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The New American Hustle

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The Oscar favorite (10 nominations), American Hustle, begins with the words "Some of this actually happened." And it did.

What actually happened, beginning in 1978 with an FBI sting operation, is that the mayor of Camden, New Jersey, six U.S. congressmen and one senator, took bribes from agents posing as Arab investors, and ultimately went to prison. The senator was Harrison ("Pete") Williams. One of the congressmen, Frank Thompson, was also from New Jersey. All of the bribe conversations were videotaped.

And yes, the FBI used a small time con-man, named Mel Weinberg, to help carry out the sting. The comb-overs, oversized eyewear, loud suits, and Jersey accents and were every bit as extreme as their portrayal in Christian Bale's inspired performance. If anything, Bale is understated. You can even watch the video stings on YouTube.

The Abscam operation was controversial because it smacked of entrapment. No crime would have been committed had the FBI not offered a corrupt deal.

Of course, in the immortal words of W.C. Fields, "You can't cheat an honest man." One of the intended targets, Sen. Larry Pressler of South Dakota, told the con artists that what they were offering was illegal, and he called the FBI. (One can imagine the chortling over at FBI headquarters as one division compared notes with another.) For this demonstration of ordinary honesty, Walter Cronkite had Pressler on his CBS newscast and called him a hero.

Fast forward nearly half a century. The biggest American Hustle of all, the financial frauds engaged in by America's largest banks and their top officials, has resulted in no criminal prosecutions of senior executives. Only a few relative small fry have been convicted of the relatively minor crime of insider trading. Oh, they did convict Bernie Madoff, whose scam was evident for a decade to a whistle blower whom the SEC didn't want to take seriously.

But there has been no FBI sting of senior bankers. In a sense, none is really necessary because the feds have an email trail demonstrating conclusively that bankers conspired to inflate the value of nearly worthless mortgage-backed bonds, to manipulate markets and to misrepresent the value of securities that they were simultaneously peddling to customers and betting against for their own profits.

Corporations have paid tens of billions in fines to settle criminal and civil complaints. Madoff's bankers at JPMorgan, paid $2 billion to settle charges that they had knowingly turned a blind eye to his frauds. But no senior banker has even been criminally prosecuted. (Corporations may be legal "persons" according to the Supreme Court, but they are still directed by human persons.)

Why no criminal prosecutions of humans? In a moment of candor, Attorney General Eric Holder explained that these banks are just too big to jail. Testifying to the Senate Judiciary Committee last year, Holder candidly said,

I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute -- if we do bring a criminal charge -- it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large.

(By an eerie coincidence, the young prosecutor who brought one of the Abscam criminal cases, against the vice chairman of the New Jersey casino commission, was the same Eric Holder.)

Just last month, the Goldman Sachs board voted to give CEO Lloyd Blankfein a 74 percent raise, to a compensation package of $20 million, despite the fact that Goldman narrowly evaded criminal prosecution and paid upwards of $20 billion in fines to settle charges.

This 21ST Century American Hustle netted hundreds of billions of dollars in insider profits by the big banks, and cost the economy about $15 trillion. Abscam was chump change by comparison. And so are the fines the bankers agreed to pay.

Compared to going after big bankers, entrapping corrupt or corruptible mayors and legislators is low hanging fruit. But the top financial fraudsters remain untouchable.

Watching the film American Hustle, we can enjoy a sublime, over-the-top '70s show as well as some civic satisfaction that despite the FBI's Keystone Cops antics and scams within scams, some corrupt officials actually went to prison. Meanwhile, the ultimate American Hustlers are still on the street, laughing all the way to the bank.

Robert Kuttner's new book is Debtors' Prison: The Politics of Austerity Versus Possibility. He is co-editor of The American Prospect and a senior Fellow at Demos.

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