Our government, and the politicians who control it, want us all to be so afraid of terrorism that we’ll give up the Bill of Rights and habeas corpus. But most Americans are far more afraid of Wall Street. The middle class lost $7.7 trillion in household net worth since collapse of the financial sector three years ago. About 24% of homes with mortgages remain underwater, which means the so-called “homeowners” have negative equity. There are 13.3 million Americans officially unemployed, and another approximately 4.8 million who have dropped out of the labor market and aren’t counted anymore. A record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.
Meanwhile, the Wall Street financiers who caused all this are doing swell, paying themselves record salaries and bonuses. But wait a minute, didn’t the 2008 financial meltdown result from fraudulent mortgage securitization and other illegal activities? Why has the Obama Justice Department not prosecuted these crimes?
Jeff Connaughton, the former chief of staff to former Democratic Senator Ted Kaufman, who chaired Senate oversight hearings on financial fraud prosecutions (emphasis added):
The Obama Justice Department hasn’t tried a single Wall Street executive in a criminal court. Against a handful, it decided to let the S.E.C. bring civil charges of fraud, which are easier to prove. So if defendants’ wrists are merely being slapped by the S.E.C. instead of cuffed by the Justice Department, Obama has only his appointees to blame.
…But did the Justice Department’s senior leadership even make targeting high-level fraud a top priority? Did it plan, staff, fund, and direct a thorough, probing investigation of each of the primary potential defendants? While I was working in the Senate, conversations I had with Justice Department officials led me to believe that it didn’t.
What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud.
…Of course, this is exactly the wrong way to go about things. If Geithner and Obama really wanted to convince the world that America’s markets weren’t broken, they would effectively police fraud, and by extension prove to everybody that at the very least, our regulatory system is not broken.
But by taking a dive on fraud, and orchestrating mass cover-ups like the coming foreclosure settlement fiasco, what they’re doing instead is signaling to the world that not only are our financial markets corrupt, but our government is broken as well.
One complication has come about due to last June’s 5-4 Supreme Court decision in Janus Capital Group, Inc. v. First Derivative Traders. The corporate-friendly justices decided to issue securities firms a license to lie, making shareholder lawsuits almost impossible. The precedent may apply as well to fraudulent mortgage securitizations going back to five years ago. Thanks to this irresponsible Supreme Court ruling, there is no longer a good reason to believe anything that’s written in a prospectus.
The Obama administration has got to stop covering for Wall Street, for three very good reasons: (1) Americans now have no confidence in our financial sector, as the middle class has taken a beating while the Top 1 Percent takes an ever-greater share of the wealth; (2) Nobody believes President Obama’s obviously false claim that that no banking or insurance executive deserves criminal prosecution for causing the 2008 collapse; and (3) By failing to prosecute Wall Street, the Obama administration is failing to deter ongoing and future financial fraud.
OWS is right. We can’t accept the funneling of wealth to the top anymore. Especially when it is done in violation of federal law, while our top officials in the Department of Justice and Treasury engage in a cover-up.