds of evidence pointing to fraud (with intent according to those interviewed here) there have still been no criminal prosecutions of Lehman executives.
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