●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity starves the economy to feed the government, and leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Some people wonder how Mitt Romney, a man having no core values, no plan and no consistency of belief, could possibly be so close to winning the Presidency from a sitting president. How could people vote for a guy who has caved to the ultra right and virtually assured voters he would increase the gap between rich and poor?
Economic dissatisfaction, yes, but the following may also be a small part of the mystery. When the people entrusted to catch and prosecute the crooks, are themselves in league with the crooks, society collapses. The citizens feel they have nowhere to turn, so they vent their anger in masochistic ways.
They kill their neighbors. They burn their neighborhoods. They refuse to work or go to school. And they vote against the “ins” no matter who is “out.” Thus: Hitler, Putin, Castro, Duvalier et al.
Why Can’t Obama Bring Wall Street to Justice?
May 6, 2012
Peter Boyer and Peter Schweizer
Obama came into office vowing to end business as usual, and, in the gray post-crash dawn of 2009, nowhere did a reckoning with justice seem more due than in the financial sector.
The public was shaken, and angry, and Wall Street seemed oblivious to its own culpability, defending extravagant pay bonuses even while accepting a taxpayer bailout. Obama channeled this anger, and employed its rhetoric, blaming the worldwide economic collapse on “the reckless speculation of bankers.”
(But) candidate Obama had been accepting vast amounts of Wall Street campaign money for his victories over Hillary Clinton and John McCain (Goldman Sachs executives ponied up $1 million in 2008). Obama far outraised his Republican rival, John McCain, on Wall Street–around $16 million to $9 million.
To the dismay of many of Obama’s supporters, nearly four years after the disaster, there has not been a single criminal charge filed by the federal government against any top executive of the elite financial institutions.
“It’s perplexing at best,” says Phil Angelides, the Democratic former California treasurer who chaired the bipartisan Financial Crisis Inquiry Commission. “It’s deeply troubling at worst.”
“Perplexing”? “Troubling”? Obama’s Chicago experience taught him something about money. His land deal with the criminal Tony Rezko was a hint of the future.
“There hasn’t been any serious investigation of any of the large financial entities by the Justice Department, which includes the FBI,” says William Black, an associate professor of economics and law at the University of Missouri, Kansas City, who, as a government regulator in the 1980s, helped clean up the S&L mess. Black, who is a Democrat, notes that the feds dealt with the S&L crisis with harsh justice, bringing more than a thousand prosecutions, and securing a 90 percent conviction rate.
Obama delivered heated rhetoric, but his actions signaled different priorities. Had Obama wanted to strike real fear in the hearts of bankers, he might have appointed former special prosecutor Patrick Fitzgerald or some other fire-breather as his attorney general. Instead, he chose Eric Holder who, after a career in government, joined the Washington office of Covington & Burling, a top-tier law firm with an elite white-collar defense unit.
Eric Holder was the perfect choice — a lawyer accustomed to taking orders from his client, a man with little moral backbone, and one who knew where his money came from.
Goldman Sachs, JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, and Deutsche Bank are among the institutions that pay for Covington’s legal advice, some of it relating to matters before the Department of Justice.
Lanny Breuer, who had co-chaired the white-collar defense unit at Covington with Holder, was chosen to head the criminal division at Obama’s Justice. Two other Covington lawyers followed Holder into top positions, and Holder’s principal deputy, James Cole, was recruited from Bryan Cave LLP, another white-shoe firm with A-list finance clients. Two members of Holder’s team have already returned to Covington.
This is the classic revolving door of politics. The lawyer knows if he fails to investigate the criminals, the criminals will hire him in gratitude. It’s all set up in advance. They certainly aren’t going to hire a guy who prosecutes them.
In 2010, the Securities and Exchange Commission charged Goldman with securities fraud (and) referred the case to Justice for criminal investigation. A year later, in April 2011, the Senate Permanent Subcommittee on Investigations, chaired by Democrat Carl Levin, believed Goldman should be investigated by Justice as possible crimes.
Meanwhile, Obama’s political operation continued to ask Wall Street for campaign money. In the weeks before and after last year’s scathing Senate report, several Goldman executives and their families made large donations to Obama’s Victory Fund and related entities, some of them maxing out at the highest individual donation allowed, $35,800, even though 2011 was an electoral off-year. Some of these executives were giving to Obama for the first time.
Question: Why do people give large amounts to a politician, especially if that politician holds their lives in his hands? Right.
Holder was himself an Obama bundler–a fundraiser who collected large sums from various donors–in 2008, as were several other lawyers who joined him at Justice.
Did Obama seek out the best possible Attorney General? No, he rewarded a bundler, whom he knew he could control. No “out-of-control” Patrick Fitzgeralds for him.
In July 2010, three months after the SEC charged Goldman in the Abacus case, the agency reached a settlement with the firm. Goldman agreed to pay $550 million, but admitted no wrongdoing. The agency touted the amount of the fine as the biggest ever–but to Goldman it was a relative pittance. The fine amounted to about 4 percent of the sum that Goldman paid its executives in bonuses ($12.1 billion) in 2007, the year of the Abacus transaction.
Holder, speaking in February at Columbia University, said that while “we found that much of the conduct that led to the financial crisis was unethical and irresponsible … we have also discovered that some of this behavior–while morally reprehensible–may not necessarily have been criminal.”
Black, the UMKC professor, says the conduct could well have violated federal fraud statutes–“securities fraud for false disclosures, wire and mail fraud for making false representations about the quality of the loans and derivatives they were selling, bank fraud for false representations to the regulators.”
What a tiger. “. . . may not necessarily have been criminal” I’m sure the banksters are oh, so frightened of Eric Holder, who soon will work for them. This is the same Eric Holder who was brave enough to prosecute Congressman Dan Rostenkowski, but of course, Rostenkowski had no future jobs to offer.
Through last fall, Obama had collected more donations from Wall Street than any of the Republican candidates; employees of Bain Capital donated more than twice as much to Obama as they did to Romney, who founded the firm.
By this spring, however, resolution had come to the GOP contest, and Wall Street could see a friendly alternative to Obama. While most of Romney’s contributions so far come mainly from the financial sector, Obama’s donations from Wall Street have dropped sharply.
But this turn may yet help Obama. Just the other week, the Republican candidate quietly slipped into a fundraiser at the home of hedge-fund king John Paulson, who made a killing shorting mortgage futures (including about $1 billion on the Abacus deal).
Obama may yet fully liberate his inner populist–that Obama who in 2010 in an off-Prompter moment uttered a sentence that made blood run cold on Wall Street: “I do think at a certain point you’ve made enough money.”
Here’s a thought: If Obama wins in November, he may begin to focus on his legacy. He won’t want to be remembered as the President who aided and abetted the criminal banksters. He won’t need their money any more, so this may be the time when he turns and sics the feds on them.
The signal: Eric Holder retires to become an attorney with a bank-related firm.
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
8 thoughts on “–Why President Obama has aided and abetted the criminal banksters, and why he may change.”
Great review of Obama’s relationship with the banksters, Roger.
But I think you are being optimistic about the 2nd term thing.
Obama’s vision for his “legacy” is to be the President who was willing to to cut the deficit, no matter how unpopular it is at the time.
Bill Clinton has made some $80 odd million since retiring from office. That’s the real “legacy” presidents are thinking about in their 2nd term.
There is a lot of misplaced hope in that last sentence about a turn around on policy and prosecution. First, statutes of limitations are running out on the older crimes and frauds. Second, the LIBOR rate rigging is a slam dunk, and so simple a first year law student could win, according to Dennis Kelleher, CEO at Better Markets. Third, as William K. Black, Prof. of Economics and Law, UMKC points out, the Justice hasn’t hired investigators nor has a grand jury been formed or seated. Fourth, the crimes of the financial sector go back and administration from both party lines. Large Wall St. banks have been significant donors to both party’s candidates, Obama hugely in 2008 and Romney this year. Rule #1 in politics is never bite the hand that feeds you. This is misplaced Hope, just as America had for Obama in ’08.
Dan and Rogue,
Sigh, you’re probably right. But since Romney absolutely, positively will not prosecute banksters, I’m left with faint hope Obama might.
Gotta agree with Dan & Rogue. You’re really wishing on a star to hope for this. Don’t hold your breath until both Holder & Geithner are fired. If they haven’t left yet, it indicates that Obama’s bundlers-in-chief now feel they can get away with it all.
My prediction: if Romney/Ryan win, they proceed to NOT cut the deficit. Even better… they increase it! And the economy does better.
Think about it: assuming Democrats retain control of the Senate, Romney/Ryan simply won’t be able to make big cuts to medicare, medicaid, social security. Senate Democrats will hold that line. What will happen though is they’ll give lots of tax cuts to wealthy people. All else equal, deficit increases. Although it’s not the ideal because it doesn’t help the people that need it the most.
What’s wrong with everyone’s memory? Don’t you remember that deficits don’t matter when Republicans do the spending? The entire “problem” of the deficit will be dropped from debate.
Whereas if Obama wins, further stalemate with Obama the the Democrats caving to the Tea/Republicans.
I HATE to say it, but I think I expect the economy to do better under Romney/Ryan IN THE SHORT TERM. But in the long term? A farther widening of economic inequality is on it’s way. Rmember GWB sent households checks for like $300 or $500? Maybe Romney/Ryan will throw the masses a few bones like that too.
Your prediction would be true IF the Democrats understood Monetary Sovereignty, and the need for increased deficit spending. But they don’t, so they will go along with the Republican desire to cut spending and “broaden the tax base.”
The Democrats agree that the deficit and debt should be reduced, as both parties have been purchased by the 1%.
I’m beginning to think netiher part actually believes that the deficit is a problem. The Republicans picked it up as a political talking point (that speak to their base and is an easy point to citicize Obama on). Here you can see Paul Ryan defending Bush Stimulus 10 years ago (http://www.youtube.com/watch?v=hcwn8MP0BMI).
The Democrats then made the political choice to be the “better” deficit cutters. While I don’t think either party probably recognizes the damage that cutting the deficit would do, a la the Clinton Surplus, I think they both fully understand that deficit spending is stimulative.