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How the Government Failed to Fix Wall Street – The Daily Beast

Here’s a nice summation of the Obama Administration’s gross failure to do anything about curing the root cause of the financial crisis- lax enforcement of the law to root out endemic, systemic fraud. – Lee Adler

Four years have passed since Lehman Brothers’ collapse; two since Obama signed financial reform into law; one since the occupation of Zuccotti Park. But the Justice Department has yet to convict a single high-profile banker. And despite the Dodd-Frank reform package, critics suggest that the system is hardly safer than it was in 2008—from JPMorgan’s beached “whale” to MF Global’s missing billions. In a recent report (PDF), the International Monetary Fund called the capital markets just as “vulnerable” to crash and fraud as they were four years ago.

Why? There’s no simple, satisfactory answer. But in recent weeks, memoirs by crisis insiders such as former Federal Deposit Insurance Corporation Chairman Sheila Bair have shed new light on the financial crisis. Interviews with officials like former senator Ted Kaufman lend further color to the crystallizing narrative. The Obama Justice Department was too timid and short-staffed to hunt down the bad guys. The White House, Treasury Department, and Federal Reserve stifled or sold out real financial reform, leaving megabanks too big to fail, and dangerous crisis-era practices untouched. Months after taking office, Obama told the CEOs of the nation’s third biggest banks, “My administration is the only thing standing between you and the pitchforks.” It has served as an effective shield.

In a departure from previous administrations, Eric Holder’s Justice Department won’t say how many bankers it has convicted. President Obama formed a “Financial Fraud Enforcement Task Force” in November 2009 to “hold accountable those who helped bring about the last financial crisis.” The current group says that the department is “working hard to investigate and prosecute” Wall Street “criminal activity,” and has sent many mortgage fraudsters to jail.

But the Obama administration has generally chosen to pursue institutions over individuals. As the head of the Justice Department’s Criminal Division, Lanny Breuer, put it in a speech in September 2012 at the New York City Bar, “our prosecutors … know the difference between a rogue employee and a rotten corporation.” Last February, the Justice Department settled with five of the nation’s biggest banks, which agreed to pay homeowners a collective $25 billion over charges of mortgage fraud. In July, it settled with Wells Fargo for $175 million over predatory subprime lending, targeted at minorities.

Sure sounds rotten. But none of these settlements entailed admissions of wrongdoing.

via How the Government Failed to Fix Wall Street – The Daily Beast.

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