If you want to know why America’s in trouble, consider this: a homeless man named George Taylor just got released after serving 13 years in prison for stealing a loaf of bread… but not one of the financial gangsters who ran the Wall St. Banks has gone to jail for lying, stealing, fraud and ruining our economy. In modern America, sad to say, the big shots on top just aren’t accountable anymore. Nobody pays the price for ruining the country and our economy. Not even a wrist slap.
So I thought I’d benefit from venting a bit.
Of all the events of the post-9/11 era, there are many things to be frustrated about. Over 2,000 dead in Iraq based on deceptive and false, likely purposeful, intelligence. Over $1 Trillion in spending borrowed money for wars. Over 10 years to get Bin Laden after he was allowed to escape, likely hiding with the knowledge of at least some Pakistani government officials, a country we are giving Billions to. A “Patriot Act” that infringed on basic civil liberties of U.S. Citizens more than any time since the Alien & Sedition Acts of 1798. Types of torture legally justified, using the same methods that we prosecuted and put to death Japanese leaders for after WWII. The list can get pretty long.
But one of those at the top of the list has to be the complete and total lack of individual accountability for the financial crisis. I promise I will attempt to avoid profanity.
Current reports are that no one in anything approaching a top CEO, company President, etc will be prosecuted. “Too Big To Jail” says Ben Hallman is a particularly disgusting piece. It’s impossible to contain my frustration over what has occurred, from the total foreseeable devastation wrought upon our country due to unregulated and unchecked greed, the job losses, and generational damage they caused. It seems the only thing those responsible have received is higher pay, and not even a slap on the wrist. Indeed, the SEC reports $2.19 Billion in fine for wrongdoing by banks during the crisis. Those same financial institutions paid $200 Billion in employee bonus since during the time span of that wrongdoing and made over $5.5 Billion in net profits even during 2008, their worst performance year of the crisis.
I began to practice law shortly prior to the S&L crisis, and I was personally involved as a baby-lawyer (basically my role was carrying file boxes) as my firm represented people prosecuted for even the slightest reason. Even if someone did not financially benefit personally when the crisis occurred, prosecutors looked for the slightest reason to obtain jail time, even calling minor misstatements perjury. People brought down ranged from Charles Keating and Speaker Jim Wright all the way down to minor bank officers. Everyone was scrutinized.
My point is not to re-litigate or second guess those prosecutions, or urge there were too many or too few. All I want to state is the obvious fact that Bush #1 was much more aggressive in going after the bankers that costs taxpayers and the economy so much, while the Obama administration is doing next to nothing. A comparison to what has happened now is warranted.
The S&L crisis ended up costing about $124 Billion in direct tax dollar expenditures to clean up. The Wall Street crisis of 2008 started with a blank check of over $700 Billion, then escalated to costs mostly hidden even to this day from the public.
Something must be pointed out about that initial $700 Billion bailout. Congress voted to reject the bailout, which had been thrown together in short order. Who can get the vision of Hank Paulsen on his knees before Nancy Pelosi out of their brain? Then the following business day Wall Street jerked Congress’ lease, with the DOW dropping like a rock. I for one have always considered that drop somewhat manipulated by Wall Street to put a gun to Congress’s head. “Bail us out or we’ll tank the markets.”
Regardless whether my conspiracy beliefs are founded, the cost of years of Wall Street ineptitude and greed is now staggering. Estimates include $2.6 Trillion in lost GDP. 12.5 million people thrown off of work. $23 Trillion in government programs and bailout. $3.4 Trillion is stock market loses, $3.4 Trillion just in retirement account loses. 46.2 million Americans in poverty, the largest number in the 52 year history of published poverty estimates.
But the cost to the individuals who played a central part in the mess? Net gains across the board.
Here’s an example of what you could do in the current crisis, and what you could receive:
Angelo Mozilo – head of Countrywide Financial – a chief architect of the entire mess
Countrywide paid $8.7 Billion in a predatory lending settlement.
Mozilo? – $132 million in pay in 2007. He paid $67 million SEC settlement, a net gain of $65 million for his role. Plus, “Bank of America picked up most of the tab” of the fine, so Mozilo truly didn’t even receive a slap on the hand, but a pat on his wallet. Of course Mozilo was allowed to deny all wrongdoing and not required to admit anything amiss. Mozilo got as close to a jail cell as I have to the moon.
After the implosion, Mozilo declares that “Countrywide was one of the greatest companies in the history of this country.” Take that Ford, Apple, IBM, GE, et al.
John Corzine’s conduct has caused Forbes to label him “Criminal or Just Plain Old Fashioned Stupid”. Since his net worth is stated to be $300 million, quite a bit less than the missing $1.6 Billion in client money he left MSGlobal with. No prosecution. I wish I could be so stupid. When I misplace my car keys I suffer bigger consequences.
Let’s now Google “JPMorgan Chase & Co.”
Jamie Dimon – the supposed guru of finance, CEO and President of Chase
Up to $9 Billion lost by Chase in trades by the “London Whale” using methods supposedly outlawed by Dodd-Frank. (Don’t Google “London Whale” or you might hit some niche porn specializing in English fat guys – different strokes for different folks, I guess)
Fines against the Dimon led JPMorgan Chase?
$154 million settlement for “allegedly” misleading investors in mortgage-securities deal. No admission of fault. Just my pleading “no contest” to that traffic ticket I guess.
$228 million to settle charges that JPMorgan Chase rigged 100 municipal bond transactions. I’m thinking that means screwing taxpayers. Bond rigging? It’s just so quaint; just so Gilded Age?
$1.7 million fine from FINRA for putting investors in unsuitable investments.
$275 million in fines for mortgage service issues, including Robo-Signing. Evidently false signing of an affidavit by a computer to foreclose on someone’s home is not felony perjury like it would be for the rest of us or all those guys during the S&L crisis. Oh, I forgot, they didn’t have many computers back then.
$75 million fine for bribery of Alabama state officials to win contracts and fees. Huh, you’d have thought it would be New Jersey or Mississippi. Roll Tide Roll. Of course, again, no admission of wrongdoing. $3.6 Billion in profits that quarter for the bank; that $75 million must have really hurt.
$88.3 million payout to U.S. Treasury for breaking U.S. embargo laws and trade sanctions between 2005 and 2011, including transactions with Cuba, Iran and Sudan. (Lest we single out Chase, Standard Chartered of England paid $340 million for “alleged” money laundering of $250 Billion for Iran.) “Alleged” my ass! (There it is, and I promised I would not cuss.)
Back to Dimon and Co – On at least 10 separate occasions Chase executed Wash Trades in U.S. crude oil and gasoline futures, i.e. banned selling to yourself, which causes irregularities in what real trades should be. Wonder if that effected the price we paid at the pump at all? The penalty – $30,000 fine. That’s 1/1,000,000th of Chase’s employee compensation. Ouch again.
Dimon says “we were one of the better actors in this [subprime mortgage] situation”, and remarkably that is probably true. Dimon also took home $23 million in compensation in 2011. He also serves on the on the Board of Directors of the Federal Reserve Bank of New York, one of Chase’s government oversight and regulatory agencies. Evidently the Chair of the Board says it’s all swell with him. (Insert appropriate rant here)
But, I’m tired of this list, as I’m only on page 2 of my Google search and I have to find a way to pay my Sept 15th tax estimate to help pay for all this bailout, plus two kid’s college and third’s car next month when she turns 16.
You can do similar research on Citigroup, Wells Fargo, Goldman, et al, or read the other hundreds of pages on Chase – if your stomach can stand it.
The bottom line is that you will see that you can’t find someone high up when things went bad, or low down (except for some Lehman underlings) who did not net gain, or who are not still on top of the world.
The list does not stop at the bankers. Larry Summer, one of the architects along with Phil Gramm and Robert Rubin for the repeal of Glass-Steagall in 1999, including the steamrolling of CTFC Chair Brooksley Born to eliminate regulations on derivatives, was put in charge of the clean up. If you haven’t watch the Frontline piece called “The Warning” about what Summers, Rubin and Gramm did to Brooksley Born, you REALLY should. If it won’t make you throw a book, cup, brick, cat, etc at your TV set, nothing will.
These 1999 bi-partison repeal of regulation with Republicans controlling Congress and Clinton in the White House set up the framework that allowed the bankers the unbridled free market action that imploded the economy.
There is blame to go around, but that 1999 action set the stage for all that was to follow. That’s one reason I almost choked on my popcorn when Bill Clinton said during his DNC speech, “They [the Republicans] want to get rid of those pesky financial regulations designed to prevent another crash and prohibit federal bailouts.” Of course, we would not have needed Dobb-Frank if Clinton and Co had not helped Gramm repeal all of our Depression-era protections. Great speech otherwise. Better than the Republicans who are owned by Wall Street. Luckily the Democrats are only rented? Gramm went on to work at UBS as an adviser, one of the biggest players in the derivative market that he helped unleash on the world.
His wife, Wendy Gramm, had deregulated energy futures while she headed CTFC (before Born arrived to do the actual job of protecting consumers) and while her husband was championing the same thing as a U.S. Senator. Of course the specific beneficiary was “Kenny Boy” Lay and Enron. Mission Accomplished, six days after providing for the Enron exemption, Wendy resigned from her regulator role. Five weeks later she went to work for Enron. The NYTimes did a piece called “The Reckoning”, which is about as good and informative as PBS “The Warning” piece, and which tells it better than I could ever. Plus I’m getting off topic as usual.
Back to Larry Summers. He was brought in by Obama to clean up the mess, having been one of those who lit the fuse on the bomb back in 1999. Guess who Summers blamed for the crisis? Anyone who answers “not Larry Summers” wins the prize. And Summers could not suggest reimplementation of Glass-Steagall and the other post-Depression regulations he helped repealed in 1999 because that would be admitted he’d made a mistake; and them financial genius folk don’t make no mistakes.
Summers couldn’t listen to Paul Volcker about breaking up the “too big to fail” banks and imposing real re-regulation for the same reasons.
Summer is said to be this super brilliant guy, and now back at Harvard, I assume teaching future M.B.A.’s about the rewards awaiting them on Wall Street. Please tell my kids how smart Larry is as they graduate high school and college into a country whose economy and banking system have been destroyed.
Then there is unregulated free market and Ayn Rand lover Maestro Alan Greenspan, at which point I” stop being I get cynical, develop an ulcer, or cuss again.
Seriously, watch The Warning and read The Reckoning. If every American did we’d increase jobs several million manufacturing pitchforks for use on the whole lot of them in D.C. and New York City.
Oh, I forgot the other side of the story. Gregory Taylor got released from prison after serving 13 years for trying to steal a loaf of bread. He was hungry and originally got 25 years to do.
Thank God Jamie Dimon never gets hungry.