Concentration of wealth yields concentration of political power. And concentration of political power gives rise to legislation that increases and accelerates the cycle. The legislation, essentially bipartisan, drives new fiscal policies and tax changes, as well as the rules of corporate governance and deregulation. – Noam Chomsky
Recent revelations by the Federal Reserve show that the country’s five biggest banks — JP Morgan, Bank of America, Citigroup, Goldman Sachs and Wells Fargo — held 8.5 trillion dollars in assets at the end of 2011, which amounts to an astonishing 56% of the American economy. That’s an increase of 13% relative to the economy since 2008, when their fraudulent activity finally reached its logical conclusion and nearly destroyed the world economy. But, in America, those who break the law — whether it be the torturers who now profit off their sadism, telecommunication companies that allowed the government to illegally spy on their customers, or government figures who sponsor terror — get off with slaps on the wrists or no punishment at all, as long as they are parts of the power system. That’s called “being responsible” in American NewSpeak. Other variations include “look forward, not back” and calls for “unity.” In other-words, key Obama slogans.
A Voice for the 99 Percent?
Obama made some headlines last year when he referred to Wall Street executives as “fat cats.” An encouraging sign for those who believe politicians are being honest when they speak in public. For those of us who know that gullible isn’t written on the ceiling, actions speak much louder than words. A look at his staffing decisions sheds some useful light:
His choice for attorney general, Eric Holder, is a former Clinton Department of Justice official who left office and joined the White-Collar Crime Defense Unit at the Washington law office Convington and Burling He made millions defending corporate clients like Goldman, JP Morgan Chase, Citigroup, and so on. Now, he is back at the Justice Department. Lanny Breuer, head of the “criminal” division of the Justice Department, was also a major player at Covington. John Garland, deputy chief of staff, already returned to Covington in 2010, as did Breuer’s chief of staff, Steven Faggell. According to Covington’s website, “it is widely recognized not only for litigating and winning high-profile criminal cases, but also for devising creative legal strategies to resolve cases long before they draw public scrutiny.” Evidently.
Timothy Geithner, perhaps the most important economic figure in the country, was tipped to be Treasury Secretary before Obama was even elected. Obama’s own website celebrates Geithner’s previous role as the President of the Federal Reserve Bank of New York, where “he played a key role in formulating the nation’s monetary policy.” Though most mainstream economists have done their best to forget their crucial role in promoting their version of fantasyland market-knows-best capitalism, it seems that Obama’s team has chosen to celebrate it.
Other appointments included Budget Director Peter Orzag, who now works for Citigroup, His current chief of staff, Jacob Lew, ran private equity and hedge fund departments at (wait for it) Citigroup. The Chief of Staff before that? That would be Bill Daley, professional lobbyist for JP Morgan. His first was Rahm Emmanuel, who worked at investment bank Wassertein and Company. His “rare new best friend’ according to the New York Times is Robert Wolf, head of the US department of the Swiss Bank UPS. Jamie Dimon, head of JP Morgan, was a big Obama supporter and campaign contributor.
This is how you raise 700 million to 1 billion dollars. This is what we call an “election” in this country — a choice between two business parties that use cosmetic issues to mobilize constituencies that would normally not vote against their interests.Republicans may be an off-the-wall, evolution-and-global-warming-denying, woman-hating and strictly corporate party, but the Democrats are right behind on economic and “national security” policies.Neither represent the public interest, which is why only 17% of the country believes the Federal Government has the “consent of the governed.”76% of Americans think the US economy “favors a small portion of the rich” while confidence in Congress is a pathetic 17 percent. Those are incredible numbers.
Is the American public wrong? Not really. There have been no executives charged with any wrongdoing, even though research has shown pervasive fraud:
By 2006, roughly one-half of the loans called “subprime” by the lenders were also liar’s loans. That means that by 2006 roughly one-third of all mortgage loans made that year were liar’s loans. Liar’s loans grew massively between 2003 and 2006. The growth rate appears in that period appears to be over 500%. Liar’s loans hyper-inflated the housing bubble.
Reuters reported in December that under Holder and Breuer, the Justice Department hasn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.
The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.
The Justice Department’s financial fraud prosecutions are at 20 year lows. In the Savings & Loan Crisis, a Republican President, George H.W. Bush, assigned over 1,000 FBI agents to investigate fraudulent activity. As a result, over 1,000 felony prosecutions were levied on Savings and Loan executives. That crisis was a fraction of the current one, yet we can’t even get a real investigation. The new “mortgage task force” is hopelessly understaffed and has made no progress. Dodd-Frank, the “financial reform law” has been gutted, the big banks have not been broken up, and most of the remaining provisions in Dodd-Frank have yet to be enacted by the Securities and Exchange commission.
In case you were wondering just what the Justice Department has been doing, they’ve been doing what corrupt power systems do best: vigorously prosecuting and harassing government whistleblowers who expose corruption and malfeasance. We can all be happy they are representing the public interest.
A Way Forward?
Unfortunately, there is no easy way to tackle the incredible political power held by the large financial instituions Since the 1970s and the start of the “financialization” of the economy, they have used their lobbying power to break regulation installed after the last major banking collapse–the Great Depression. An obvious example would be the repeal of Glass-Steggeall , but other bank friendly regulation, led by both Democrats and Republicans, like the Commodity Futures Modernization Act, was pivotal in creating the Wall Street casino that ravaged the economy. They’ve been remarkably successful, and they continue to be.
One thing is for sure: the big banks have to be broken up. This was true in 2009 and its true now. But, we live in a true nanny-state–for the giant institutions that scream for government help after they destroy themselves with terrible loans and risky behavior. The IMF agrees: propping up big, insolvent banks only deepens a crisis. Unfortunately, “our” government protects the giant institutions: as Barack Obama told the chief executives of the 13 largest banks, he is the only one between them and “the pitchforks.” Of course, the pitchforks are the “people.” That’s the American version of democracy: where the people are contained and hoarded away from those who hold the financial and political power. Thankfully, Occupy Wall Street has made serious progress at shedding some light on the corruption and power of Wall Street. Unsurprisingly, however, they have been criticized for having no direction and other nonsense. It’s pretty clear what their message is. They are occupying Wall Street, after all. Meanwhile, offshoots of Occupy have offered serious policy proposals aimed at minimizing the power of the financial institutions, but they’ve been largely ignored. Can Occupy Wall Street be our Robin Hood? That remains to be seen, but it is the closest thing we have so far. Right now, they are just our pitchforks.