August 31st, 2014
in Op Ed
by William K. Black, New Economic Perspectives
This is my third installment in my series of columns discussing the WSJ's rant against even feeble actions by Attorney General Holder to hold the banks and (a pittance of banksters) even slightly accountable for leading the three epidemics of mortgage fraud that caused the financial crisis and the Great Recession. The WSJ is enraged not at how feeble Holder's efforts have been, but that Holder dared to take any action against the elite frauds. The WSJ explicitly frames the question of accountability for the banks and banksters as a left v. right divide. Only the "populist left" is in favor of not granting the banks and banksters immunity from the criminal and civil laws for leading the most destructive fraud epidemics in history.
It is hard to imagine a more damning indictment of the "right" (indeed, the right, the middle, and non-progressive left) than that issued (unthinkingly) by the WSJ, the supposed champion of "conservative" values (like accountability). If the progressive left were the only group in America dedicated to a single rule of law for the rich and powerful and the weak, then our Nation would have lost its way.
I disagree with the WSJ. I believe that there is immense support among Americans of every political belief that it is critical for our Nation's financial, political, and moral health that the banksters be held accountable for the crimes that made them wealthy by blowing up the global financial system. I have seen first-hand during the savings and loan debacle how prosecuting elite financial frauds puts facts in the public record that lead to a consensus among the American people on the vital need to prosecute elite banksters. Prosecuting the banksters would unite, not divide, Americans.
This issue has nothing to do with "pitchforks" (President Obama's blood libel of the American people as a crazed, murderous mob). It has everything to do with justice and restoring the rule of law in our Nation.
Prosecuting dishonest banks and bankers is not hostile to the financial industry. The opposite is true. When the officers that lead control frauds are not prosecuted their frauds often create a "Gresham's" dynamic in which bad ethics drives good ethics out of the markets - and the professions that are supposed to serve the public in many public, nonprofit, and for-profit endeavors. Only effective regulation and prosecution can defeat such a Gresham's dynamic. Effective regulation and prosecutions are essential to making it possible for honest businesses to succeed and "markets" to cease being not simply "inefficient" but cease being part of the fraud scheme.
The WSJ, which has no problem when huge corporations and vulture hedge funds threaten so sue governments and hold hostage their ability to fund programs vital to keeping their citizens alive, healthy, and educated thinks it is unconscionable for governments to sue the most powerful corporations in the world. Suits by the government, however, constitute "extortion."
The "extortion" is supposedly an effort to "appease" the "populist left."
The BofA extortion continues the Administration's second-term campaign to appease its populist left by punishing banks one by one. The left is upset that Mr. Holder couldn't find enough bankers to indict for actual crimes, despite five years of tireless effort.
The WSJ, of course, has no clue about the progressive left because that group exists in their imagination solely as a caricature invented by Murdoch that WSJ ranters must accept as gospel if they wish to stay employed. The WSJ assumes that the Democratic Party is run like the Republican Party, with which is intimately familiar. The Republican Party leadership largely shares the views of the Party's base and gives slavish attention to its existing base rather than voters it might add at the margin (such as Latinos).
The Democratic Party leadership is overwhelmingly neo-liberal, particularly in its support for big finance. The Democratic Party's base is primarily progressive - the Party voters most likely to favor the candidate of their Party and far more likely to turn out and vote for Democratic Party candidates. The Democratic Party's leadership rolls their eyes at the Party's progressive base's policy views on big finance. The leadership understands that even when they treated the Party's progressive base with contempt the base will continue to turn out and be the most reliable voters for the Party's candidates.
The Democratic Party is so different than the Republican Party that the "handlers" for Democratic Party candidates for national office advise them to look for and exploit symbolic opportunities to demonstrate that they do not share the views of the base. This typically is done through denouncing the views or actions of a well-known member of the base. The bottom line is that President Obama never seeks to "appease" the progressive left. He loves to publicly flog his base.
The second point is that the Democratic base does not support Holder's (in)action in refusing to prosecute the (financial) base of the neo-liberals leaders of the Democratic Party - the banksters who control the Nation's largest banks. Obama would not have been chosen as the Party's candidate in 2008 had he not beaten Hilary Clinton (a member of a political partnership that was infamous among the base for its alliance with big finance) in fundraising from Wall Street. Obama's Wall Street fundraising success, at a time when he was still an unknown junior Senator engaged in a seemingly impossible nomination battle with Ms. Clinton, owes a great deal to the efforts of Jamie Dimon, JPMorgan's CEO. Holder's abject refusal to prosecute even a single elite banker for leading the three mortgage fraud epidemics that caused the financial crisis disgusts the Party's base. Holder gets credit among neo-liberal Party leaders for refusing to prosecute the elite Wall Street criminals who grew wealthy by leading the three fraud epidemics that caused the crisis, but he is viewed with contempt by the Party's base for his refusal to restore the rule of law. Far from "appeasing" the "left," Holder disgusts the Democratic Party's base.
So, Holder isn't engaged in "extortion" or "appeasement." Holder continues to refuse to even conduct a serious criminal investigation of the elite bankers and their far from elite counterparts running the mortgage banks. The WSJ's efforts to paint the hapless Holder as a zealot who has undertaken the labors of Hercules ("five years of tireless effort") in pursuit of his once and future elite banking clients are hilarious. Next we will learn that Larry Summers, Bob Rubin, and Timothy Geithner were the scourges of Wall Street. Sorry, nobody, and that includes Republican flacks, thinks that Holder is anything but an ambitious empty suit when it comes to (not) prosecuting bankers.
In the next installment I will show that the U.S. government has found copious evidence of crimes by the elite and non-elite banksters. Holder refuses to prosecute despite the evidence.