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    Prosecute the Malefactors

    Running Out of Time

    by | 28 | Apr 25, 2012

    I have come both reluctantly and late to the belief that President Obama will lose re-election unless he moves, and moves quickly, to prosecute the main Wall Street malefactors of the 2008 economic collapse.

    Last Sunday’s segment on “60 Minutes” about the activities by Lehman Brothers executives (and their accountants) to fool investors, regulators, and customers was one of the most damning pieces of journalism I’ve seen on what happened and who was responsible. Reporter Steve Kroft deserves a Pulitizer for his reporting on this colossal, cynical, and arrogant bamboozle of the American people. In case you missed the show, watch it on your  computer screen.

    Kroft’s investigation was not the first time “60 Minutes” has laid out reports on exactly what happened and who some, maybe even most, of the main villains were. On a Sunday evening a few months ago, I watched with mouth agape as correspondent Scott Pelley reported on blatant forgery in the housing crisis. For all to see, he revealed in shocking detail how some of the biggest banks in the country participated knowingly in an assembly-line forging of mortgage documents.

    The reporting of Kroft and Pelley on the economic crisis has provided all the leads – names, dates, witnesses – that the Justice Department could possibly need to begin legal action against the suspects. In fact, their reporting has uncovered what Congressional hearings should have uncovered two or three years ago.

    The failure of Congress to act seems explainable to me this way: the Republications are bought and paid for by the nation’s big-money interests. Their rule-or-ruin approach to government calls for doing nothing in the hope that they can win back the White House with Romney – at which point Wall Street can begin hosing all of us again – with impunity again.

    But the failure of Obama to act is to me a puzzler. He could unleash a full-scale Justice Department investigation tomorrow morning. Why hasn’t he acted? Some think it’s because Obama himself appears very cozy with big-money figures like Tim Geitner and Hank Paulson. Others say that Obama’s political incubator was Chicago, so what do you expect?

    Frankly, I don’t know anymore what to expect. Steve Kroft reported that it has been four years since Lehman Brothers crashed but that no one has been prosecuted for the out-and-out swindling that was involved. But though I don’t know what to expect, I know what I’m seeing, and what I’m seeing are angry citizens who believe – who in fact know – that they’ve been screwed over by Wall Street, losing homes, jobs, pensions, savings, and that nothing has been done about it. If you’ve forgotten how angry they are, watch the video here:

    Yes, things are quieter. For now, at least. But those angry citizens are still out there, watching and waiting to see what, if anything, happens to the bastards who took them to the cleaners and brought the United States of America to its knees.

    Better do something, Mr. President. You won’t win re-election with charm and rhetoric alone, and the hour grows late.

    ###
    Robert Lamb

    Robert Lamb

    I grew up in Augusta, Ga., where I attended Boys' Catholic High. After a stint in the Navy, I attended the University of Georgia, majoring in English (Class of '61). I began my (wholly unexpected) journalism career on the old Augusta Herald, an evening paper, and went to work for The Constitution in, I think, 1976. I left in Sept. '82 to write The Great American Novel. That goal has proved remarkably elusive, but my first attempt (Striking Out, in 1991) was nominated for the PEN/Hemingway Award and my second (Atlanta Blues, in 2004) contended for an Edgar Award. My latest novel won no honors but might well get me nominated for a hanging. Titled A Majority of One, it is about a clash between religion and the Constitution over book-banning in a small Georgia town. I've also published a collection of short stories and poems: Six of One, Half Dozen of Another. Before retirement, I taught creative writing and American literature at the University of South Carolina and its Honors College, and feature writing in its School of Journalism. I maintain a now-and-then blog at boblamb.wordpress.com and I walk my dog on the beach a lot at Pawleys Island, S.C.

     

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    • Meg Gerrish

      I am as disgusted by the blatant fraud as anyone, but I’m not sure about this part: Is it within the power of the President’s office to demand an investigation by the Justice Department?

      Maybe a brain synapse — something I should obviously know, but don’t and I can’t find an answer to that on Google.

      • I can answer that for you, Meg. YES. The AG works at the pleasure of the President. The pleasure of this President has been that the AG NOT investigate crony friends of the current group of investment bankers (More reading: Hen house outsourced to wolves) who run our government.

        • Unfortunately, much of the investigating was supposed to be done by the SEC, an independent agency. If Lehman Bros. collapsed while the SEC was on the premises, there’s not a lot of recourse to be had. Not to mention that there are statutes of limitation.  Some of the states have longer time frames in which to bring actions.  That’s why New York and Delaware and California refused to sign on to the “settlement.”  Also, as the Citizens United debacle proved, private corporations have to be regulated by the jurisdictions which grant their charters, not by the Congress or the national executive. Sometimes the federal system works to our advantage; sometimes it doesn’t. Human rights, including the right to medical care ought to be a federal obligation, if only to insure our individual inclination to perambulate all over this great land. Get snake bit in Montana, you’re gonna want to get treated on the spot, not wait until you get back to Alabama.

      • Yes, the AG serves at the pleasure of the President and he can fire, as Nixon in the Saturday Night Massacre demonstrated for all the ages.  However, if a defendant can prove that a prosecution was politically motivated, he walks.  Our system presumes that individuals are innocent until proven guilty. Despite law enforcement being convinced that “everyone’s guilty of something,” the law still demands otherwise, which is why so many convictions are reversed.

    • Noel

       A fine piece, Robert. Thanks for posting it. I saw Kroft’s splendid piece, too, and it is indeed yet another 60 Minutes blood-boiler that begs for action by Congress, the SEC, the Mod Squad, somebody, anybody. I want all these crooks punished, and I think your theory about the Republicans is correct. I mean, they’re mainly the ones saying we should get the hell out of the way and let businesses do what they need to do to make money. As for the Obama administration’s failure to prosecute, I suspect it’s concern for how the Republicans will use it against them as well as concern about how  legal actions could undercut a recovery that is not exactly robust. I wish to hell they would kick some Wall Street butt, but I think their reluctance is understandable.

    • Drill_baby

      You think the people bringing you the cop-killing Gun-walker scandal and Solyndra are somehow capable of reining in fraud? Mr. President is a Chicago kleptokrat reflecting the political swamp that produced him.
      Second, the government created the housing crisis and the incentives for fraud. Do you think mortgage lenders would have held onto those “no-doc” loans if they had to keep them on their own books? The government ORDERED lenders to loan to people who were not qualified in the name of political correctness – then the same stupid government bought up all the loans, paid Goldman Sachs to securitize them and sold them as AAA-rated securities to public pension funds. They screwed us bigger than any bank!
      Who are the corrupt liars here? The bankers? Maybe but they’re pikers compared to the fraudsters’ fraudstering at Fannie and Freddie’s fraudrific fraudulator. And at least some bankers have gone to prison. I’m sure Fraudulent Franklin Raines is still making big money somewhere and John Lewis is out there telling everyone what a great guy Fraudulent Franklin is. And Fraudulent Franklin’s golden parachute comes entirely from the U.S. ripped-off taxpayer.

    • Dockeroo

      The progam at 9 p.m. last night on GPB was even more damning. Kudos for Roy Barnes who shined as a defender of the public interest on this PBS special. I, too, am weary of hearing about “belt tightening” and “learning to live within our means” from lovely TV “reporters” who are likely reading script they neither wrote nor understand. What a poor example of governing by leaders at all levels. Telling those graduates at commencement what a wonderful world you are building for them when not one of you has the cahones to publicly demand that these conspirators be fitted with orange jump suits makes a mockery out of all that Jefferson, Franklin, Washington and Hamilton believed in. The evening news is corn-sweetner corpoate cereral, junk stuff about medications, miracle cures, sex crimes, wild whores in Columbia, do-gooders, local low-level officials gone wrong but not about the gunslingers who with impunity  destroyed America’s economy. Yes, Obama failed to prosecute (and he can damn sure order his attorney general to do so) and there’s not a whit of evidence that Romney would do otherwise.

    • Drill_baby

      Obama wants to give student loans the Fannie Mae treatment. After all, all those dual journalism/art history majors should be free to pursue their passions without the injustice of repaying their debts. Keep up the good work, Mr. President! I’m sure Goldman Sachs awaits the next traunch of no-doc ivy league loans. Change we can believe in!

      http://online.wsj.com/article/SB10001424052970203440104574405154157021052.html

      • Boblamb

        Obama wants only to keep the interest rate on student loans from doubling. Nothing wrong with. What was wrong was to allow such a provision in the bill in the first place.

        • While the banks were playing middleman on the education loans, it made every sense in the world to promise them an increased interest rate, especially after all the suckers for fly-by-night training programs had been hooked good.

          • Drill_baby

            Students default on their loans. That is reality. They are young, they don’t have income history or much else that would make them creditworthy. Hence, the loans are risky and lenders have to recoup the defaults by charging a higher interest rate. Dont’ know what that “fly-by-night” comment means but if we want to address cost issues in the academic area we’d be wise to first look at athletics, then worthless courses of study like journalism, ethnic/gender studies, etc., and focus on meaningful degrees with challenging cirricula that teach skills employers will pay for.

      • It isn’t necessary for the Treasury to get Wall Street to bundle its loans.  Like the Social Security Trust Fund, the education dollars can be carried on its own books.  That’s the advantage of being the issuer of currency.

    • Lehmann Brothers is politically sensitive, if only because one of the principals, who’d recently moved over from the foreign desk of Goldman Sachs and who walked away from the debacle with what could be salvaged to set up the privately held Neuberger Berman, is one George Herbert Walker IV.
      http://en.wikipedia.org/wiki/George_Herbert_Walker_IV

      It seems that the financial acumen in the family is on the Walker, rather than the Bush side.

      Lots of bankers and mortgage brokers have gone to jail.  However, the major media do not make a big issue of it.  The long time between arrest, trial and conviction makes a good excuse for losing track.  The stories are reported, but only once.
      While G.H.Walker IV is connected to Neuberger Berman, dear old dad’s association is with the Stifel Bank and Stifel Financials of St. Louis. There’s a host of people in the heartland who pride themselves on not being intimately connected to Wall Street.
      http://en.wikipedia.org/wiki/Stifel_Nicolaus

      I can attest that they are most assiduous about protecting their reputations. The Chicago smear is unwarranted and based on the competitive interests of the players along the stretch of the Mississippi.  Why do the red states have to be held hostage?  ‘Cause that’s their power base. The battle for the soul of America is being waged in the Heartland, not on the coasts.  The self-deprecations of the denizens of fly-over country are a sham.

      Also, Congressional investigations are a sham.  Whatever anyone testifies to under oath can no longer be used against him in a prosecution.  Oliver North proved that. Then too, financial corporations have the same protections as individual persons in that they do not have to testify themselves.  To even have probable cause to investigate, there has to be credible evidence from outside.  One of the things Dodd/Frank will do is provide periodic reviews (looks at the books) that will provide clues about where the skull duggery is going on. 
      No financial institutions were forced to make loans to unqualified borrowers.  If bankers felt incentivized by loan guarantees, it merely means that their ability to resist temptation was low. That losses will be covered should not serve as a prompt to throw all prudence out. Might as well argue that medical care will cause people to drive with reckless abandon.

      • Drill_baby

        ” If bankers felt incentivized by loan guarantees, it merely means that their ability to resist temptation was low. ” In a word, no.
         
        The banks were ORDERED by the government to make loans to people they knew did not qualify (see: Community Reinvestment Act). The government passed a law requiring banks to lend to subprime borrowers. The government then bought up all the loans and PAID investment banks with an explicit U.S. government guaranty.
         
        No one in the private side made a dodgy decision regarding the government-caused housing/credit debacle. The banks did what the government ORDERED and PAID them to do.  

        • Boblamb

          No one was ordered to carry out the government’s mandate by committing fraud.

    • Noel

      Hey there, Drill Baby. I just wanted to make sure I had read your comments correctly. Did you indeed say that the government not only forced Wall Street bankers to make scads of bad loans but also made them bundle the loans into complicated securities to be sold like, say, mutual funds —   but without telling the buyers that were rotten and as sure to to explode as, say, a plastic bag full of uncooked chicken parts left in the sun? If so, please email Steve Kroft at 60 Minutes and make sure he includes this information in his follow-up.

    • Drill_baby

      Oh, I’m sure he knows and supported all of it. After all, the left judges social policies on their intentions rather than consequences. The government intended to correct nominal inequality so any measure they undertook was justifiable. Even if those measures were known to be destructive and moronic. Since the banks in following government’s orders and transacting-in-good-faith were only in it to make money — any of their actions can be declared illegal and immoral.
       
      Never let a crisis go to waste, and all that.

    • Drill_baby

      to boblamb (comments think is jacked up)
      1) So when the government orders you to make a loan to someone who doesn’t meet your lending standard for some arbitrary reason like hair color, and you comply, that is not fraud as such. The lender knows the loan is likelier to default so the government buys it along with a bunch of others, then guaranties it with the U.S. government’s credit rating and re-sells it on the open market under the higher credit rating. When that securitized loan portfolio defaults owing to its true risk rating and the seller (government) represented it as less-risky — that is fraud. Anyone else doing the same thing would go to prison.
      2)So Obama knows “the correct” risk/return rate on a Student loan because he went to Harvard?

      • Boblamb

        You are not arguing rationally. Nobody was ordered to forge signatures and otherwise falsify the entire home-buying system. Nor did bankers reluctantly make these loans. They saw a gravy train and rode it to enormous wealth (and to a great crash).

        You don’t need to know high finance or have an Ivy League education to see that usurious interest rates are wrong and that it is especially bad to inflict them on college students.  

        • And, let’s keep perspective: the 4 year reduction in student loan interest was signed by George W. Bush.

          • Drill_baby

             Well if George W Bush did then it must be a sound economic plan. My apologies. I fully endorse this plan to governmentize the financial sector.

            • The financial sector is being “rewarded” for being a non-productive middleman.  While it is useful to have someone keep accounts and they deserve some compensation for their time, letting them sequester the currency and dole it out selectively is a bad idea. The banksters know they are on thin ice and that’s why they are, as the Lord of Little Rock admits, filled with uncertainty.

            • Drill_baby

               No one is sequestering currency. People who have wealth want to invest in productive enterprise to gain returns on their wealth. This is not a conspiracy, not complicated. I assume you must have saved money in your life. Maybe you put in a savings account, bought a house, mutual funds … something. This is exactly the sort of “bankstering” you slander that 99 percent of us hope to use to preserve and grow wealth. When the government lies to to pensioners about underlying risks of shady mortgage portfolios, that is a crime anyone else would go to prison for.

        • Drill_baby

           one man’s “usurious interest” is another man’s recovery cost of capital. Students default on their loans all the time making them risky and deserving of higher rates. But, yeah, the government will do a better job by charging less. Works. Every. Time.
          We’re talking past each other on the credit/housing crisis thing. I admit that there was some bad behavior by banks but it was a nano-fractions smaller compared to the financial crimes perpetrated by Fannie and Freddie. They told investors highly-risky loans were, in fact, low-risk securities. That is a criminal, big fat lie.

          • Money is a figment of the imagination, a token of value that is intrinsically worthless.  Might as well charge an arm and a leg for using the alphabet.  

            • Drill_baby

               You may want to turn back to a stone age barter system but 99 percent of us do not. Seems you may have trouble with financial concepts. If you don’t understand something — do you simply want it destroyed.

              Hulk angry?

    • I must insist that we get back to commenting on this story. If you wish to comment about student loans and other tangents, take it somewhere else. Thank you.

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