Busting Out the Wall Street Casinos

I'm tempted to keep writing about Wall Street Fraud because the Stat Counter is going through the roof, and I'm aware of my public, you know. Just stick that in the label down below ("Wall Street Fraud," that is) and the world beats a path to your door. So I say hello to my new friends in India & France. I don't know any Hindi, but I can say bonjour. I suppose the citizens of the Earth have been waiting for the United States to begin, at least, the process of trying to clean up the mess that Wall Street has inflicted upon the civilized world at large, and the SEC complaint against Goldman Sachs, while barely a start, is a move in the right direction. I see where the brave and honorable Marcy Kaptur has even sent a letter to Eric Holder expressing her desire to see the Department of Justice use its criminal powers to come to the assistance of the SEC.

If Representative Kaptur's letter is delivered, that will at least offer some proof that we have an Attorney General. Mr. Holder certainly maintains a low profile. He was going to prosecute at least one case, against Khalid Sheikh Mohammed in District Court in New York, but now it seems virtually certain that he will turn even that prosecution, the biggest in his docket, over to the military. So it isn't as if he doesn't have time to take on Wall Street. What he should do is deputize Eliot Spitzer as a U.S. Attorney in charge of financial malfeasance and turn him loose. Eliot did a great job as the Sheriff of Wall Street, back in the day, which is why the Bush Administration, in cahoots with the Big Boyz, had to set him up for a fall. He understands how the game is played, how the big investment banks are making huge amounts of money by borrowing at a half percent and lending the money back to the government at 3%, while Congress sits still for it because these banks are so vital to the functioning of our economy. An economy which utterly sucks, but never mind. These things don't have to make sense, they just have to make money for the right people.

It's possible the SEC action is a rogue operation. It seems to violate one of Obama's key principles, ENSOL - the Eternal Now Statute of Limitations. Under this guideline, a predicate act cannot be prosecuted if it occurred in the past, because this is Looking Backward, Not Forward. Thus far, it has been applied mainly to war crimes and illegal wiretapping, but philosophically speaking a logical extension to Wall Street bankers, who are tantamount to government officials, could be made. We shouldn't forget that despite all those Obama email solicitations sent to us mere mortals (the "Morts" in Michael Lewis's phrase) for campaign money, his single biggest contributor was Goldman Sachs, and Obama's first overnight guest at the White House (as a way of saying thanks) was Lloyd Blankfein, the head guy at Goldman. Blankfein must be wondering right now: why don't I get the benefit of ENSOL? These things they're accusing us of, they all happened in the past, just like torture and wiretapping. It is a curious breach of professional courtesy, especially after the O-Man went out of his way to praise Lloyd and Jamie Dimon, the equally unscrupulous head guy at JP Morgan Chase, as "savvy businessmen," although that was after he called everyone on Wall Street a bunch of "fat cat bankers." Blankfein, Dimon, all the rest of them - they must be wondering what's up with this guy.

Meanwhile, I did catch Clinton's act on "This Week" Sunday where Bill admitted he made a mistake in agreeing to deregulate derivatives. Since derivatives were and remain the single biggest, efficient cause of the entire world economy going into a financial collapse, this seems like a minimal admission. No one admits error with quite the aplomb and gravitas of Bill Clinton. He never brags, but he's very effective at apologizing. I recall he also admitted that doing nothing during the Rwanda genocide was also a mistake, one that cost the lives of 800,000 Rwandans, or about 20% of the population. Some days nothing goes right. Bill's explanation, about derivatives, was that the "thinking" at the time, championed by Larry Summers, Bob Rubin and Alan Greenspan (and Summers is still on the job with Obama!), was that derivatives were the exclusive realm of the rich and sophisticated and thus needed no supervision. Thus, we allowed a company like AIG to make book on bets against all manner of derivative performance, such as subprime mortgage CDOs, and paid no attention to whether AIG had anything like the cash reserves necessary to make the bets good if the book went against them, on account of all the sophistication and resources of the people involved (like Joseph Cassano of AIG Financial Products division, who would write a credit default swap based on your bet about how many people would get off the 38 bus at the next stop). Yet when AIG crashed, due to its idiocy and lack of resources, the deregulation meant that the American public had to buy the company at enormous expense ($180 billion) so that it could make good on its bad bets with companies like Goldman Sachs (who took down $14 billion of that bailout), because the American financial system depends on these fraudulent investment banks in order to keep the gangster economy going, and anyway, if Geithner had not presided over that backdoor bailout, then what was all that largesse Blankfein was shoveling into the Obama campaign supposed to buy?

It's all definitely a pretty picture. Congress is so slow-witted that about three years after it became completely clear why the financial system was burning, the House and Senate are just now beginning to figure out exactly how we got had by Goldman, JP Morgan, Merrill Lynch, Lehman Brothers, Bear Stearns, Bank of America, Citigroup, Countrywide, New Century and a host of other scoundrels. Just in time, I'd say, because there are statutes of limitations involved, not the fanciful ENSOL either, but real ones. With guys like William Black, Frank Partnoy, Michael Lewis, Simon Johnson and many other learned commentators drawing them crystal-clear road maps, for literally years, Congress is just now positioning itself to do something about this mess. Which tends to demonstrate that they're only doing so, for the most part, because they really feel now they have absolutely no other choice. They'd really rather wait for another ten years and then "apologize" for not doing the right thing, but that is not going to play very well with a public even now sharpening the tines on their pitch forks.