Department of Justice In Bed With Wall Street | Ring Of Fire Radio: Robert Kennedy Jr, Mike Papantonio and Sam Seder.
Even before the final votes were counted on election day, the results of the election really don’t matter when it comes to Wall Street bankers. The so-called Too Big To Fail banks had already won the election, because neither candidate had the courage to stand up to the corruption of Wall Street and enact any kinds of reform that would help stop the banking industry from pulling off scams that destroy the lives of American consumers. Wall Street has already won, and American consumers have lost. Recently, Mike Papantonio of Ring of Fire talked about why Wall Street declared itself this year’s election winner with Nomi Prins, author of the new book “Black Tuesday,” and the transcript of that interview is below:
Mike: Nomi, when you hear Democrats talk about Dodd-Frank, it’s almost as if they’re thinking it’s some broad, sweeping reform that’s going to solve all the problems that burned our economy down. Nothing’s further from the truth, is it? All you have to do is look at this short history since the Wall Street burn down of our entire economy to understand Dodd-Frank is certainly not the sweeping reform that’s going to save us, is it?
Nomi: No, it isn’t at all. The bad part about framing it as such, or how Washington has framed it as such, is it doesn’t give us an opportunity to really create reform. Real reform would entail restructuring the entire banking landscape, and separating the components of banks that do shoddy toxic assets, and sell them, and speculate with them, and borrow against them, and inflate an entire fake economy and then deflate it much more quickly, as we saw during the crisis of 2008, into reasonable components that deal with individuals on deposits and loans. They can speculate separately all they want to, but not within the same institution that’s federally backed. That is not what was thought from Dodd-Frank.
Mike: Nomi, as you look back, we all knew what was going to happen when we saw Glass-Steagall dismantled. If you go back and you look at what the critics were saying was going to happen, it’s a little eerie because all of it happened. Exactly what they said was going to happen, happened. You had greed take over on Wall Street and create a mechanism that it makes it virtually impossible for the average consumer to ever get a fair break where it comes to dealing with big banks. Second of all, it makes it impossible to have our leadership find enough courage to do anything about it, as we’ve seen with our Justice Department. There’s no happy ending here. I don’t see this landing in a way that there’s a happy ending, unless you have a Department of Justice that starts putting people in jail. I just don’t see how this gets any better.
Nomi: Unfortunately, it doesn’t get better. The Department of Justice has totally dropped the ball. In fact, everything that the SEC did in terms of fining a lot of these institutions for what was called CDOs, or collateralized debt obligations, just a crazy Wall Street acronym for packaging junkie loans into something that looks pretty and then selling in onto the world, are all of the fines. The SEC was completely not even behind the ball, but nowhere near the ball in looking at this stuff as it was building up throughout the 2000s. Even after their fines, all the banks got to say, “We will deny any wrongdoing. We did nothing wrong. We’ll pay these fines so that we can go on our merry way, but we did nothing wrong.” Then you hand us over to the Justice Department and they basically say this on behalf of the banks. They say, “We can’t find that they really did anything wrong either.” They dropped all of these cases, and then that result was a total of about $4.5 billion worth of fines levied on the industry, most of which came from civil suits, not even from the SEC fines. [Inaudible 00:03:25] the bonuses these guys made over the period where the buildup to the crisis happened.
Mike: Let’s put it in perspective. $4.4 billion is what we saw. As you point out, most of that came from the private sector, lawyers saying, “We’re going to go after these people.” Otherwise, the Department of Justice probably would have done nothing. I can tell you firsthand, having handled these cases, that had it not been for our effort, the Department of Justice would have done nothing. Virtually nothing. Your comparison is to say, “Let’s look at the $4 billion compared to the Wall Street bonuses that topped $600 billion. Almost $700 billion dollars. The bonuses versus the paltry fines. To say, Nomi, that nobody did anything wrong. Nobody went to jail. Nobody was perp walked. There were no trials. It doesn’t take a lot of analysis to understand that we have a broken Department of Justice and broken leadership in Washington under Obama. This was his watch and nothing was accomplished.
Nomi: That’s exactly right. Not only was nothing happened, again, what occurs is we have this pretend that something happened, which is even worse than nothing happening, or at least equal. We have historically a period where there leadership. When FDR was in office in the White House, and this was after an unprecedented amount of fraud and speculation had culminated in the 1929 crash, and the awful Great Depression that followed. He took the leadership to create Glass-Steagall which separated the banks, and said you can’t be backed by the government and also create speculative transactions. You do one or the other, but you don’t back to speculation. Not only that, and this is something historically I don’t think anyone today understands in leadership or in banking. Something very critical happened under FDR as well, which was that the top banker at the time, Winthrop Aldrich, who was the head of Chase, the biggest bank in the country. He said, “I am for regulation. He in the front pages of the New York Times had a full spread with tighter regulations than Glass-Steagall was even proposing. He made it harsher and he did that because he agreed that regulation was important to the stability of the country, which was important also selfishly, to the stability of Wall Street. It came together. Today, we don’t have that philosophy.
Mike: First of all, as you put it and make it so clear in everything you write, we have no leader that will take on Jamie Dimon. If you don’t take on the worst of the worst, the Jamie Dimon types, then you have a system that doesn’t work. One story I thought was interesting, and you pointed out several times in your writing, and that is that you had, and this really tells a story, you had an Obama appointed SEC head, Mary Schapiro. She settled with Bank of America for just a giveaway, $34 million in a case that somebody should have gone to prison for. I’ll say it. You don’t have to say it. I’ll say it. I know the facts. People should have gone to prison for it. It was so bad the Department of Justice says, “We’re going to give you this friendly settlement of $30 million and then the judge, Rakoff of all people, the judge who typically is not really a proactive judge on these issues. He says, “No, the fine is going to be $150 million, because you misled shareholders. You did it during a time that all the rules were very clear, and you violated about 17 that were very clear, that in ordinary circumstances, would have put people in prison. This was Mary Schapiro, the Obama appointed SEC head, that said, “We’re just going to let you go.” How do you ever change the culture like that? Read more