Failure to Prosecute Criminal Banksters Is Killing The Economy
By: BooneCountyGirl
Despite U.S. Attorney General Eric Holder’s protestations to the contrary, it would not be difficult to prosecute the large banks that brought down, and continue to suppress, our economy, and in fact a good “perp walk” is just what is needed to restore the economy.
Day after day, week after week, more and more evidence of wholesale, systemic fraud and criminality by the Banks is coming to light even through criminal justice law firm for hire, yet the mainstream press – and even much of the vaunted “alternative” media – remain scarily silent.
Holder claims, “It is difficult to prosecute when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”
If the big banks are really generators of prosperity, why are they virtually 100% subsidized in order to keep them afloat? If the big banks are so important to the economy, why are so many prominent economists, financial experts and even bankers calling for them to be broken up?
Nobel Prize winning economist Joseph Stiglitz says that we must prosecute fraud for the economy to ever recover. Says Steglitz: “The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.”
The current regulatory environment has become so large and cumbersome that it not only fails to “codify our norms and beliefs,” but is so dysfunctional it now has a symbiotic, rather than adversarial, relationship with the banks. Regulators cannot, and indeed will not, stop even the most blatant of abuses as was recently seen in the case of HSBC, which laundered BILLIONS for drug cartels and terrorist organizations and yet not one employee was prosecuted. The bank instead received a fine, that, to the average Joe, seems astronomical but in fact represents less than two months profit.
Economists use the concept of incentives to explain how people make economic choices. Bankers are not stupid. When a “cost of doing business” fine will be the only repercussion to cheating, the incentive to cheat is strong and the risk is minimal.
History has demonstrated that failure to punish white collar criminals creates incentives for more economic crimes and further destruction of the economy in the future. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties. Professor of law and economics (and chief S&L prosecutor) William Black notes that we’ve known of this dynamic for “hundreds of years” yet fail to act.
Paul Zak (Professor of Economics and Department Chair, as well as the founding Director of the Center for Neuroeconomics Studies at Claremont Graduate University, Professor of Neurology at Loma Linda University Medical Center, and a senior researcher at UCLA) and Stephen Knack (a Lead Economist in the World Bank’s Research Department and Public Sector Governance Department) wrote a paper called Trust and Growth, showing that enforcing the rule of law – i.e. prosecuting white collar fraud – is necessary for a healthy economy.
One of the leading business schools in America – the Wharton School of Business – published an essay by a psychologist on the causes and solutions to the economic crisis. Wharton points out that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable. As Alan Greenspan said recently: Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it doesn’t work.
If we are to see real recovery, the public must trust their leaders in both parties will hold the perpetrators of the economic disaster responsible and take action to prevent them from harming the economy again.
Robert Shiller – one of the top housing experts in the United States – recently noted in Fortune Magazine that the recent, ongoing mortgage fraud is a lot like the fraud which occurred during the Great Depression. Shiller said the danger of foreclosuregate — the scandal in which it has come to light that the biggest banks have routinely mishandled homeownership documents, putting the legality of foreclosures and related sales in doubt — is a replay of the 1930s, when Americans lost faith that institutions such as business and government were dealing fairly.
In both the “Great Depression” and the current economic crisis, the government knew what needed to be done. And, both times, they declined to do it.
In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing. Instead Tim Giethner and Ben Bernake and team delivered low interest rates and deregulation. Any action that attempted to punish the banks malfeasance — the Attorney General’s investigation, the OCC foreclosure reviews, etc. — were all prematurely aborted when the banks agreed (insisted) on paying “large” so-called settlements that helped few, if any, of the many homeowners, investors and pension funds that continue to be flagrantly looted and destroyed.
Unfortunately, Obama’s official policy is not to prosecute fraud, even though (or perhaps because) criminal fraud is the main business model adopted by the giant banks. Indeed, the government has done everything it can to cover up fraud, and has been actively encouraging criminal fraud and attacking those trying to blow the whistle.
Holder’s DOJ, the Treasury, the SEC and virtually every state and Federal agency that are allegedly placing “cumbersome” regulation on the Banks, have in fact done nothing but send clear signals that laws will not be enforced. The signals are not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting.
At the root of the crisis we find the largest financial swindle in world history, where counterfeit mortgages are being laundered by the banks, our land records are being destroyed, and our fellow citizens – many of them service members – are being thrown into the streets, aided and abetted by our elected officials and the courts.
Despite the “deadbeat” meme put forth by the media, many of these unsuspecting homeowners took out mortgages that were designed to fail with features like hidden ARM adjustments. If the homeowner failed to default on schedule, the servers simply “manufactured” defaults by diverting payments, force-placing $10,000 a year homeowners insurance and adding that to the mortgage bill, charging $700 per month for home “inspections” that never occurred, and other bogus fees and charges. Many more never missed a single payment yet found themselves in foreclosure. And, in non-judicial states like North Carolina, homeowners don’t even get due process. A CLERK – who is forbidden from determining if a default occurred – decides if your house is given to whatever bank decides to take it, often with shoddy, obviously fake documents provided by the servicer’s local (thugs) lawyers.
Not only are the banks and servicers defrauding the homeowner, but the fine print in the Mortgage Backed Securities deals into which these mortgage were sold, often specify that the investors have no right to the underlying collateral (the homes). This means the investors – many of them pension funds – see nothing of the proceeds of the foreclosure sale. Investors put up the money for the mortgages, and the banks – the deal “underwriters” – get to keep the money AND the house. Nice work if you can get it, eh?
Perhaps the time has come for the economists to move into the background, and the criminologists to the front. Because the government, in permitting these crimes to occur, is complicit in a vast crime not just against the immediate victims, but against the American economy upon which our very freedom is based.
The government, by failing to prosecute criminal bank fraud, and by allowing taxpayers to be extorted into providing constant bank bail-outs, is actually destabilizing the economy and ensuring future crashes. The press, by acting as little more than the servile stenographer of the bankster class, is aiding and abetting these crimes.
Being in the belly of the banking beast here in Charlotte, it is tempting to look the other way and wring our hands and do nothing. (Think of the jobs lost! The (hush) money given to Charity!) But what if your plumber was caught defrauding homeowners? Would you say – we can’t put him in jail he has 100 employees!
Charlotte Republicans have always taken pride in being “pro-business.” But we are also stern believers in fairness and the rule of law. Being pro-business does not mean subverting the rule of law and giving in to “economic blackmail.” It is no coincidence that when Moynihan took over Bank of America he replaced one of the main tenets of the bank’s mission statement – “Do the Right Thing” – with one word – Winning.
Bankers, and Charlotte, were winners for years without cheating and stealing and wrecking the lives of our fellow citizens. And we can be again.
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