Yes, we know the “Sharknado” craze ended about ten days ago. The sci-fi movie’s premise of tornadoes filled with deadly sharks has probably passed its cultural sell-by date. But we’ll use the metaphor anyway, because it’s just so apt: Wall Street’s a whirlwind filled with predators descending on a hapless population.
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And while our leaders stand idly by, the teeth-filled twisters keep falling from the sky. Look out below!
Goldman Sachs was recently found to be manipulating aluminum prices by buying up large amounts of the metal (what are the banks we rescued doing in the commodities business, anyway?) and then shuffling the stuff from warehouse to warehouse to jack up its price by a fraction of a penny at a time. By taking advantage of a regulatory loophole in this way, Goldman’s making billions at everyone else’s expense.
Goldman’s gamesmanship, which may be legal but certainly isn’t ethical, follows evidence of Goldman crimes and misdeeds that range from investor fraud to perjury by its chief executives. (See here, here, here, here, and here – for starters.)
JPMorgan Chase has committed widespread energy fraud, according to recent revelations. Enron played games with energy prices, too, remember? Chase is preemptively leaking stories to the press that it’s willing to pay half a billion dollars to settle fraud charges.
Since when do criminals negotiate their way out of their crimes with other people’s money? Since the Obama administration decided to let them, in the wake of revelations that bank fraud led to the 2008 crisis.
The perpetrators don’t just go free. They keep their ill-gotten gains. In JPM’s case, we’re told that the executive behind the misdeeds won’t even be fired or disciplined, despite a range of accusations that included false testimony.
Past crimes by JPMorgan Chase employees include bribery (which led to the bankruptcy of Jefferson County, Alabama), the “London Whale” case (which involves investor fraud and what appear to be deceptive public statements by CEO Jamie Dimon), widespread perjury and forgery in commission of foreclosure fraud (which includes a unit of temp employees called the “Burger King kids”), and other repeated fraudulent activity.
HSBC acted even more heinously, by laundering money for the Mexican drug cartels that have murdered tens of thousands of people. Yet that bank, like the others, was given a free pass by the Justice Department. Attorney General Eric Holder even madede facto immunity explicit by stating that “if you do prosecute, if you do bring a criminal charge (against lawbreaking banks), it will have a negative impact on the national economy, perhaps even the world economy.”
That’s a shocking admission from the nation’s chief law enforcement officer, even for those of us who have become jaded under this attorney general, given that HSBC effectively served as an accomplice after the fact (at least in a moral sense) to murder, torture, and drug dealing.
Holder did not explain why he was not moving to indict individual bankers at HSBC. Nor did he address that question earlier this year, when he gave senior executives at our criminal mega-banks get-out-of-jail-free card for a range of other crimes.
The LIBOR scandal involved all the nation’s major banks in a long-standing pattern of fraud that cheated the nation’s cities (among others) out of billions of dollars. And yet Detroit’s bankruptcy filing focused press attention on the pensions earned by police officers, firefighters, and sanitation workers, rather than on the bank criminality which has drained so much money from the nation’s coffers.
Bankers, not retired workers, should be asked to sacrifice for Detroit.
The Bible says that God spoke to Job from a whirlwind, asking him rhetorically if he could catch the giant sea creature Leviathan with only a fishing hook. “Can you make a pet of him like a bird,” Job was asked, “or put him on a leash for your children?”
The United States faces a task of roughly the same magnitude, that of taming this country’s mega-banks. They’re the sea monsters of the economy, waiting to lure entire nations into the depths, and regulators don’t have much more to work with than a fishing hook.
The Dodd-Frank banking legislation’s moderate prescriptions are being eviscerated by hack Republicans who’ve been bought off lock, stock, and barrel by the bankers. Other urgently-needed reforms are dismissed by leaders in both parties as “politically impossible”: A restoration of Glass/Steagall. A financial transaction tax. Breaking up the too-big-to-fail banks.
Politically impossible? They’re popular with voters across the political spectrum. Why aren’t they already the law of the land?
Here’s why: Republicans are in Wall Street’s hip pocket. As for the White House, this is from Ezra Klein’s coverage of Lawrence Summers’ candidacy for Federal Reserve chair: “The White House … (is) getting feedback from fans of Summers, who are … very present in the ranks of economic and Wall Street heavyweights who’ve worked or fundraised at high levels in Democratic administrations.” (emphasis ours)
Bankers have deep pockets, and they dig into them when the campaign fundraisers come calling. That guarantees them a friendly audience in the corridors of power. Jamie Dimon’s testimony before the members of the Senate Banking Committee, most of whom had received campaign money from his bank, was a reminder of the Biblical description of Leviathan:
“He looks down on all that are haughty; he is king over all that are proud.”
The Limits of Outrage.
The “banknado” metaphor may seem too flippant, too informal, given the gravity of the problem. But banker fraud’s been described in dispassionate detail again and again. There have been countless expressions of fully-justified outrage at the amorality and immorality of Wall Street CEOs and their Washington enablers.
Nothing’s changed. The evidence is overwhelming, the case is clear, but business goes on as usual.
How many times can Wall Street’s fraud be clinically described, its effects on the economy laid out on the table like an autopsy? How many times can practical solutions be proposed, only to be dismissed by bought-off politicians? How many times can bankers like Jamie Dimon be called out for crimes committed under their leadership, only to see them lionized once again in Washington and the mainstream media?
What is there to say that hasn’t been said? Outrage marginalizes the outraged, giving policymakers one more excuse to dismiss their warnings and prescriptions. It can also trigger a level of reader rage toward bankers that is sometimes disturbing.
The goal is to change a broken system, not to trigger vengeful emotions toward individuals. Miscreant bank executives are simply responding to the incentives society has given them. Yes, they’re behaving venally – but as the fable of the scorpion and the frog says: It’s their nature. Perhaps they would be better citizens and better human beings if we didn’t reward them so handsomely for being so much less than that.
And so Wall Street moves on, a whirlwind of razor teeth and predatory instinct. Bankers commit fraud, settle for billions paid with other people’s money, then commit the very same crimes again. Why not? Their financial incentives encourage it.
And who’s stopping them? The writers and activists who catalog their crimes are marginalized as radicals, scolds, and bores. That has to stop, because those who strike a “moderate” tone help perpetuate a climate in which their behavior continues unchecked.
If Wall Street’s not reined in, it’s only a matter of time before there’s another crisis. What the government describes as a “recovery” is fragile at best, and includes ongoing depression for millions of people. There could be another banker-driven financial crisis at any moment.
Our leaders stand motionless, one hand covering their eyes and the other outstretched for cash. Too many financial journalists are hypnotized by the charismatic glow of great wealth and power. Meanwhile the sky’s growing darker – and the forecast calls for sharks.