In his State of the Union speech, President Obama said and proposed many reasonable-sounding things. One of them was this:
We'll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud... financial firms violate major anti-fraud laws because there's no real penalty for being a repeat offender... So pass legislation that makes the penalties for fraud count.
And tonight, I'm asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.
Now, how could you be against that? In his speech, and indeed as has been true for his entire career, Mr. Obama deserves an A for rhetoric. But what grade does he deserve for action? Alas, he flunks.
It has now been three and a half years since the financial crisis of September 2008. Only a few months after that crisis -- three years ago now -- President Obama took office. At the time, he had an overwhelming popular mandate and huge majorities in both houses of Congress. The nation was in crisis, with unemployment growing nearly half a percent per month. The Bush Administration's policies (and the financial sector that those policies had allowed to run wild) were utterly discredited. If ever real change is possible in Washington DC, this was that time.
In that situation, and over the intervening three years, what did President Obama do? Well, we got a stimulus package, and then a year later a watered-down, absurdly complicated new law that addressed everything except the most important issues. And that's about it. Consider the record:
President Obama's personnel appointments were heavily weighted towards those who had sat by and done nothing as the housing bubble grew (Tim Geithner, Ben Bernanke), former officials who had made major contributions to causing it (Larry Summers), senior lobbyists for the worst of the banks (Mark Patterson, Tom Donilon), a former board member of AIG (Richard Holbrooke), and literally dozens of former executives of banks and hedge funds that had played major roles in causing the crisis. The new chair of the SEC, Mary Shapiro, was the former head of the investment banking industry's self-regulation body, which brought not a single enforcement action related to the bubble. Her new director of enforcement, Robert Khuzami, was formerly general counsel for Deutsche Bank, which profited by helping John Paulson create securities so that he could profit by betting that they would fail.
We got the Financial Crisis Inquiry Commission, deliberately crippled through its tiny budget (less than $10 million for its entire operation, beginning to end), limited subpoena power, and publication date conveniently just after the 2010 midterm elections. Even so, the FCIC actually did a pretty decent job, and demonstrated that the housing bubble had involved pervasive fraud on the part of the banks.
Moreover, there followed a huge wave of private lawsuits. The banks fought them hard, and have tried extremely hard to prevent depositions and testimony from becoming public. But many plaintiffs persisted, and there has now accumulated a massive record of extraordinarily repulsive, and clearly illegal, behavior. In a book that I have just finished, and which will be published in May, grimly entitled Predator Nation, I go through what is known in considerable detail, and make the case for large-scale prosecutions and asset forfeitures.
This information is already public. So what has happened as a result?
Well, the SEC has filed some civil fraud cases -- not many, and not big. Thus far, every single one has been settled with a minor fine, with neither individuals nor banks required to admit guilt. Criminal prosecutions of banks? Zero. Criminal prosecutions of senior financial executives related to the bubble? Zero. RICO cases, such as were used against Michael Milken and are routinely used against drug dealers and other organized criminals to seize their assets and forfeit their ill-gotten gains? Zero. Sarbanes-Oxley prosecutions, based on CEOs' certification of obviously fraudulent financial statements? Zero. In Mr. Obama's three years in office, not a single U.S. bank or senior financial executive has been convicted of any crime (or even prosecuted), or had their assets confiscated.
But now, it's re-election time, and Occupy Wall Street has shown simmering anger among the population. So we create a task force. (There was another one before, too, but never mind.) A week later, several bankers are arrested. They're low level patsies, who worked for a Swiss bank, and who didn't create or sell the toxic stuff; they just traded it afterwards. And the task force? Its initial personnel: a whopping 15 people in the Justice Department, and ten -- count them, ten -- FBI agents. Eventually, Justice says, the task force will have an awesome 55 people. Goldman Sachs has 32,000 employees, there are several thousand financial industry lobbyists, the FBI has a total of 14,000 agents -- but hey, I'm sure that those ten agents are the very best.
So yes, it's absurd, and rather disgusting. But it must also be said that President Obama is not alone in prostrating himself before the financial sector. Congress is no better, and neither are Obama's likely opponents in the presidential race. Newt Gingrich screamed about government interference while he was being paid $1.6 million by Freddie Mac's chief lobbyist for "conservative outreach." In Mitt Romney, we have someone who thinks it's perfectly OK to have a tax rate of 14 percent on over $20 million per year in unearned income, and who wants to increase taxes on the poor while reducing them further for the wealthy. Unfortunately, the power of financial sector money has by now produced a pervasive, bipartisan systemic disease in American politics, of which the president's recent speech is merely one example among many.
Financial Crimes Unit Announced By Obama Reminds Some Of His Financial Fraud ...
New Financial Crimes Unit Could Throw Wrench in 'Robo' Settlement
Financial Crimes, Trade Enforcement Targeted in State of the Union
A quote from Larry Summers from 6 days ago: "The run of numbers for the last two months really have been consistently positive, consistently ahead of expectations, and do raise the possibility that the kind of virtuous circle we've been looking for has kicked in, virtual circles of rising income, rising employment, leading to increased spending, leading to more employment."
Apparently, Summers tells us there is the “possibility of virtuous circles” no matter how dire the real situation is. Not only is the latest rosy statement untrustworthy, coming from Summers, but it allows us, and our government officials, to shift our focus away from taking real action to prevent another crisis. I think people from all political persuasions need to set aside their differences on other issues, join forces, and protest the presence of the people involved in the Financial Crisis in our government. Without real action on this issue, who knows what the next scam will be?-it certainly won’t be virtuous.
Dodd-Frank was a step towards financial regulation, but holding those responsible for the crisis accountable is reasonable because we have pulled back from the brink and the institutions themselves can withstand scrutiny and prosecution.
Locking up criminals is emotionally satisfying, but to do so at the cost of the economy is foolish.
Give Obama credit for saving the economy first, and then give him credit for holding those accountable who caused the crisis.
Priorities, my good man, priorities.
Because those Romney is "even worse"? How?
There are other alternatives.
To do this the Office of the Currency Comptroller invoked an 1863 law to give itself the power to override state laws governing mortgage lending. Bush took this argument to the supreme court and lost the case in 2009. But by then the damage had been done.
Finally under a set of rules from the SEC in 2004, called "Alternative Net Capital Requirements for Broker-Dealers," the amount of capital that had to underlie assets was reduced. The act allowed high risk capital instruments, subordinated debt and deferred return of taxes. They even allowed securities "for which there is no ready market" to be counted as capital and broker-dealers to set their own valuations and creditworthiness ratings.
The reason no one has been prosecuted is that the Bush Regulators rolled back all the protections and overruled the states regulatory authority, re-writing the regulations to be complicit - making the fraud legal.
More of these articles need to be written and given space and airtime to educate the public how game is rigged against a majority of Americans -- and more people need to play "arm chair president" because the failures of the last 3-1/2 years cannot continue, or we will have the middle class and poor economically decimated beyond repair.
I could go on...
If it had been a Republican President with these accomplishments Republicans would already have his likeness added to Mt. Rushmore.
60K "advisers" still in Iraq, 30K of them armed,
--- also, the Iraq pullout was planned under a timetable created by Bush.
Obama simply followed it, and even then, wanted to keep regular troops there, except our Iraqi allies rejected the offer as destructive to any chance for permanent peace.
We killed a symbol, Bin Laden, not terrorism,
you don't know that any Obama act had anything to do with it.
Terrorist groups, and terrorist bases still proliferate.
You don't know nor does anyone else, the outcome of Libya, where brutal goons, the victors, still terrorize their people. Nor do you know the outcome of Afghanistan, nor Iraq, nor Iran nor Egypt nor Syria.
One could continue...
this administration is run by the same bankers who advised Clinton and Bush. The only difference from Romney is that Obama is the more polished caviler.
Be assured, that either way the world will not be safe, unless, that is, you trust that Goldman-Sachs knows what they are doing even in their own interests.
I didn't say Obama ended "terrorism" I said he eliminated THE "terrorist"...not JUST "a symbol"... who was responsible for murdering 3000 people in NYC, and Ghadaffy, who was ALSO responsible for murdering "innocent" Americans.
I don't happen to share YOUR apparent willingness to have just let that slide.
btw. "You" don't know what the "outcome" of Libya, Egypt, Syria, etc. will be either. You are criticizing "Obama" for an outcome that NO ONE knows what will happen?...and that President Obama didn't start.
NO revolution has ever had an "outcome" in the span of a year. It will take YEARS before anyone will know what the "outcome" will be.
The Arab Spring was started by the PEOPLE of those countries, not President Obama.
All those issues either started with REPUBLICAN policies, or were continued by Republicans in power for 8 straight years, the SAME Republican establishment running the Party now, why would anyone put Republicans back in power ?
I will vote for President Obama because he has in fact already made a difference, he has had successes and accomplishments that I agree with in just three years, even with the entire Republican Party obstructing everything, to make him FAIL.
He deserves another four years, in my opinion.
I see the problem right there - general counsel, that's a big-shot lawyer. All the banks that did these things had squads of lawyers making sure everything was completely legal. That's why the government will never get any criminal convictions.
It says right on page 378 of the prospectus that if the financial markets collapsed, the value of these securities might be adversely affected. Didn't read that part? You, or your lawyer, should have.
What I expect is more of the little fish getting thrown under the bus, some more hand slaps and tiny fines, with no admission of wrongdoing.
Until the big fish pay with jail time and confiscation of assets, nothing will change.
if you were the 1% Obama is your choice to keep the pitchforks at bay because he serves to neutralize the outrage.
Here is what they predictably do:
Ignore the evidence completely
Start squealing that HP is biased or attack the author
Claim that Obama was thwarted in his true intent by obstructionists of one sort or another--ignoring Obama's own choices as appointments and never acknowledging how much the right accomplishes even when they are the minority.