Bill Black on our failure to hold thieving banksters accountable
Who needs Princeton* and Chicago** when we've got UMKC***? It's Sunday morning, so I'll grab a money quote from Bill Black's three part series, but read parts one and two. They describe what we're up against: Theft, plain and simple, and demonstrable at law if the perps were brought before a court. (The willful refusal to consider "accounting control fraud" as even a contributing cause of the financial meltdown defines the limits of acceptable discourse in Versailles. Krugman, for example, has to my knowledge never mentioned it.) Black's critiquing an article by Bo Cutter, a managing partner of Warburg Pincus who led President Obama's Office of Management and Budget (OMB) transition team (interesting data point...). Black writes:
Bo admits that even the most ideologically-blinded theoclassical economists (his phrase is "failure of intellectual traditions") knew "we were headed to a cliff" by 2006. "Everyone," including "the capital market experts" knew that "the banks were going crazy." Moreover, the experts all knew that the banks were not merely "crazy" but farblondget (a Yiddish term literally meaning "lost" but with the connotation of insanely lost: as in I tried to drive from Kansas City, Missouri to Lawrence, Kansas and 28 hours later it began to dawn on me that I might be lost because all the signs were in Spanish). The banks were so farblondget that Bo aptly describes the "terms of major loans" as "nuttiness of epic proportions." In my first essay I explained that this pattern demonstrates that there was an epidemic of what white-collar criminologists term "accounting control fraud." Honest banks would not make loans on such terms because they were suicidal. The housing bubble had already stopped inflating by 2006 and the nonprime specialty lenders were blowing up. ...
Sounds like farblondget is Yiddish for Clusterfuck?
[W]here are the Fed's criminal referrals against the accounting control frauds[?] Bo's answer to this question is fully representative of big finance's attitude towards the prosecution of elite white-collar criminals:
I do not understand why every board of every institution that failed was not asked to resign immediately. But I guess the answer is "when you are up to your ass in alligators, it is hard to think about draining the swamp." Geithner had other things to do at that moment than settle scores.
I write now from the perspective of one wearing both regulatory and white-collar criminology "hats." When the industry has become an alligator-filled swamp draining that swamp is precisely what you need to do. The swamp is the "criminogenic environment" that creates perverse incentives that produce the alligators (control frauds) and gives them cover so that they can attack with impunity. You need to drain the swamp and you need to simultaneously target the biggest, "baddest" alligator. You tan his hide on the side of your shed and show that no alligator is too big to flail. Bo will not hold any financial elite accountable. He treats accountability – which is essential if we are to reduce the risk of future crises – as a shameful practice: "settling scores." Is it any wonder that while we obtained felony convictions in over 1000 "priority" cases during the S&L debacle there has yet to be a single indictment of a senior manager of a large nonprime lender?
No wonder at all. And the Obama administration will no more hold thieving, criminal banksters accountable than it will hold murderous torturers or surveilling telcos accountable. All felonies! Neither legacy party will do that because they have the same owners. Maybe the country isn't governable because kleptocracies can't govern, but only rule?
NOTE * Saltwater.
NOTE ** Fresh water.
NOTE *** No name, naturellement, but I like "Rain water." Rain is a cycle, and a hard rain's gonna fall.