Party Doesn’t Matter— Not When Our Political System And The Elites It Supports Are Crooked

A few days ago we looked at the seamier side of Eric Holder’s very mixed record, his (and Obama’s) refusal to hold the banksters, who finance the political careers of both parties’ politicians (including Obama’s), accountable to the law. This week Bill Moyers did the same thing on his TV show (above). Moyers also wants us to remember that “No banking executives have been criminally prosecuted for their role in causing the biggest financial disaster since the Great Depression.” His guest was William K. Black, the veteran bank regulator. who exposed the Keating Five.

Black is clear. The buck doesn’t stop with Holder and Geithner— the Treasury Secretary Wall Street gave Obama— but with Obama himself. McCain, a crook who was taking bribes from banksters, may have escaped with a wrist-slap but Black helped prosecutors convict more than 1,000 crooked bankers during the horrific savings and loan scandals back in the l980s and 90s. They were just “fulfilling administration policies. The problem definitely comes from the top. And remember, Obama wouldn’t have been president but for the financial contribution of bankers.”

The shareholder and taxpayers pay for the big fines. The criminal class of banksters walked away with generational wealth in the form of unwarranted compensation and bonuses. No one was put against a wall, given a last cigarette, blindfolded and shot. No one was even put on trial or forced to give back the stolen loot.

Worse yet, “The Clinton, Bush and Obama administrations all could have prevented [the financial meltdown]… We have created the incentive structures that [are] going to produce a much larger disaster.” Hillary Clinton, who has told the Wall Street banksters explicitly that she will be more deferential to them than Obama ever was, will be worse than her husband, worse than Bush, worse than Obama.

From Moyers’ interview with Black:

BILL MOYERS: Yet Eric Holder didn't bring one criminal case against any executives in charge of the banks' lending. You've called this the greatest strategic failure in the history of the Department of Justice.

WILLIAM K. BLACK: Yeah, in baseball terms they’re batting 0.000. But they’re not just batting 0.000, they took called strikes. They never got the bat off their shoulder and even swung. They didn't even try.

BILL MOYERS: Do you remember when President Obama told 60 Minutes, I think it was late December of 2011 that, “Some of the most damaging behavior on Wall Street…wasn’t illegal?”

WILLIAM K. BLACK: I do.

BILL MOYERS: What did you think?

WILLIAM K. BLACK: I thought that he was wrong. That in fact if he listened to what the United States of America has demonstrated in court and through investigations, the activity was clearly illegal, it was a violation of a whole series of laws that make it felonies.

And these are just the frauds that caused the crisis. In addition to the frauds that caused the crisis, which are massive and we could talk about, we have the largest cartel in world history. This was the bid rigging of Libor, which is an international standard that sets the prices on over $300 trillion in contracts.

A trillion is a thousand billion, right? And then we have the foreclosure frauds where we have false affidavits. Over 100,000 felonies in that context. And then we have the bid rigging on bond prices where all the major banks, according to the Justice Department, were involved.

And then we had the Federal Housing Finance Administration, a federal agency suing virtually every largest, of the largest 20 banks in the United States of America, saying they defrauded Fannie and Freddie through false sales. And it goes on and on.

The savings and loan debacle, we made over 30,000 criminal referrals. Here, zero criminal referrals as far as we can get any public information. So the first thing Holder should’ve done is reestablish the criminal referral process. Because, you know, banks don’t make criminal referrals against their own CEOs.

BILL MOYERS: Do you tell yourself, well, there is a justifiable and understandable reason why they don't prosecute?

WILLIAM K. BLACK: No, there is no justifiable reason. Apparently modern financial regulators are vastly more sophisticated than we were as financial regulators 25 years ago. Because we had never figured out that the key to financial stability was leaving felons in charge of the largest financial institutions in the world.

BILL MOYERS: But they do claim with a straight face that they can't prosecute.

WILLIAM K. BLACK: They make it sound like the only choice we have is to prosecute banks as opposed to bankers. And that's nuts, right? We've always prosecuted bankers. We prosecuted successfully over 1,000 bankers in the savings and loan and bank crises.

And those are just the major cases and such. And it, of course, it greatly enhanced financial stability instead of the other way around. Indeed, none of the people in that era came back in this crisis and were able to lead frauds. And they couldn't because they had criminal records. But in the next crisis, these folks have no criminal records. They'll easily be able to come back. In fact, if you want to create the next crisis and make it vastly worse, leave the people in charge who led the frauds in the senior ranks at the banks in charge of those banks. So now they have all the postgraduate education in how to run a fraud. And they learned that there are no consequences other than good consequences.

BILL MOYERS: How does it feel to be right? Because when you said that this is the greatest strategic failure in the history of the Department of Justice, it was before the Justice Department inspector general himself issued a report that determined the FBI Criminal Investigative Division "ranked mortgage fraud as the lowest ranked criminal threat in its lowest crime category."

WILLIAM K. BLACK: And that it had diminished the number of FBI agents assigned, that the number of investigations and cases was falling still, that they were misleading the public by claiming that they were making it a higher priority, and that they had lied about the number of criminal cases they had brought against the mice, and that they persisted in using the false statistics when they knew that they were false. All of those things were found by the inspector general. It feels terrible to be right about those things.

BILL MOYERS: There's clearly been a culture of deference toward the banks in the Obama administration. You would agree with that?

WILLIAM K. BLACK: Absolutely. Again, I blame Holder. I blame Timothy Geithner. But they are fulfilling administration policies. The problem definitely comes from the top. And remember, Obama wouldn't have been president but for the financial contribution of bankers.

And it's an extraordinary political story. Because the Clintons, of course, have been close to banking for decades and very supportive of it. But a junior senator from Illinois was able to outraise by a substantial margin political contributions from the banking industry to win that nomination.

And then outraise his opponent, who was, of course, famously or infamous for his support of banking, John McCain, by more than two to one. And a person who led that effort to take big finance money and get it to then Senator Obama was, of course, Jamie Dimon, the CEO and chairman of the board of JP Morgan.

BILL MOYERS: Whom the Times has referred to as President Obama’s “favorite banker.”

WILLIAM K. BLACK: As his favorite banker even though, as Holder now admits, JP Morgan was one of the leading, what we call criminology, accounting control frauds in the world. It takes the New York Times six pages to list the violations on its website of JP Morgan Chase. So these are serial fraudsters.

And Jamie Dimon has even said out loud to his own shareholders what we call the accounting control fraud recipe. His phrase is, it's easy to produce low quality revenue. Bad underwriting means income today and losses tomorrow. Now, of course, it doesn't mean real income today. It means fictional income through accounting fraud.

So he gets it. If you have terrible, terrible underwriting, you will be mathematically guaranteed to report record profits that will make the executives wealthy through modern executive compensation. And if there's a problem, well, the government will bail you out and give you massive subsidies if you're too big of fail. And, of course, JP Morgan is the quintessential example of too big to fail, too big to jail.

BILL MOYERS: Do you remember when Obama was elected president he called the bankers to the White House and he said, I'm all that's standing between you and the pitchforks, meaning between you and a wronged and indignant public.

WILLIAM K. BLACK: I thought that was an obscene statement, slanderous about the American people. The American people don't want pitchforks. They want justice. They want these senior officers to be prosecuted. If they're found guilty, they want them to be sent to prison. And they want their fraudulent proceeds, the bonuses and compensation to be recovered. And that is a very good thing about the American people.

BILL MOYERS: To man that wall between the bankers and the public he chose Eric Holder as everyone knows who at the time was at the elite law firm of Covington & Burling which represents some of the very banks he would later exonerate from criminal prosecution. Within that justice were three other top lawyers from Covington & Burling, including the firm's star lawyer defending against white collar crime who became Holder's right hand man running the criminal division of the Justice Department. What are we to make of that coincidence?

WILLIAM K. BLACK: Well, first, you should avoid it. But I want to caution that it isn't just the conflict, and indeed that in some ways takes one away from where the primary focus should be. So in the savings and loan crisis, President Bush, the first, brought in a Covington & Burling lawyer when they represented banks and such.

And he promptly, his name is Harris Weinstein, increased enforcement actions by fivefold. And we went after the biggest folks and we had by far our greatest victories. Because Harris Weinstein was picked because he was tough and competent and because he was given a mission which was you will go after the worst folks and you will demonstrate the rule of law exists in the United States. And that there was a political subtext of, I inherit, I, President Bush, inherited this crisis and I'll be seen as fixing it. Show the American people that there is no exception to the rule of law. Whereas Holder had exactly the opposite instructions which are, you know, don't rock finance. And that was reinforced by Timothy Geithner. But again Obama picked Timothy Geithner who was notorious as the worst failed regulator in the United States of America in the field.

BILL MOYERS: Why do you think on any evidence you have that they didn't want to fix the problem?

WILLIAM K. BLACK: Because two things. One, they were wrapped into this insanity that Timothy Geithner and Ben Bernanke were pushing that said, we must not do anything negative about the banks. We must instead “foam the runway[s],” is the infamous phrase of Timothy Geithner.

BILL MOYERS: To make a soft, safe landing.

WILLIAM K. BLACK: For the banks.

BILL MOYERS: For the banks.

WILLIAM K. BLACK: Not for the people. We will use the people as the excuse to get these programs. But the programs we all know are really for the banks.

BILL MOYERS: You do acknowledge that there have been some big settlements, I mean, and not all of them by Holder, but there've been settlements of over, you know, 125 or more billion dollars so far.

Hillary better than Ted Cruz? Oh, dear yes. Worth voting for her? Not to my way of thinking. We need one honest party; right now we have two that are owned by the Wall Street predators. Is there a way out? Bernie.

We have a very conservative Senate and House. Congress is dominated by large campaign contributors who exercise enormous influence. I think, the people here [in Washington] have almost developed an instinct not to attack the people who put money into their coffers. Obviously the Republicans are beholden to these guys. But too many Democrats are nervous about talking about issues including income and wealth inequality.

But in fact, the American people absolutely want to hear about it. I talk about it all the time. I give a lot of speeches and large crowds come out. People are very, very concerned about the overall impact of income and wealth inequality in terms of morality, in terms of economics, in terms of—with Citizens United—what it means to our political system.

The Koch brothers are not tucking their money under the mattress. They’re spending it very significantly trying to buy elections so that candidates representing the wealthy are going to get elected. So it is a huge issue, which people are keenly concerned about. But you have a Congress significantly dependent on the one percent for their campaign contributions and you have the media that is owned by multinational corporations who are not excited about dealing with this issue.

...There’s no question that the Republican Party has become a far-right party, significantly controlled by the Koch brothers and a few others. But the Democratic party has moved, you know. It used to be a center-left party — Truman, Roosevelt — it was the party of the American working class. I don’t think there are many people who think that is the case now. It is far better [than the Republican Party], and there are some great people in the Democratic Party who spend an enormous amount of time and energy fighting for working people, and I work with those guys. But I don’t think anybody would say, as a whole, that the Democratic Party is the party of the American working class.

...What I am telling you, as somebody who likes Obama and respects Obama, is that the key mistake that I believe he made, and it’s perfectly understandable, is he got into office, and he said, two years after he was in, “I’m gonna sit down and negotiate with the Republicans. I know I can’t get everything. We’ll work on some kind of compromise.”

What he didn’t catch on to is that the Republicans had no intention of compromising with him and they have no intention of compromising at all. They have an agenda. It is an extreme right wing agenda backed by the Koch brothers and other billionaires, and the only way you defeat that right-wing agenda is when the American people rise up and demand real change. It can’t be done within the confines of Congress. It has to be part of a strong and active grassroots movement.