"Investigate the Banks!" Today a coalition of progressive groups handed in a petition with more than 360,000 signatures that demanded exactly that. It calls on the Administration to stop pushing a cushy fraud settlement for bankers, to pursue a fair deal for shafted homeowners, and to let criminal investigations against Wall Street crooks proceed.
Yet White House officials are still aggressively pushing the very same cushy deal on foreclosure fraud that inspired the petition. And just this week the Justice Department declined to prosecute fraudulent bankers once again as it worked to settle another bank fraud case.
Thinking about this relentless pursuit of Wall Street settlements, suddenly the last line of The Great Gatsby -- the one about "boats against the current" -- came to mind. Bankers are today's Jay Gatsbys. They're shady figures who have adopted a veneer of respectability, yet remain relentlessly, ruthlessly, and sometimes illegally self-interested.
And the very kindest way to look at Democrats who flirt with them is to compare them to Gatsby's old flame Daisy, whose reunion with him ended in disaster.
"He had come a long way to this blue lawn and his dream must have seemed so close that he could hardly fail to grasp it."
There was a time when Democrats could succeed by triangulating liberal imagery against neoliberal economic policy. It looked like they could have it all: The enthusiasm of their base, widespread public support, and Wall Street campaign money, all at the same time. The nineties-era stock bubble even made it look like this was smart policy.
Those days are over. The facade has been pulled away from Wall Street's crimes. The myth of deregulation has been exposed. Bankers have been revealed, not as "Masters of the Universe" but as ordinary people with ordinary talents but extraordinary drive and ambition -- and in some cases, extraordinary greed and immorality.
Wall Street broke the economy once, and next time it could be worse. In its relentless pursuit of a mythical past where "Wall Street and Main Street rise and fall together," the White House is endangering both the economy and its own political future.
The progressive groups behind the "Investigate the Banks" petition include Color of Change, MoveOn, Credo Action, New Bottom Line, Progressives United, and Campaign for America's Future (where I have a fellowship). "President Obama," the petition says. "Hold Wall Street banks accountable by fully investigating the big bank fraud that caused the housing crisis."
"Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that's no matter -- tomorrow we will run faster, stretch out our arms farther... "
Even as they were preparing to deliver it to Obama offices around the country we saw a wave of news stories with headlines like this one from Bloomberg News: "Federal-State Meeting Planned to Rally for Foreclosure Accord." And this one: Settlement would end yearlong negotiations over deceptive mortgage practices...
There were others, too: Mortgage settlement between banks, states 'close'. Or 'Robo-signing' settlement close: reports. Or Foreclosure deal with banks is 'very close,' HUD's chief says. Or US, Banks Near 'Robo-Signing' Settlement; US HUD's Donovan: 'Very Close' To Robo-Signing Settlement.
There was even this overhyped line, as reported by Reuters: One million homeowners may get mortgage writedowns: US. Since the proposed settlement figure is $25 million, somebody's exaggerating here. (More than 10 million homes are underwater, and $25 million for one million homeowners comes to $25 apiece.)
"He did not know that it was already behind him, somewhere back in that vast obscurity beyond the city, where the dark fields of the republic rolled on under the night."
A number of Attorneys General have refused to sign on to the Administration-backed deal despite intense political pressure to do so. We also learned recently that the White House is leaning on these heroes even harder, rather than backing off and letting them do their jobs -- or, better yet, helping them. From Saturday's New York Times article on California Attorney General Kamala Harris, who joined Beau Biden, in taking a strong stand:
Since taking office... Harris has clashed with the Obama administration over one of her signature issues: foreclosures and mortgage fraud... She said the proposed settlement sought by the Obama administration asked California to "excuse conduct that has not been adequately investigated."
It's not hard to see that there's a major disconnect forming between the White House and many of the groups it will need to rally in order to regain the White House in November. More importantly, the Administration-backed deal would let criminal activity go uninvestigated, much less unpunished, and would leave the economy vulnerable to future banking predators. (See below for more information.)
"And one fine morning --"
And the disconnect continues. There was even a trial balloon about the President appointing Larry Summers to lead the World Bank.
All of this suggests that the overly intimate relationship between our leaders and those who designed our failed, deregulated system -- and then got rich from it -- continues. So does this week's partial settlement of currency fraud charges with Bank of New York Carnegie Mellon, where the bank agreed to stop defrauding customer while negotiations for the cash part of the settlement continue -- without any apparent effort to charge the individual executives who conducted the fraud.
There's a great war brewing on the left between Obama's supporters and his critics. But even his staunchest supporters should be dismayed by his Administration's insistence on pursuing unjust deals with crooked bankers. It does the President no good to pretend that these moves won't hurt him politically, that they aren't bad for the country, or that they're part of some mythical 'long game' that the rest of us can't possibly understand.
They're tragic mistakes, and everyone -- the Administration's friends, as well as its critics - should insist that he stop making them.
"So we beat on, boats against the current, borne back ceaselessly into the past."
The President's inclusive "and/and" approach to governance can be admirable. But when it comes to criminal fraud by the nation's bankers and the public's resulting outrage, the situation is "either/or": Either the law applies to everyone or it doesn't. Either you represent wronged borrowers or you represent the bankers. America won't humor the mad Gatsbys of Wall Street any longer, and neither should the Administration.
The days when Democrats could have it both ways are over forever. To cling to the dead triangulations of the nineties is to drown in the shifting political tides.
The President's allies should join his critics in encouraging him to abandon the Jay Gatsbys of Wall Street to sail with, rather than against, the currents of history.
_____________________________
Related Posts:
The Obama Administration's 'New' Bank Fraud Deal: Still Unfair, Still Unjust, Still Unbalanced
That $335 Million Bank of America Settlement: The Good, the Bad, the (Very) Ugly
- Wall Street: Guilty as Charged
- Mr. President, Stop Protecting Bankers ...
- Pictures Of MERS, Part 1: Corporate Documents Illustrate The Mortgage Shell Game
- Fix Foreclosure Fraud With A Borrowers' Bill Of Rights
- Getting Medieval On Your Assets: Four Reasons Foreclosure Fraud Really, Really Matters
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow
Take banking today with BANKS TO BIG TO FAIL we have the worse of both worlds not the best.
We removed the safe guards of GlassSteagall but maintained the Federal Deposit Insurance Corporation (FDIC). Does this really make sense? Bank executives are allowed to gamble with our money they take the profits and we take the losses!
Allow two systems. Allow BANKS TO BIG TO FAIL to go with minimum regulation but remove the Federal Deposit Insurance Corporation (FDIC).
Allow other banks to operate under Glass-Steagall and have the protection of Federal Deposit Insurance Corporation (FDIC).
Let the 1%er's have their risky banks, allow us 99%er's to have our small well regulated safe banks!
I know where I'd put my money!
For a quick primer on banking deregulation:
http://www.ehow.com/about_5413083_history-bank-deregulation.html
This was done to us in Bipartisan fashion. Both parties will make a wonderful show of fighting over social issues but when it comes to Wall Street they are both on the same side. It was both parties in the 90's that deregulated the banks and created BANKS TO BIG TO FAIL and gave us NAFTA and permanent MOST FAVORED TRADE STATUS with China.
In fact, Republicans spent more taxpayer money issuing regulations than any previous administration in US history. The number of pages added to the Federal Register, which lists all new regulations, reached an all-time high of 78,090 in 2007, up from 64,438 in 2001. Many of these regulations weakened or outright overturned State regulatory authority. From a regulatory standpoint, it was the biggest power grab of the Federal government in almost a century.
The result was a near depression with very little ability to hold anyone culpable.
- F. Scott Fitzgerald, The Great Gatsby, Ch. 5
In my opinion all outside money should be banned from our political system. No lobbyists, no pressures from fat cats, bankers, or even Unions. No single person should have more access and influence over our political system than the average man on the street. A lobbyist has only a single purpose, to manipulate the process, period.
But I would go further than that, make taking any bribe or payoff by an elected official have mandatory prison time, and to ensure we catch a few put a bounty on their heads, offer a large reward for anyone who can offer proof that a politician has taken a bribe. If successful prosecution was accomplished from the tip pay them $200,000 or even more, it is worth it to end corruption of our system. A corrupt politician taking bribes will cost us more than we can count.
The Dodd-Frank Act, the one piece of regulation that's supposed to put a damper on excesses in banking, probably won't Protect Consumers at all - the curious can see why not here: http://www.sec.gov/news/studies/2011/967study.pdf
Some choice come November. Plutocracy or Plutocracy light. - Theodore Roosevelt must be spinning in his grave.
If you accept one of the Plutocracies candidates, you affirm the Plutocracy. I fear that the best I'll be able to get out of my vote this year is standing up and being counted for something other than a Dempublican corporatist.
By proping up the banks they were allowed to force prices to stay high instead of crashing the way they should have, we would have had a short term bad time and then we could have started the recovery and been out of it by now, that is how free markets work, let the weak die off, and the remaining elements come out bigger and stronger than ever before.
But that is not what we did, we protected "specific" people and businesses from their own mistakes and I am sure the gratitude will be seen in campaign contributions but that does not help the rest of America still waiting on the true recovery that has been delayed because we have never properly relieved the toxic debts.
While I blame Bush for signing TARP1, let's not forget that it was written and put on his desk for signature by Democrats who had the majority.
"But he didn’t despise himself and it didn’t turn out as he had imagined. He had intended, probably, to take what he could and go — but now he found that he had committed himself to the following of a grail."
"And he knew that if he were to wed his unutterable vision to (our) perishable breath ... his mind would never romp again like the mind of God."