THE SPINE SEPTEMBER 4, 2009
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I am loathe to think that one solution to the problem of the credibility of bankers and the banking system is prison. Yes, I know Bernie Madoff is in prison and there are a few more Ponzi schemers who will join him there. But these are not the financiers who destroyed the American financial system basically on a lark, using their skills of ingenuity and deception without considering either the moral or legal constraints on their behavior.
A headline in Friday's Financial Times shouts out at me: "More prison sentences may renew financial credibility." And a sub-head: "There are precious few financiers behind bars." You know I don't much like the FT on foreign policy matters, and on Israel it borders on—no, it crosses the lines of—the anti-semitic. But it is quite reliable on financial matters. Moreover, it is Gillian Tell, a very sound observer of banks and bankers, who has put forward the idea.
She begins with a very provocative question: "How many financiers do you think ended up in jail after America's Savings and Loan scandals?" And here's her dazzling answer. "...[B]etween 1990 and 1995 no fewer than 1,852 S&L officials were prosecuted and 1,072 placed behind bars. Another 2,558 were also jailed, often for offenses which were S&L-linked too." She goes on to point out what should be obvious to all. That the current crisis vastly eclipses the S&L debacle in wealth destruction ... and in raw social and economic destruction too.
Ms. Tett informs us that at least 25 companies are under investigation by federal investigators. There is a trial about to commence against Moody's and Standard and Poor's, firms that rated public companies and debt instruments basically by auctioning off their services. What they did to actually rate their clients was clearly false and, maybe, deliberately so. They are now seeking refuge from prosecution by taking the First Amendment defense. Perhaps the A.C.L.U. will take up the cudgels for them.
Here's Tett's conclusion. "If there is no retribution against financiers, it will be difficult to force a real change in behavior."
3 comments
This is the approach taken by most in the mainstream media. They always focus the beam of reform on ways to crack down on those who practice corruption under the table. That way they can sidestep all the carpenters in Washington and New York who actually built the table...built it such that the transactions taking place on top of it are far more dangerous to both the economy and our wallets than the stuff the Madoffs engage in. Let's sit back and note how Marty gauges the effectiveness of the upcoming "investigations" into the near Wall Street [and global economy] meltdown. Also, the efforts to "reform" the finance industry. Marty notes the reliability of the Financial Times with respect to the finance industry today. There some are of the persuasion that heads should and must roll if it is discovered the bankers pursued transactions that were not quite all the way under or not quite all the way on top of table. Send the bastards to jail if necessary. Again: Amen, brother, amen! But there are still those shades of gray here he does not shine the light on: 1] The role lobbying, revolving doors, campaign contributions etc. play in facilitating that crucial and pivitol juncture where economic and political power meet in sustaining the interests of a Bilderberg world. In other words, the nature of our POLITICAL economy. 2] The role the mainstream media [including The New Republic] plays in obfuscating this...consciously or not...by channeling the headlines and the analysis in a direction that takes us away from a deeper understanding of how America's ruling class functions. And no, not in a Marxist sense. More in the pragmatic, utilitarian need of a small slice of the population that sucks in the overwhelming preponderance of income and wealth, to sustain this in their favor. This juggernaut is not without cracks and fizzures of its own, however. These things are always far too complex to reduce down to some simplistic "ism", a cartoon world where Good and Evil ever clash. But that doesn't make them any less real. george walton d/a
- iambiguous
September 5, 2009 at 9:01am
This blog is one of the few times I agree with Mr. Peretz. These clowns ruined our economy and they got off scott free. One of them, Jamie Dimon, has the president's ear to boot. FDR considered the moneymen the criminal class but the crowd we have in charge now is buddies with them; do you really think they're going to be prosecuted? George is right too: look at the revolving door. TNR hasn't helped either as they needed to be more harsh on the moneymen and not give them a pass too often (I'm looking at your Noam). I'd like to see more FDR in this administration and Congress, a lot less GOP-style friendliness to sleazy business practices and outright graft.
- tnmats
September 5, 2009 at 2:56pm
tnmats, I sympathize but don't agree. Should incompetence and greed be a crime? You have to prove intent, and I think there are very, very few of these bankers/looters who had the intent to ruin the worlds economy. Bring back Glass/Steagal by all means, but to punish by criminal sanction what was not against the law? I just don't agree.
- blackton
September 5, 2009 at 9:27pm