This Time For Securities Fraud

Danny Schechter, Al-Jazeera

Hats off to Matt Taibbi for staying on the Wall Street crime beat, asking in his most recent report in Rolling Stone: “Why Isn’t Wall Street in Jail?”

“Financial crooks,” he argues, “brought down the world’s economy — but the feds are doing more to protect them than to prosecute them.”

True enough, but that’s only part of the story. The Daily Kos called his investigation a “depressing read” perhaps because it suggests that the Obama Administration is not doing what it should to reign in financial crime. Many of the lawyers he calls on to act come from big corporate law firms and buy into their worldview.

Kos should be more depressed by the failure of the progressive community to focus on these issues, and not pressing the government to do the right thing.

There is much more to this story. It’s also more about institutions than individuals, more about a captured system that enables and covers up crime and, then, deflects attention away from the deeper problem.

Ten problems

You could see that when television host Bill Maher pressed Taibbi to name the biggest Wall Street crooks, on his weekly political comedy show, he didn’t fully understand what we are really up against.

Here are ten of well-planned but flawed factors that help explain the procrastination and rationalisation for inaction. The government is not just to blame either. Several industries working together, through their firms associations, and well-paid operatives, collaborated over years to financialise the economy to their own benefit.

Personalising bad guys makes for good TV without offering a real explanation.

When financial institutions and services became the dominant economic sector, they, effectively, took over the political system to fortify their power. It was a done incrementally, over years, with savvy, foresight and malice.

First, many of those who might be charged with financial crimes and fraud invested in lobbying and political donations to insure that tough regulations and enforcement were neutered before the housing bubble they promoted took off.

After hundreds of bankers were jailed in the wake of the Savings and Loan crisis, financial fraudsters pushed for weakened regulations, guaranteeing that their colleagues wouldn’t be jailed in when the next crisis hit.

In effect, their deregulation strategy also deliberately ”decriminalised” the environment to make sure that practices that led to high profits and low accountability would be permissible and permitted. What was once illegal soon became “legal”.

No enforcement

The cops and watchdogs were taken off the beat. Anticipating and then dissolving restraints, they engineered a low-risk crime scene in the way the Pentagon systematically prepares its battlefields. This permitted illicit practices, to be encouraged by CEOs in a variety of control frauds to keep profits up so that the executives could extract more revenue.

Today’s proposed Republican cutbacks of the funding of regulatory bodies aims to undercut recently passed financial reforms. One Commissioner of the Commodity Futures Trading Commission said if the budget is slashed, “there would essentially be no cop on the beat…we could once again risk another calamitous disintegration.” He added, according to a New York Times report, “the process will mean nothing, squat, diddley … if we get cut we’re going to be in a world of hurt.”

Read more here