Wall Street’s Immunity: DC’s Unholy Alliance with the Banks

Why has the Obama administration so aggressively protected the financial industry from legal accountability? Of all the ignominious actions of the Obama administration, the steadfast, systematic shielding of Wall Street from criminal liability is probably the most corrupt in the traditional sense of that word. In Newsweek this week, Peter Boyer and Peter Schweizer have an excellent examination of what happened and why, tying together crucial threads. First they lay out the basic facts, including the core deceit of the President’s campaigning for re-election like he’s some sort of populist crusader:

With the Occupy protesters resuming battle stations, and Mitt Romney in place as the presumptive Republican nominee, President Obama has begun to fashion his campaign as a crusade for the 99 percent—a fight against, as one Obama ad puts it, “a guy who had a Swiss bank account.” Casting Romney as a plutocrat will be easy enough. But the president’s claim as avenging populist may prove trickier, given his own deeply complicated, even conflicted, relationship with Big Finance.

Obama came into office vowing to end business as usual, and, in the gray post-crash dawn of 2009, nowhere did a reckoning with justice seem more due than in the financial sector.… Two months into his presidency, Obama summoned the titans of finance to the White House, where he told them, “My administration is the only thing between you and the pitchforks.…”/p>

Candidate Obama had been their guy, accepting vast amounts of Wall Street campaign money for his victories over Hillary Clinton and John McCain (Goldman Sachs executives ponied up $1 million, more than any other private source of funding in 2008). Obama far outraised his Republican rival, John McCain, on Wall Street—around $16 million to $9 million. As it turned out, Obama apparently actually meant what he said at that White House meeting—his administration effectively would stand between Big Finance and anything like a severe accounting. To the dismay of many of Obama’s supporters, nearly four years after the disaster, there has not been a single criminal charge filed by the federal government against any top executive of the elite financial institutions.

“It’s perplexing at best,” says Phil Angelides, the Democratic former California treasurer who chaired the bipartisan Financial Crisis Inquiry Commission. “It’s deeply troubling at worst.”

The Newsweek reporters note that “financial-fraud prosecutions by the Department of Justice are at 20-year lows”; in fact, such prosecutions under Obama “are just one third of what they were during the Clinton administration” — even though the 2008 financial crisis was drowning in financial fraud. Contrast that with the reaction of George H.W. Bush to the much less severe Savings & Loan crisis of the 1980s:

“There hasn’t been any serious investigation of any of the large financial entities by the Justice Department, which includes the FBI,” says William Black, an associate professor of economics and law at the University of Missouri, Kansas City, who, as a government regulator in the 1980s, helped clean up the S&L mess. Black, who is a Democrat, notes that the feds dealt with the S&L crisis with harsh justice, bringing more than a thousand prosecutions, and securing a 90 percent conviction rate. The difference between the government’s response to the two crises, Black says, is a matter of will, and priorities. “You need heads on the pike,” he says. “The first President Bush’s orders were to get the most prominent, nastiest frauds, and put their heads on pikes as a demonstration that there’s a new sheriff in town.”

Read the rest of the article here.

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Posted in Economy, US
One comment on “Wall Street’s Immunity: DC’s Unholy Alliance with the Banks
  1. Pintu says:

    You sound like one of them danged Socialists/Marxists. No, I’m a cyincal realist. Just as there are good people in all walks of life, there are also dishonest individuals in the same areas of society whom we must take in account. History has shown that if business is allowed to do anything it wishes, unscrupulous businessmen will set aside what is right or moral in their search for profits. Nor will consumers (aka the market forces ) always be able to correct for predatory capitalists, any more than they can correct for predatory politicians. This is precisely what keeps me from considering joining the Libertarian party, as most of the anti-regulatory Libertarian leadership naively think that the market will always adjust for unscrupulous business practices, yet, refuse to accept the reality that a dishonest business can take over the share of the market over honest merchants, driving the ethical capitalist out of business.@: Is this directed towards me? If so my answer is Hell no! I fully support our republic’s capitalist system, even if I don’t support the dishonest, manipulative, elitist leadership of many on Wall Street or in our nation’s ivory towers. The so called OWS movement is a purely Astro-turf one motivated by world socialists groups who gain support by joining forces with other radicals and by manipulating the society’s poor into thinking that their lot will improve under socialism. And who always end up resorting to corruption, violence and criminality to gain power.Reply

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