The headline on HuffPost this afternoon said it all: The Rot Spreads. The conservative magazine The Economist runs a cover story on "Banksters". Rolling Stone has articles comparing bankers to the mafia. The Libor scandal is creating huge headlines all over the world, making people ask why aren't the big banks being prosecuted. But it isn't just the Libor scandal, as one article after another, one book after another, one blog post after another over the last four years researches and documents levels of corruption in the financial industry that break all corruption records by miles. As the damage of the financial wreck the Wall Street titans created in America enters its fifth year, and the Eurozone financial crisis soon staggers into its third year with absolutely no end in sight, all of us are starting to wonder: will the American justice system ever take action? Because as long as the bankers are allowed to keep committing the kind of fraud evident from all these stories, our economy, and Europe's, will not recover.
I don't even really blame the bankers that much. Don't get me wrong: I think many of them have the moral compass of the ooze lying at the bottom of a dumpster on one of the 100+ degree days we have been suffering through lately. But you give any group of people the kind of virtually unlimited power and wealth, with no effective checks on their behavior, that these big Wall Street tycoons have had most of the last decade, and most of them will turn corrupt sooner or later. Especially when the system seems set up to encourage it, and so many of their competitors are doing it. A new survey just out says that 26 percent of senior executives in the financial industry have firsthand knowledge of wrongdoing in their workplace, 24 percent said they thought people in the business needed to engage in unethical or illegal conduct in order to be successful, and 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law. I would guess that the only reason those numbers aren't a lot higher is that many of the people surveyed are already so ethically compromised that it hasn't ocurred to them in a long time that they might be doing something wrong.
These scandals are sucking money straight out of the main street economy and straight into the pockets of the wealthiest in society, people who are generally not investing in creating new jobs but who are basically speculating in the financial to maximize their short term profits. (Sort of like Bain Capital.) The only way to straighten our economy out is to deal with the cancer of this corruption. Easier said than done, without question. Given the biggest banks' overwhelming market power, there are only two things which will go the heart of the matter and stop this pervasive corruption: either the biggest banks need to be broken up, or the corrupt bankers at the top -- the biggest sharks in the water -- need to be prosecuted for their crimes. Okay, preferably both, but I will take either one in the short term, at least.
Since the biggest banks aren't going to be broken up anytime soon due to their immense political power and the megabank-loving members of Congress currently in control of things, we are left with one thing we could do now to go straight at the heart of darkness: prosecute these bankers. The president, to his credit, set up a task force to do just that. He appointed a co-chair, Eric Schneiderman, who has spent the last 18 months saying he wants to do it. The new Consumer Financial Protection Bureau, which Elizabeth Warren willed into being and is staffed up with tough aggressive staffers, is chomping at the bit ready to go. From what I hear, another key player in the fraud task force, HUD Secretary Shaun Donovan, is eager to push the big bankers and hold them accountable. So why doesn't anything seem to be happening?
A new report out by Richard Eskow ought to be read by everyone in the Obama administration, and everyone who wants to understand why the task force has felt like it is moving so slow. Sources are telling Eskow that it is Holder holding back action by the task force. Eskow is hearing from sources that as few as 20-30 new DOJ staffers would make a huge difference in moving things forward. And based on everything I have been hearing from sources close to the task force, Eskow's reporting is very credible.
This is serious business -- deadly serious both to the world economy and to the chances of Obama being re-elected. Our economy will not heal unless these mega-banks are stopped from the kind of crooked deals that steal from everyone. And the president will not have the kind of credibility to go after Romney's Bain-onomics without having a financial fraud task force that is doing what the president said he wanted it to do -- not with practically every major news source in America talking about banking scandals that no one is prosecuting. Everyone in the Obama administration who wants to keep their job past January 20, 2013 when the next president is due to be sworn in, needs to be joining the rest of us looking on from the outside in asking: when is Eric Holder going to do the right thing and allocate the resources needed to prosecute the big banks? As someone who is desperately afraid that a banker like Romney who got rich by manipulating financial markets and now keeps much of his ill-gotten gain in secret accounts in places like Switzerland and the Caymans is going to be president, I hate to raise questions about Eric Holder. But I fear that he is dooming his boss, the president, and I believe those of us who care about that are precisely the ones who need to raise hell.