A scathing new report on enforcement of Wall Street crime says they're not even trying
Mike Lux wrote this piece yesterday, telling people about a new report on Wall Street. It's not pretty:
There is a new report out this morning once again reminding us of the greatest disappointment progressives have in the Obama administration: the lack of toughness in regards to Wall Street. The report, issued by the Campaign for a Fair Settlement (full disclosure: this is a coalition I have helped in various ways since their founding), is probably the most harshly critical analysis yet by a coalition aligned with traditional progressive Democratic groups. The report opens with this damning list of hard-to-dispute facts, and then just goes on from there:
• The Administration has yet to prosecute a single major bank or top level executive for the widespread fraud leading to the system’s collapse.
• Civil penalties have similarly failed to be imposed on top executives, and fines levied against the banks have been so small as to amount to a minor cost of doing business.
• Settlements have left the banks themselves in control of providing relief and restitution to homeowners, giving them credit for cleaning up their balance sheets more than preventing foreclosures.
• Far from showing any signs of having been chastened, the biggest banks are now even bigger, and have successfully slowed down or weakened key elements of the financial reform bills passed in the wake of the collapse.
And signs even early on in the second Obama administration are not encouraging:
• With no mention of Wall Street and the banks anywhere in either his second inaugural speech or his 2013 State of the Union address, the President appears to be wishing the crisis behind him more than addressing its still festering wounds.
• Statements by new appointees like Treasury Secretary Jacob Lew have suggested that they view the “too big to fail” problem as having been largely solved, even as new studies confirm how much the systematically risky banks still benefit from market assumptions that they retain that status.
• Despite having faced withering rebukes for their handling of key cases and settlements, agencies like the Office of the Comptroller of the currency have reignited that criticism in their attempts to amend the disastrous Independent Foreclosure Review settlement, yet again constructing terms far more favorable to the banks than to homeowners and borrowers.
The report barely mentions the Consumer Financial Protection Bureau, the one agency where progressives have generally given the administration better marks, it is mostly dismissive of the good things that passed in Dodd-Frank given how slow regulatory agencies have been in writing rules, and it seems to have little faith in the Residential Mortgage Backed Securities Task Force co-chaired by NY AG Eric Schneiderman- which is notable given that the coalition has historically been relatively close to Schneiderman politically.
So there are two questions that Obama loyalists might ask about this report. The first is whether all this negativity is truly deserved. The second is, why are Wall Street accountability activists so obsessed with this issue?
On the first question, I am sad to say the answer is mostly yes. If I had been writing the report, I would have been more positive about the accomplishments of CFPB, would have given the administration more credit on a few things in terms of Dodd-Frank and a few of the appointments they have made, would have pointed out that Republicans are doing everything they can to starve regulatory agencies of resources, and being the loyal Democrat I am, I would have written the report more diplomatically.
But when you add up all the results of the Obama administration’s dealings with Wall Street, it is hard to avoid the fact that life hasn’t changed much at all for the big banks, and that they continue to make money hand over fist while the rest of the economy is stuck in the mood. It is hard to think of any one of the report’s bullets listed above that aren’t accurate. Most damning of all are these absolutely true words in the report’s conclusion:
“The irony in all this is that the areas in which the Obama Administration has been found most wanting by critics for its handling of Wall Street accountability are not the result of intractable differences with a Congress hamstrung in inaction. Instead, they are areas almost wholly under the sole control of the Administration through its executive powers, and carried out largely through cabinet agencies.”
On the second question, the reason Wall Street activists are so obsessed with the lack of toughness toward Wall Street is that Wall Street is ground zero for the rest of the problems in our economy. These monstrously huge mega-banks completely dominate our economy, siphoning off money that might otherwise go into productive uses in the mainstreet economy so that the big bankers can keep speculating away. And when they screw up in ways that hurt the rest of us, even when they blatantly violate the law, the fact that they are never seriously punished means they have no incentive to stop.
Until the Obama administration fixes this problem, the rest of the economy is going to keep suffering, and the risk of future financial meltdowns will keep growing.
I'm going to guess that's not in the cards. This round of looting will go unpunished and we're being set up for yet another fall.
It means something that Mike would write this. He's been trying hard for a long time to give the administration the benefit of the doubt on this. It's tough to go up against Wall Street. But there was no longer any other way to look at this once we heard the Attorney General say this under questioning from the Senate:
I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy, and I think that is a function of the fact that some of these institutions have become too large.
Evidently, federal law enforcement is yet another area in which the Executive Branch has no power --- or, at least, feels it is injudicious to use it. This instance of presidential impotence is especially difficult because it pretty much says that even if the congress were to make new laws, the Justice Department still couldn't enforce them because of these alleged threats to the economy. So we'll just have to put up with the looting and wait for the house of cards to collapse again. Because otherwise the house of cards will collapse.
Meanwhile, let's check in across the the pond, shall we?
Emboldened by its meteoric rise in Greece, the far-right Golden Dawn party is spreading its tentacles abroad, amid fears it is acting on its pledge to "create cells in every corner of the world". The extremist group, which forged links with British neo-Nazis when it was founded in the 1980s, has begun opening offices in Germany, Australia, Canada and the US.
I'm sure there's nothing to worry about. Just a bunch of Greeks bearing swastikas. But still, it's probably never a good idea to let wealthy oligarchs off the hook while telling the people they should eat cake. It's risky. Sometimes the people react and not always in a good way.
The international push follows successive polls that show Golden Dawn entrenching its position as Greece's third, and fastest growing, political force. First catapulted into parliament with 18 MPs last year, the ultra-nationalists captured 11.5% support in a recent survey conducted by polling company Public Issue.
The group – whose logo resembles the swastika and whose members are prone to give Nazi salutes – has gone from strength to strength, promoting itself as the only force willing to take on the "rotten establishment". Amid rumours of backing from wealthy shipowners, it has succeeded in opening party offices across Greece.
It is also concentrating on spreading internationally, with news last month that it had opened an office in Germany and planned to set up branches in Australia. The party's spokesman, Ilias Kasidiaris, said it had decided to establish cells "wherever there are Greeks".
"People have understood that Chrysi Avgi [Golden Dawn] tells the truth," he told a Greek-language paper in Melbourne. "In our immediate sights and aims is the creation of an office and local organisation in Melbourne. In fact, very soon a visit of MPs to Australia is planned."
Many in the diaspora believe, like Endy Zemenides who heads HALC, that Golden Dawn has deluded itself into believing it is a permanent force because of its soaring popularity on the back of the economic crisis. "The reality is that it is a fleeting by-product of failed austerity measures and the social disruption this austerity has caused," he said.
In Greece, where Golden Dawn has begun to recruit in schools, there are fears of complacency. Drawing parallels with the 1930s Weimar period and the rise of Hitler's National Socialist German Workers' party, the historian Mark Mazower recently warned against underestimating the threat posed by a party whose use of violence was so disturbing. "Unfortunately, the Greek state does not seem to realise the urgency of the situation," he told an audience in Athens...
"It is an extremely dangerous phenomenon and do I think it will get worse? Yes I do," Psarras said, lamenting that, with living standards plummeting, the organisation was opening offices in traditional middle-class neighbourhoods. There remained a simple fact too big to ignore: in 2009 the party was a political pariah, gaining a mere 0.29 % of the vote; today it had global ambitions.
"Ten years ago, if you had said Golden Dawn would become the third biggest force in Greece, you'd be called crazy," said Psarras. "Now look where it is."