Economist James Galbraith says America’s economic collapse “was the product of wide-scale criminal fraud” but that the press, instead of investigating it aggressively, has treated it as a ‘boys will be boys” phenomenon.
Galbraith, a University of Texas professor and author of seven books, notes that during the savings and loan scandal of the 1980s more than 11,000 cases were referred to the Justice Department for investigation and possible prosecution. Reports vary on the number of investigations today but they are believed to be nowhere near that number even though the sub-prime mortgage collapse led to a national and world wide catastrophe. One difficulty, Galbraith pointed out, is that hundreds of FBI agents were switched from white collar crime to terrorism after the 9/11 bombings.
Here’s an interview with Galbraith on the subject by writer John Hanrahan, running today (October 15th) on the Nieman Foundation’s niemanwatchdog Web site. It’s part of a series on coverage and the crash, and what the press should be doing now, titled “Reporting the Collapse.” Also included, at the bottom, are links to other stories in the series.
John Hanrahan's Interview with James Galbraith
University of Texas economist and author James Galbraith believes the press has paid too little attention to investigating the “criminal and felonious behavior” involved in the economic crash of last year.
“The press as a whole used [Ponzi-schemer] Bernie Madoff as the emblem of wrongdoing, but compared to the wrongdoing in the housing sector, the Madoff scandal was small-bore,” Galbraith told Nieman Watchdog in a recent interview. “The press has tended a bit to treat this issue [mortgage related fraud] as a kind of boys-will-be-boys phenomenon. The press has not been aggressive in investigating this the way they should, to point out to readers the extent to which we’re talking about fraud -- criminal, felonious behavior -- that will end up with people in the penitentiary.”
Galbraith said last year’s economic collapse “was the product of wide-scale criminal fraud,” just as was the case in the savings and loan scandal of the late 1980s, which produced thousands of criminal charges against S&L officials and loan officers.
(In 1987-1988, the Federal Home Loan Bank Board referred more than 11,000 S&L cases to the Justice Department for investigation and possible prosecution. A book, “Big Money Crime” by Kitty Calavita, et al., reported that by the spring of 1992, more than 1,000 defendants had been charged in major S&L cases, with a conviction rate of 91 percent.)
So far, Galbraith said, there have been few prosecutions of mortgage related fraud in connection with the economic collapse. One difficulty, he noted, is that after the 9/11 bombings, hundreds of FBI agents (2,400, according to this Nieman Watchdog piece) were switched by the Bush administration from white-collar crime investigations to terrorist/national security cases, and were not replaced.
The FBI’s ability to conduct full-scale field investigations of white-collar crime appears to be improving somewhat. Since the end of 2007, various mortgage fraud task forces have been established by U.S. attorneys and the FBI, most recently in July in Connecticut. A press report a year ago indicated there were then some 1,500 active investigations involving such giants as AIG, Lehman Brothers, Fannie Mae and Freddie Mac.
Additionally, other press reports have indicated that Countrywide Financial, the nation’s largest mortgage lender, was being investigated for securities fraud by the Justice Department and FBI. Also, officials in various states -- including New York, California, Connecticut, Illinois, Massachusetts and Ohio -- are reportedly investigating mortgage related fraud.
However, there are concerns that Justice Department and FBI investigators are still in too short supply to conduct widespread and in-depth investigations into crimes underlying the economic collapse, and that Congress is exerting inadequate oversight needed to prod federal investigators. Rep. Marcy Kaptur (D-Ohio), on the PBS program Bill Moyers Journal, said recently, "We need to get hired over at the Justice Department, 1,000 agents, in mortgage fraud and in securities fraud. Then, I pray, that the leadership of both chambers [of Congress] will do the kind of robust hearings that the nation deserves to rout out those who did wrong and to change the fundamental financial architecture of this country."
The Nation's national affairs correspondent William Greider, in the magazine's October 26 issue, spotlights one promising vehicle for exposing the root causes of the nation's financial crisis -- the Congressionally-created, bipartisan, 10-member Financial Crisis Inquiry Commission that began operations September 17. (And, as Greider observes, "it was a nonevent for the media," which has "moved on" and seems to regard the financial crisis as "last year's story.")
The commission is headed by Phil Angelides, the former California state treasurer. Greider quoted Angelides as saying the commission's purpose is "uncovering the facts and providing an unbiased historical accounting of what brought our financial system and our economy to its knees."
Noting that "the landscape remains littered with unanswered questions and informed suspicions about who did what to produce the breakdown," Greider warned: "Given the rush of events, the commission may be the public's last, best chance to get at the truth of the matter."
"The industry will not be trustworthy until their crimes are investigated and prosecuted," Galbraith said. "The press needs to get on this one. The wheels of justice grind slowly, but they will grind."
Galbraith holds the Lloyd M. Bentsen Jr. chair in government business relations and is a professor of government at the University of Texas, Austin. He is the author of seven books, the most recent being "The Predator State: How Conservatives Abandoned tgeh Free Market and Why Liberals Should, Too," published last year.
~~~~~~~~~~~~~~~~
Next in the ‘Reporting the Collapse’ series:
What the press can learn from its failure to report the housing bubble before it burst. Reporters and editors need to evaluate arguments for themselves, and get officials and economists to back up their statements, not just make assertions. That’s advice from someone who suspected early on that there was a bubble about to burst and did research that confirmed his suspicions.
Earlier in this series:
Doing a better job coping with economic disaster. Writer Henry Banta lays out what has gone wrong and why it is so important for the press to do a better job.
Rein in entitlements? No. Increase them, says James Galbraith. It’s time the press stopped falling for false, ongoing efforts to portray Social Security and Medicare as going broke, says Galbraith in the first installment of his interview with John Hanrahan.
As joblessness rises, reporters need to focus on calls for a second stimulus. Dean Baker sees a new, large stimulus as urgent. He has an alternate plan, also: Give companies tax credits to reduce workers’ hours (but not their pay) and put on new staff to take up the slack.
Galbraith: Deficits are the solution, not the problem. The University of Texas economist views aiding households, not banks, ia the key to recovery. He is highly critical of most coverage of deficits and fiscal policy and singles out the Washington Post editorial page as the worse offender.
Health care patents cost Americans hundreds of billions a year. Dean Baker says drug and medical device patents drive up costs enormously but are seldom if ever mentioned in the debate over health care reform. Drugs and equipment that could be sold profitably for a few dollars may instead sell for thousands.
Story ideas, from an expert. Dean Baker becomes assignment editor for a day, and asks for stories on deficits, on the mathematical basis for figuring the right size of a stimulus program, and the set-up by which banks borrow money from the Federal Reserve at 0 percent and re-lend it to the Treasury at 3-1/2 percent.
Follow Barry Sussman on Twitter: www.twitter.com/niemanwatchdog
But massive Justice Department investigations can still uncover the crimes. But like so much else will their be a will to prosecute?
http://www.cbsnews.com/stories/2009/10/15/business/main5386084.shtml
Huge swaths of this country hear only what Rupert wants them to hear.
The time for term limits is now!
and advising in 06 / 07, the height of the media hype then, might come in handy for that purpose. The viewer can instantly figure out a whole lot. It is considered awesome by many who know it. It may also be helpful to save a lot a problems.
http://www.youtube.com/watch?v=2I0QN-FYkpw
As far as newspapers are concerned, Danny Schechter gave a nice insight last year:
http://rinf.com/alt-news/media-news/where-was-media-when-sub-prime-disaster-unfolded/2854/
http://www.youtube.com/watch?v=V5HN8fqQI1U
http://www.youtube.com/watch?v=kNqQx7sjoS8&feature=related
I wish there would be a quite place somewhere on the HuffPo for such videos.
From the free dictionary online.
Seems to fit doesn't it?
Let's ignore this too and go directly to a resource based economy - www.thevenusproject.com
Truly
The Venus Project describes a resource based economy where all the basics are covered - health care, home, food - work days are shortened because of the support of technology and the city centers are universities where we all contribute ideas that forward freedom and an enjoyable life for anyone that wants to participate.
http://www.breitbart.com/article.php?id=D93COC400&show_article=1#
FBI investigating companies at heart of meltdown
Sep 23 07:09 PM US/Eastern
By LARA JAKES JORDAN
Associated Press Writer
http://www.youtube.com/watch?v=V5HN8fqQI1U
It goes well beyond Wall Street. Appraisers, real estate brokers, mortgage brokers and many individuals sought to cash in on the bubble. Wall Street was the collector and distributor of trillions of dollars in bad paper. In one instance a house flipper had down on his mortgages that all of his 200 properties were owner occupied. He couldn't have done this without the collusion of several other parties. In the overall scheme of things we could jail hundreds of thousands of individuals for millions of years.