Well, the SEC has finally brought a case, cheers to that. Though the SEC has proved itself particularly hapless over the past couple decades, one must nonetheless always allow for the restitution of any system. Let’s hope this is just a start, a case against a Goldman underling is only that. The fraud on Wall Street is systemic. It is an industry that has turned predatory against both their clients and the greater society. People need to go to jail, and not the underlings, but the heads of the firms.
The NYT editorializes:
We urge everyone to keep a close eye on this case. If it is handled correctly, it should finally answer the question of whether malfeasance — and not merely unbridled greed, incompetence and weak regulation — was also responsible for the financial meltdown.
There is no question of malfeasance, it is rampant. The only question is what perpetrators go to jail. At the FT, Gillian Tett writes:
Thus while Goldman Sachs might have been the focus of Friday’s suit – and makes a tempting target for politicians – its practices were certainly not unique. I would not be at all surprised if other names eventually jump into the SEC gunsights too.
Of course, it remains to be seen in court whether any of this will actually produce convictions. Precisely because the subprime and CDO markets were so opaque during the credit boom, it was often very unclear what was legal – or not. Moreover, bankers were extremely adept at “innovating” to get round the law.
In what other industry is breaking the law considered innovation? If you want a layman’s view of what was happening across the industry, check out Dylan Ratigan’s explanation here. The greatest problem is the SEC brings civil not criminal cases, and a few slaps on the wrists to underlings and token fines, combined with fraudulent reform isn’t going to do anything. The president needs to get the Attorney General to start bringing criminal cases. The problem with that is he will have to start prosecuting some of his funders. We’ve heard endlessly about the president’s stint as a community organizer, but very little about how he received more Wall Street money than any candidate in American history. Of course you won’t hear about that from the Republicans, because they’re still scratching their heads trying to figure out how the hell the Democrat’s became the party of Wall Street.
This is where real courage is necessary and if the President needs some fortitude, I suggest next time he’s back in Chicago, he take a stroll from his house in Hyde Park and head a few blocks south and west to Englewood, in his old state senate district. Englewood has lit up lately, 40 shootings in a couple days, four dead. Now, pretty much everyone in Englewood has a relative or knows someone in jail, and if the President was to tally up the total money pilfered by everyone from Englewood sitting in a jail cell, it wouldn’t add up to one tranche of one fraudulent Wall Street CDO. Yet, the Englewood folks are all in jail, while Wall Street enjoys record bonuses.
If you want to see what happens to a society when the rule of law breaks down, just head to Englewood. As the report states, “A gulf of mistrust remains between many Englewood residents and police.” Can you imagine after forty years of “law and order” as ubiquitous campaign policy across America and thirty years after Morning in America, there’s people in this country that mistrust the police?
Residents say, unfortunately, similar incidents –while tragic– are neither shocking, nor surprising, not in Englewood.
“It’s something you come to expect around here. So, on a hot day, don’t get too far from your house so when the shots start, you can run. Really. Always, around here, somebody is going to want revenge,” a neighbor said.
When the rule of law breaks down, revenge replaces justice.