We have posted extensively on the lack of criminal accountability for the masterminds of the financial crisis, the crisis “profiteers” and engineers. Save Lee Farkas, former CEO of Taylor, Bean & Whitaker, almost no financial executive has been indicted. Instead, our “mortgage task forces” have turned to the “street level pushers,” prosecuting borrowers for so-called liar’s loan, despite scads of evidence that the Countrywides and EMCs of the era were filling in income FOR the borrower after phone interviews, bank-owned brokers were inflating income figures to originate any loan that could help fill the securitization machine, and badly underwritten loans were knowingly put into mortgage-backed-securities, often with the issuing bank taking the opposite side of the trade on the side, via credit default swaps, or shorting CDOs. In the new age of No-Prosecution, where Justice whines that prosecution is too hard (see Lanny Breur on 60 Minutes), although the reporters at 60 Minutes were able to interview several people and uncover significant evidence in a period of weeks. Even when banking giants like Bank of America or Chase are “fined” in widely touted Justice Department cases involving “civil penalties” (anybody remember HSBC getting to pay a fine for money laundering drug cartel money, and the executives kept their handsomely paid jobs?), the banks don’t have to admit any liability, they can pay in all sorts of creative ways that amount to more government (aka taxpayer) subsidies and bailouts, and scant resources reach the homeowners actually affected by the harms.
But this old story becomes rage-inducing when starkly compared with the treatment of minorities and socially powerless individuals by police and the justice system. This trend was highlighted in Matt Taibbi’s last book, “The Divide.”
Bill Black has also drawn comparisons to the treatment of minor crimes and criminals versus the well-heeled white collar crimes of the elite. This is particularly compelling given the ongoing protests relating to police killings of unarmed black males. On these lines, here is an excerpt of an article by Bill Black, criminologist, ex-S&L regulator, and law professor, that I found on Naked Capitalism but that originally appeared on New Economics Perspective, full article at those links:
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
New York City exemplifies two perverse criminal justice policies that drive many criminologists to distraction. It is the home of the most destructive epidemics of elite financial frauds in history. Those fraud epidemics hyper-inflated the housing bubble and drove the financial crisis and the Great Recession. The best estimate is that the U.S. GDP loss will be $21 trillion and that 10 million Americans lost their jobs. Both numbers are far larger in Europe. The elite “C Suite” leaders of these fraud epidemics were made wealthy by those frauds through bonuses that measured in the billions of dollars annually.
The most extraordinary facts about the catastrophic fraud epidemics, however, is New York City’s reaction to the fraud epidemics. Not a single Wall Street bankster who led the fraud epidemics has been prosecuted or had their fraud proceeds “clawed back.” Not a single Wall Street bankster who led the fraud epidemics is treated as a pariah by his peers or New York City elites. New York City’s elected leaders have made occasional criticisms of the banksters, but Mayor Bloomberg was famous for his sycophancy for the Wall Street banksters that made him wealthy. In 2011, Mayor Bloomberg attacked the “Occupy Wall Street” movement for daring to protest the banksters.
“I don’t appreciate the bashing of all the hard working people who live and work here and pay the taxes that support our city,” said Bloomberg, during a press conference in a Bronx library.
“The city depends on Wall Street.”
“Jamie Dimon is one of the great bankers,” said Bloomberg. “He’s brought more business to this city than any banker in (the) modern day. To go and picket him, I don’t know what that achieves. Jamie Dimon is an honorable person, working very hard, paying his taxes.”
Bloomberg also questioned why the protestors were picking on wealthy bankers and other corporate titans.
It is, of course, depraved to claim that because banksters are made wealthy through fraud and pays a small portion of that wealth in taxes they should not be held accountable for those frauds because they are important to local finances. The claim becomes all the more risible when we take into account that under Dimon’s leadership JPMorgan became infamous for engaging in and facilitating billions of dollars in tax evasion that cost many governments, including NYC, enormous amounts of tax revenues. As a final indignity, most of the purported amounts that JPMorgan paid in settlements with DOJ are actually paid by the U.S. Treasury because DOJ allowed JPMorgan to treat large amounts of those payments as tax deductible. DOJ’s senior leadership used this as one of their cynical means of making the settlements paid by the banks appear far larger than they actually were.
. . .
The crisis is marked by exceptional recidivism by these banks and banksters, the rapid progression of fraud in terms of severity and its spread through the elite banks, and the creation of a massively corrupt culture in banking and their political allies in which even the largest and most destructive frauds are ignored and the perpetrators are shielded from even the mildest forms of accountability. To sum it up, NYC exemplifies the moral depravity, endemic criminality, and resultant breakdown of the criminal justice system that “broken windows” theory predicts. “Broken windows” theory, however, is not applied by its conservative proponents to elite white-collar crime. When the SEC (purportedly) adopted the “broken windows”) theory, the same conservatives that give the theory rapturous support when it leads to the mass arrests of poor minorities for the most trivial of offenses become apoplectic in their rage against holding elites accountable for lesser offenses.
This class-based rush to shield elite white-collar criminals from even the mildest forms of administrative accountability (the SEC uses “broken windows” as a PR slogan, not a reality) while simultaneously adopting an ultra-aggressive policy of arresting mostly poorer Blacks and Latinos for the most minor of offenses (e.g., selling small numbers of cigarettes from broken packs). The proponents of using “broken windows” to arrest large numbers of minorities for minor property offenses almost never demonstrate any awareness of the obvious obscenity and disaster of allowing banksters to grow wealthy by defrauding with impunity. Eric Garner ends up dead because the police arrest him for selling goods without paying sales tax (amounting to several hundred dollars in lost government revenue over the course of a year). The fraud epidemics cost that drove the financial crisis and the Great Recession cost our Nation $21 trillion – and no senior banker who led the frauds in even arrested. (As I have explained, the Department of Justice and the FBI do target a tiny slice of the mortgage fraud “mice” – particularly those of disfavored minorities like Russian-Americans – for prosecution.)