Senate report on Wall Street crash: The criminalization of the American ruling class
rab
dusty
> http://www.wsws.org/articles/2011/apr2011/pers-a18.shtml
This wsws summary indicates nothing new having come from the
report...again, like the 9-11 Report, chaired by a Zionist. His words
are mere platitudes, and even they are reversible, rather like those
of Richard Goldstone, who, under strong, often very personal pressure
from World Zionism, recanted on his Gaza Report.
How can the wsws write this stuff without any mention, not of the
power of Zionism in the saddle in America, but due to "power of the
individuals involved, all of whom wield immense influence over
politicians, the media and the legal system." That's bullshit...the
truth being that the bulk of the media IS Zionist and they too
dominate the political and legal system.
"How is this to be explained? Why are Goldman CEO Lloyd Blankfein,
JPMorgan CEO Jamie Dimon, the former CEO of Washington Mutual, Kerry
Killinger, as well as Treasury Secretary Geithner and his predecessor,
Henry Paulson (previously CEO of Goldman), not in prison?
Such financial manipulators are being shielded while workers are being
stripped of their jobs, wages, homes and basic social services to pay
for the debts resulting from the transfer of trillions in public funds
to the banks. Collective resistance to this attack is being
criminalized in the form of anti-strike laws, imposing fines and jail
terms for workers who fight back.
One reason for the absence of prosecutions is the power of the
individuals involved, all of whom wield immense influence over
politicians, the media and the legal system. But it goes deeper than
the status of individuals, just as the sordid state of affairs as a
whole arises not from individual greed, but rather from a profound
crisis of the entire system."
For the record..
Senate report on Wall Street crash: The criminalization of the
American ruling class
18 April 2011
The US Senate Permanent Subcommittee on Investigations released a
voluminous report last Wednesday on the Wall Street crash of 2008 that
documents the fraud and criminality that pervade the entire financial
system and its relations with the government.
The 650-page report is the outcome of a two-year investigation that
involved over 150 interviews and depositions as well as the
examination of subpoenaed emails and internal documents of major
banks, government regulatory agencies and credit rating firms. The
report, entitled “Wall Street and the Financial Crisis: Anatomy of a
Financial Collapse,” establishes that the financial crash and ensuing
recession were the result of systemic fraud and deception on the part
of the mortgage lenders and banks, carried out with the collusion of
the credit rating corporations and the complicity of the government
and its bank regulatory agencies.
The World Socialist Web Site will analyze the contents of this
important document in detail in the coming days. However, its basic
thrust is clear. As the executive summary states: “The investigation
found that the crisis was not a natural disaster, but the result of
high-risk, complex financial products; undisclosed conflicts of
interest; and the failure of regulators, the credit rating agencies,
and the market itself to rein in the excesses of Wall Street.”
At a press conference Wednesday and in subsequent interviews, Senator
Carl Levin (Democrat from Michigan), the chairman of the subcommittee,
was even more explicit. “Using emails, memos and other internal
documents,” he said, “this report tells the inside story of an
economic assault that cost millions of Americans their jobs and homes,
while wiping out investors, good businesses and markets. High-risk
lending, regulatory failures, inflated credit ratings and Wall Street
firms engaging in massive conflicts of interest contaminated the US
financial system with toxic mortgages and undermined public trust in
US markets.
“Using their own words in documents subpoenaed by the subcommittee,
the report discloses how financial firms deliberately took advantage
of their clients and investors, how credit rating agencies assigned
AAA ratings to high-risk securities, and how regulators sat on their
hands instead of reining in the unsafe and unsound practices all
around them. Rampant conflicts of interest are the threads that run
through every chapter of this sordid story.”
Levin went on to say that the investigation had found “a financial
snake pit rife with greed, conflicts of interest, and wrongdoing.” He
told the New York Times: “The overwhelming evidence is that those
institutions deceived their clients and deceived the public, and they
were aided and abetted by deferential regulators and credit ratings
agencies who had conflicts of interest.”
The report is divided into four sections, each focusing on a different
contributor to the network of fraud and abuse: the mortgage lenders,
the regulators, the credit rating firms and the Wall Street investment
banks. The first section takes Washington Mutual (WaMu) as its case
history, detailing the predatory and deceptive lending practices and
accounting and reporting subterfuges that led, following the implosion
of the subprime mortgage market, to the bank’s collapse and takeover
by JPMorgan Chase in September of 2008.
The second examines the corrupt role of the federal Office of Thrift
Supervision (OTS), which oversaw three of the biggest financial
failures in US history—Washington Mutual, IndyMac and Countrywide
Financial. “Over a five-year period from 2004 to 2008,” the report
states, “OTS identified over 500 serious deficiencies at WaMu, yet
failed to take action to force the bank to improve its lending
operations and even impeded oversight by the bank’s backup regulator,
the FDIC.”
The third section documents the systematic manner in which the rating
firms Moody’s and Standard & Poor’s gave top credit ratings to
collateralized debt obligations (CDOs) and other complex securities
backed by subprime and other toxic mortgages, enabling the banks to
make billions of dollars by palming off these junk securities as top-
grade investments. In return, the rating companies raked in huge
profits for their services.
As the report states: “Credit rating agencies were paid by Wall Street
firms that sought their ratings and profited from the financial
products being rated… The ratings agencies weakened their standards as
each competed to provide the most favorable rating to win business and
greater market share. The result was a race to the bottom.”
The final section examines the fraud and deception perpetrated by the
major investment banks as they profited first from the inflation of
the US housing market and then from its implosion. It takes as its
examples Goldman Sachs and Deutsche Bank. Goldman began betting
heavily in 2007 that the housing market would collapse, packaging and
selling subprime mortgage-backed CDOs even as it secretly bet that the
same securities would plummet in value.
The report cites emails by Deutsche Bank’s top global CDO trader,
Gregg Lippman, calling risky mortgage securities marketed by the bank
“crap” and “pigs” and the bank’s operations a “CDO machine,” which he
characterized as a “Ponzi scheme.”
The document points to the central role of the big Wall Street banks
in promulgating the fraud, stating: “Investment banks were the driving
force behind the structured finance products that provided a steady
stream of funding for lenders originating high-risk, poor-quality
loans and that magnified risk throughout the US financial system. The
investment banks that engineered, sold, traded and profited from
mortgage-related structured finance products were a major cause of the
financial crisis.”
The overall picture is one of criminality on the part of the entire
financial establishment that, with all levels of government serving as
its co-conspirator, systematically looted the economy in order to
further enrich itself. The result is a social tragedy for tens of
millions of people in the US and many millions more around the world.
And yet, the result of this historic crime is that the bankers and
speculators are richer and more powerful than ever.
Not a single senior executive at a major US bank, hedge fund, mortgage
firm or insurance company has gone to jail. Not one has even been
prosecuted.
There is every indication that none will be criminally indicted in the
future. As with the similarly damning report released in January by
the US Financial Crisis Inquiry Commission, the Senate report has been
largely buried by the mass media. It was reported perfunctorily on the
inside pages of some of the major newspapers and barely mentioned by
the broadcast and cable networks, and then dropped.
One day after the release of the Senate report, the New York Times
published a long article on the failure to prosecute any of the Wall
Street criminals. It recounted a private meeting between the then-
president of the Federal Reserve Bank of New York (now Obama’s
treasury secretary) Timothy Geithner and then-New York Attorney
General Andrew Cuomo in October 2008 at which Geithner urged Cuomo to
back off on investigations of the banks and rating agencies.
The article contrasted the absence of criminal charges against bankers
today with the aftermath of the savings and loan debacle of the late
1980s, when government task forces referred 1,100 cases to prosecutors
and more than 800 bank officials went to jail. It noted the
precipitous decline in referrals by bank regulators to the FBI, from
1,837 cases in 1995 to 75 in 2006. Over the ensuing four years, at the
height of the financial crisis, an average of only 72 a year have been
for criminal prosecution.
The Office of Thrift Supervision has not referred a single case to the
Justice Department since 2000, and the Office of the Comptroller of
the Currency, a unit of the Treasury Department, has referred only
three in the last decade.
How is this to be explained? Why are Goldman CEO Lloyd Blankfein,
JPMorgan CEO Jamie Dimon, the former CEO of Washington Mutual, Kerry
Killinger, as well as Treasury Secretary Geithner and his predecessor,
Henry Paulson (previously CEO of Goldman), not in prison?
Such financial manipulators are being shielded while workers are being
stripped of their jobs, wages, homes and basic social services to pay
for the debts resulting from the transfer of trillions in public funds
to the banks. Collective resistance to this attack is being
criminalized in the form of anti-strike laws, imposing fines and jail
terms for workers who fight back.
One reason for the absence of prosecutions is the power of the
individuals involved, all of whom wield immense influence over
politicians, the media and the legal system. But it goes deeper than
the status of individuals, just as the sordid state of affairs as a
whole arises not from individual greed, but rather from a profound
crisis of the entire system.
The criminalization of the American ruling class is the outcome of
more than three decades in which the accumulation of wealth by the
corporate-financial elite has become increasingly separated from real
production. In its pursuit of profit, the ruling class has dismantled
huge sections of industry and turned ever more decisively to financial
manipulation and speculation.
The ascendancy of the most parasitic sections of the capitalist class
has been accompanied by a sharp decline in the living standards of the
working class. The richest and most powerful layers have acquired
staggering levels of wealth by plundering society.
The ruling class itself senses that to prosecute any of the leading
figures in the defrauding of the American people (and the rest of
humankind) would rapidly expose the criminality of the entire system.
It would mean putting the capitalist system itself on trial.
Barry Grey