". . . It is critical to understand that the recent financial crisis was not a natural disaster. It was a man-made economic assault. People did it. Extreme greed was the driving force. It will happen again unless we change the rules," stated the Chairman of the Senate Permanent Subcommittee on Investigations Carl Levin, Democrat of Michigan.
Looking into the reasons for the subprime mortgage crisis that brought the American economy to a financial meltdown, Senator Levin has hit the nail on the head when he says the financial crisis was not a natural disaster but that "people did it."
After reading his testimony at his hearings entitled Wall Street and the Financial Crisis: The Role of High Risk Home Loans and having just finished reading the excellent new book by Michael Lewis The Big Short: Inside the Doomsday Machine, I am wondering why not one person seems to have paid for this financial crisis by being charged with a crime such as fraud.
During the savings and loan financial crisis during the 1990s, which was not as big as today's financial meltdown, we did send some people to prison for their corruption and scandal for ruining that sector of the economy.
Charles Keating, owner of Lincoln Savings & Loan, served time in prison for fraud and conspiracy in the 1990s. He became the name associated with the savings and loan scandal.
Today we hear talk of reform, new regulations, curbing Wall Street, putting derivatives outside the reach of our banks, and helping stop foreclosures, but why has no one been prosecuted for this financial meltdown that will rank next to the Great Depression as one of the worst economic times in American history?
Who will be the Charles Keating of today's economic disaster? As Senator Levin correctly points out this was "a man-made economic assault" and "extreme greed was the driving force".
Senator Blanche Lincoln, Democrat of Arkansas, has brought up some good suggestions about reforming the big banks and not letting them "gamble" with our money -- let them return to being banks and not gambling casinos.
There really should be more of an outrage across America. The other night, on the CBS Evening News there was a story about how prosecutors didn't have enough evidence to put one of AIG's traders on trial. The American taxpayer has given this firm nearly $200 billion. What have we gotten in return and who will pay for their gambling spree?
The American taxpayer has helped keep part of the U.S. auto industry alive and workers at their jobs. Where is the outrage against the auto executives who so destroyed an industry that America once owned?
It may sound naïve but in a capitalist society where there are winners and losers, there are also laws to protect the consumer and taxpayer.
So far no one has been punished for the financial meltdown and there needs to be accountability. At the Washington Mutual Bank hearings it appears none of the bank executives had even heard of subprime mortgages. This is a disgrace especially since Washington Mutual Bank has been the largest bank failure in U.S. history.
Even a former financial icon like Robert Rubin at Citi seemed to be oblivious to what his massive bank was doing in the way of subprime mortgage loans.
Is anyone going to take responsibility to this man-made economic disaster? Is anyone going to be charged with crimes? Surely this all did not happen by accident. What about the government regulators who weren't doing any regulating? Have any of them lost their jobs?
America has been brought to its knees financially and no one has accepted responsibility and no one has been charged for any illegal activity in bringing on this meltdown. It is a disgrace and needs to be remedied soon.
It is good and fine to talk of reforming Wall Street in the future but who will pay for bringing our financial system down today?