As the 2012 presidential election season heats up, new campaign finance figures reveal Wall Street is heavily investing in President Obama. According to the nonpartisan Center for Responsive Politics, the Democratic National Committee and Obama have together raised more than $14 million from the securities and investment industry, compared to nearly $9.5 million contributed to his Republican rival, Mitt Romney. This makes Wall Street the third most generous industry donating to Obama’s re-election efforts. The news comes amidst ongoing investigations by the Justice Department into massive financial fraud by some of the nation’s largest banks. Yet four years after the 2008 economic crisis, not a single top Wall Street executive has gone to jail.
Glenn Greenwald talking:
When the PATRIOT Act was first enacted, it was obviously in the immediate aftermath of 9/11. And even with the sort of fear and hysteria that was prevailing in the country at the time, the PATRIOT Act was considered remarkably controversial, even for that time period. When it was enacted, there were all kinds of editorials warning about the surveillance capabilities that we were investing in in the United States that were unique, warnings and concerns about how pervasive the surveillance would become, about how it could be conducted without oversight. It was really a very controversial provision. The PATRIOT Act had become sort of the symbol of Bush-Cheney radicalism and the way in which the fears of 9/11 and terrorism were being exploited.
Fast-forward 10 years later, we haven’t had another single successful terrorist attack on American soil, and yet now the PATRIOT Act is completely uncontroversial. It gets renewed every four years. Even in the wake of 9/11, the warnings and concerns of it were sufficiently strong that they put in sunset provisions, saying we don’t want this to be a permanent state of affairs, it has to be renewed every four years. It now gets renewed with no debate. The votes are something like 89 to 10 in the Senate to renew it, with no reforms, even though there’s mass of evidence of systemic abuse. The Democrats and Republicans both renew it when they control Congress. Obama’s administration demanded its renewal without any—without any modifications. And it just goes to show how quickly what’s conceived as radical and what is radical becomes so normalized and a permanent fixture in our political landscape. That, I think, is the really disturbing lesson about the PATRIOT Act.
Barclays, less than a week after, agreed to pay to $450 million to settle accusations that it had tried to manipulate key interest rates. Goldman Sachs agreed to pay $550 million to settle charges of securities fraud—one of the largest penalties against a Wall Street firm by the Securities and Exchange Commission. June 2011, Bank of America announced it would pay $8.5 billion and set aside an additional $5.5 billion to settle claims by investors who bought toxic mortgages from the banking giant. One after another, these banking companies and Wall Street companies keep paying these apparently huge fines, but no one goes to jail.
I think it’s important to realize that, although these figures sound large, in one sense—$200 million seems like a lot of money, $500 million seems like a lot of money—in the scheme of what these banks are earning across the globe and the magnitude of the fraud, they’re really little more than blips on their balance sheets. I mean, they basically end up writing these things off as a cost of doing business, or really, more accurately, a cost of doing fraud. The amount of money they’ve made on their fraudulent activities vastly outweighs the amount they paid in fines. Now, some of those fines are more significant than that. They’re certainly not negligible once you get into the billion-dollar range. But even so, these banks are still extraordinarily profitable. They’re in fact making more money in some cases than they even were prior to the 2008 crisis. And so, when you look at what the institutional incentives are for banking executives, it is still very much to take these huge risks and gamble, as we saw with, you know, JPMorgan, and there might be $9 billion trading losses that were undetected by regulators.
And the reason is exactly what you said, which is what is supposed to deter true securities fraud is not that these banks may end up paying some fines institutionally, because that really doesn’t provide enough of incentive, obviously, as that list of yours proves. What is really supposed to deter systemic violations of the securities laws is the fact that they’re criminal offenses. I mean, Congress made them into felonies in the wake of the Great Depression. And yet, there has been zero legal criminal accountability from the financial crisis. And that’s the reason that this behavior continues. It’s exactly because these executives knew that they could take these huge risks and even break laws and pay no real price, and that’s what happened. And it’s not just a travesty of justice that we haven’t punished them for past transgressions. The real danger is that we’re continuing to send the signal to the world’s most powerful financial actors that they don’t have any fear of criminal accountability when they commit these obvious crimes.
the massive orgy of deregulation that took place that let Wall Street do many things that for decades had been criminal, took place in the 1990s during the Clinton administration and under Democratic Party control and was led by people like Larry Summers and the whole acolytes of Robert Rubin, such as Timothy Geithner, who ended up being empowered by President Obama at the highest levels of his economic policy team. So this idea that he is somehow disturbed by or in opposition to the kind of deregulation that made a lot of this behavior un-criminal is incredibly misleading, given that those are the people who continue to run his administration.
Secondly, you notice that he said “some of this behavior” was not criminal. The unspoken implication of it, though, is that much of it was criminal. And, in fact, I just did an interview with Eliot Spitzer, who of course was probably the only elected official in the last two or three decades to put serious fear in the heart of Wall Street, when he was a prosecutor and attorney general and then governor. And I had said, as part of this interview, you know, I know that there’s this notion that prosecutions might be difficult of Wall Street executives, but that’s not a reason to refrain from doing them. And he actually objected and said, “You know what? Prosecutions would not be difficult.” And he’s right. We have emails from Wall Street executives where internally they’re mocking the assets that they’re representing to the public as being these sterling assets, and they’re mocking them as garbage and junk. They knew that they were committing fraud. Credit agencies were purposely shielding these assets, knowing that they were junk, as well.
And then a third issue that he said was, you know, “It’s not my job to comment on prosecutions.” That’s particularly ironic, given that President Obama expressly argued and instructed the Justice Department not to prosecute Bush officials for the crimes that were done as part of the war on terror. He’s made comments about Bradley Manning’s prosecution and decreed him guilty in public. And yet, suddenly, when it comes to Wall Street executives, who funded his 2008 campaign and are funding his 2012 campaign, he suddenly becomes very shy and reticent and says, “It’s not my job to comment on prosecutions.” He is the leader of the party. He’s the leader of the country. And the fact that we haven’t prosecuted Wall Street executives is one of the greatest national disgraces. You see in Spain, as we heard in that report, some effort to move away from that. That is his responsibility to demand that justice be applied equally. The vow that he made when he announced his presidency—run for the presidency, in the first paragraph of his announcement, he said the era of Scooter Libby justice would be over. Scooter Libby justice means, if you’re sufficiently powerful, you don’t pay a price for your crimes. That was the promise that he made when he ran, and that’s the promise that he’s so woefully failed to fulfill.
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Glenn Greenwald, former constitutional law and civil rights attorney, and political and legal blogger for Salon.com. His book, With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful, was released this week in paperback.
— source democracynow.org