RSN Fundraising Banner
FB Share
Email This Page
add comment
Print

Danny Schechter writes: "The truth is that most of the bigger banks have emerged from the financial crisis stronger than ever, with executives cashing in with higher salaries and bigger bonuses. That old saying about criminals who 'laughed all the way to the bank' has to be revised because in this case they never left the bank."

Goldman Sachs CEO Lloyd Blankfein misled Congress when he testified before the Senate's Permanent Subcommittee on Investigations, 04/14/11. (photo: Jim Watson/AFP)
Goldman Sachs CEO Lloyd Blankfein misled Congress when he testified before the Senate's Permanent Subcommittee on Investigations, 04/14/11. (photo: Jim Watson/AFP)



Too Big to Jail

By Danny Schechter, Reader Supported News

24 May 11

 

his week the financial crisis finally went prime time in the form of a big budget HBO docudrama called "Too Big To Fail."

It was a well-acted docudrama focused on the BIG men and some women in the banks and in government who tried to put Humpty Dumpty back together again up on that wall to prevent a total economic collapse when panic dried up credit and financial institutions faced failure.

Based on the work of a New York Times reporter, it offered a skillfully-made but conventional narrative which, like most TV shows, showcase events but miss their deeper context and background.

We heard all the explanations, save one.

There was greed, ambition, ego and money lust. There were personal rivalries and ideological battles, parochial agendas and narrow self-interest. There was panic on THE Street and in the halls of mighty institutions. In many ways, the program recycled and made an official narrative compelling viewing. In the end, everyone was to blame so no one was to blame.

But ... what was missing was any notion of intentionality and premeditation, almost no mention of systemic fraud and CRIME, that one word that sums up what really happened for those millions of Americans who have lost jobs and homes. We never saw victims or felt their pain and bewilderment. We were never shown how a shadow banking system emerged or how the finance industry worked with their counterparts in finance and insurance to transfer wealth from the poor and middle class to the superrich.

When I was but a precocious lad, my elementary school encouraged students to take out a savings account at the nearby Dime Bank in the Bronx. We were each given a bankbook and taught to put in $.50 a week to show us how to build wealth by being thrifty. It was with a sense of pride that I watched my balance grow.

It may have been peanuts in the scheme of things, but to me, at the time, it was the way to plan for the future.

At the same time, in those year I watched TV shows glamorize the bank robbing antics of a man named Willie Sutton who also staged jail breaks wearing masks and costumes. When he was asked why he robbed banks, he responded famously, "That's where the money is."

And it still is, except in our era, it is the banks that are robbing us.

That's because what's now called the "financial Services sector" has gone from about 30 percent of our economy to over 60 percent. Through a process called financialization, they have transformed how all business is done.

Making money from money soon began to surpass making money from making things. What we were never warned about was the danger of getting too deeply in debt, or how the economy was shifting from production to consumption.

Private equity, credit swaps, derivative deals and collateralized debt obligations soon drove the economy. Markets became captives of high performance trading by powerful computers.

When Wall Street became the defacto capital of the country, the bankers accrued more power than the politicians who they bought up with impunity. Their lobbying power deregulated the economy and decriminalized their activities. They killed many of the reforms enacted during the New Deal designed to protect the public. They built a shadow (and shadowy) banking system beyond the reach of the law.

And now, here we are, in 2011, five years after the meltdown of 2007, four years after the crash of 2008 and the passage of the TARP bailout that pumped money into their treasuries at taxpayer expense. Since then, there has been a steady parade of scandals and the disclosures that have come out since. Every week, more banks close and or consolidate and run into problems with regulators.

Take "my" old bank in the Bronx. It has been through as many changes as I have been. A website on bank histories runs it down:

Dime Savings Bank of New York, The
04/12/1859 NYS Chartered Dime Savings Bank of Brooklyn
09/10/1930 Acquire By Merger Navy Savings Bank
06/30/1970 Name Change To Dime Savings Bank of New York, The
09/30/1979 Acquire By Merger Mechanics Exchange Savings Bank
07/01/1980 Acquire By Merger First Federal S & L Assoc. of Port Washington
08/01/1981 Acquire By Merger Union Savings Bank of New York
06/23/1983 Convert Federal Dime Savings Bank of NY, FSB
01/07/2002 Purchased By Washington Mutual Inc.
01/07/2002 Name Change To Washington Mutual Bank

And then, of course, some years later, Washington Mutual itself, went bust and was bought up for a song by JP Morgan Chase. Here are some of the latest headlines about the bank now known as WAMU:

WaMu agrees on post-bankruptcy control - report - Reuters
WaMu, Shareholders, Biggest Creditors Said to Settle ... - Bloomberg
WaMu shareholders are offered $25M-plus to drop claims

On the day I wrote this commentary, the New York Times reported:

"The nation's biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac."

And to whom does the Times turn for expertise on the subject, but a key former operative at Washington Mutual who was with the bank in the go-go era of shoveling out subprime mortgages? Now, he gives advice on risk management:

"These shops are under siege; it's just a tsunami of stuff coming in," said Taj Bindra, who oversaw Washington Mutual's servicing unit from 2004 to 2006 and now advises financial institutions on risk management. "Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end."

What were people's homes are now "inventory" to be stockpiled even though it has a negative cumulative effect on economic recovery of the housing market.

The banks that are increasingly despised and blamed for their role in engineering the financial disaster, are now trying to play nice to change their negative image.

Explains the Times:

"Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

"Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us," said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. "It's a lot different than it used to be."

So, they are still foreclosing, but with a smile. Is it a 'lot different than it used to be'?

Just last month, Huffington Post reported:

"Top executives at Washington Mutual actively boosted sales of high-risk, toxic mortgages in the two years prior to the bank's collapse in 2008, according to emails published in a wide-ranging Senate report that contradicts previous public testimony about the meltdown.

The voluminous, 639-page report on the financial crisis from the Senate Permanent Subcommittee on Investigations singles out Washington Mutual for its decision to champion its subprime lending business, even as executives privately acknowledged that a housing bubble was about to burst."

The truth is that most of the bigger banks have emerged from the financial crisis stronger than ever, with executives cashing in with higher salaries and bigger bonuses. That old saying about criminals who "laughed all the way to the bank" has to be revised because in this case they never left the bank.

More shocking has been the largely passive response by our government and prosecutors. At last, the Attorney General of New York is said to be investigating but none of the big bankers have yet gone to jail or suffered for the scams and frauds they committed. Most of the State officials who vowed to after the banks in the absence of aggressive federal actions have backed down.

So what can "we the people" do? We can do nothing and watch more of what's left of our wealth vanish, or we can join others in demanding a "jailout," not a bailout.

A well-known international banker was just arrested for a high profile alleged sex crime but not one of possibly thousands have been prosecuted for well documented financial crimes.

Where are the political leaders and activist groups willing to "fight the power" and demand accountability and transparency on Wall Street?

Why are so many us banking on a financial recovery to bring back jobs and a modicum of justice created by the very people and institutions responsible for the crisis?

And why didn't I learn about these dangers when I first discovered the wonderful world of banking? Isn't that what schools are for?


News Dissector Danny Schechter elaborates on this issue in his book, "The Crime of Our Time," and in a DVD extra to his film "Plunder - The Crime of Our Time" (PlunderTheCrimeOfOurTime.com). You may contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

e-max.it: your social media marketing partner
 

Comments   

We are going to return to our original fully-moderated format in the comments section.

The abusive complaints in the comment sections are just too far out of control at this point and have become a significant burden on our staff. As a result, our moderators will review all comments prior to publication. Comments will no longer go live immediately. Please be patient and check back.

To improve your chances of seeing your comment published, avoid confrontational or antagonistic methods of communication. Really that is the problem we are confronting.

We encourage all views. We discourage ad hominem disparagement.

Marc Ash
Founder, Reader Supported News

 
+38 # Ophelia629 2011-05-24 22:52
WHY AREN'T WE IN THE STREETS PROTESTING? BECAUSE WE'RE ALL TOO BUSY TRYING TO STAY ALIVE, THAT'S WHY! ONCE THE MIDDLE CLASS LOSES EVERYTHING WE'LL BE IN THE STREETS--COUNT ON IT!
 
 
+7 # boudreaux 2011-05-25 08:01
LET'S DO IT OPHELIA!!!I'm ready when you are......Helen
 
 
+13 # Activista 2011-05-24 23:06
"Washington Mutual itself, went bust and was bought up for a song by JP Morgan Chase" - on government pressure ("friends" of Chase in congress?)
Washington Mutual (our home bank) was taken over by CHASE - all interest and fees did go up (at least doubled) -
WaMu was great bank till the greedy last CEO jumped on to Housing Bubble.
This should be investigated ... something is rotten here ...
 
 
+8 # Activista 2011-05-24 23:15
JPMorgan/Chase paid just under $1.9 billion for WaMu, which regulators said had $307 billion dollars in assets.
With help of government Chase made $300 billions ... how much politicians got paid?
 
 
+6 # Activista 2011-05-24 23:25
CRIME -
www.wamucoup.com
at Chase and Government - still there - ruling class.
 
 
+24 # Dave W. 2011-05-24 23:55
President Obama has failed to lead on this issue and for good reason. Follow the money trail. A recent RSN article stated that Obama received 800 million dollars from Wall St. financial firms in his drive to the Presidency in '08. His opponent John McCain received slightly over 600 million. Geithner, Summers, Rubin, and the CEO of non-tax paying GE all bending the President's ear on financial matters. He is NOT going to start now with any type of investigations. Obama has already stated, quite categorically, that he wants to focus on the future not the past. This is akin to a pardon, not only for Wall St. sharks but for Bush administration officials who fabricated evidence to initiate our military involvement in the Middle East. I voted for Obama and held out great hope that justice might finally be around the corner. I was mistaken. Justice doesn't even exist in this country anymore. The Republicans have both oars out of the water and the Democrats, as always, have one. It's going to be a looooong trip to the bottom. Perhaps then, as Ophelia629 says, we'll be in the streets. I'm 54 and ready to go.
 
 
+6 # Saberoff 2011-05-25 00:31
There is too much stuff; "news" going on, continuously. Too fast. Too many accaustinations every day! Spreading us too thin.

Like Bill Cosby once said "If the kids are acting up, take one of them outside and eat 'em. Let the others watch."

Screw all the (valid, yes) distractions, and our best-of-all-pos sible media (that meat-grinds them out to us). We need to focus on one, single, pig (you know what I mean) and eat it (and let the other's watch). Then move on. To the next pig.

What will we do? And, how? (This is NOT a rhetorical question). How can we let these things happen to us, by these swine?
 
 
+9 # zrants 2011-05-25 01:55
13 states are looking into following in the footsteps of North Dakota and starting their own state-owned public banks as a solution to their economic problems. Just look up the North Dakota Bank and see for yourself why a state bank looks attractive.
 
 
+2 # boudreaux 2011-05-25 08:05
I am so with you Zrants.....I think that is the soloution....
 
 
+15 # PGreen 2011-05-25 07:06
The problem with the (capitalist) system which promotes and encourages these financial institutions, is that it also encourages the worse impulses in all of us. We have raced to create a hierarchical pyramid of authority, with a very few men at the top who are excused from moral and legal consequences, just as in a feudal system. The rest of it fight it out for positions beneath them. Self-interest is rewarded, but only in service of the establishment, not in service of humanity. Profit is king. Truly nice guys not only finish last, but they usually aren't invited back. As Plato said, "what is honored in a country is cultivated there." In our greedy competition, we threaten to become a mean-spirited and desperate people. Our natural human responses to flinch at the sight of another's pain, to feel empathy and compassion, are overridden. Most of us are good people, but it has become harder to live in that ethos. Bill Russel once said in response to a question, "there are no other people's children. There is only the next generation of Americans." As we seek to level the pyramid, to hold those at the top accountable for their excesses and their crimes, may we remember this.
 
 
+9 # mtnview 2011-05-25 08:00
Watching Too Big To Fail what was evident at the end was in the game of Brinksmanship between Paulson (government)and the Bankers, the Government blinked. As one character said, there were no concessions from the banks because they would not have signed the agreement if there had been. Banksters were willing to crash the system rather than put the country first, even tho their own actions and policies, abetted by Congressional removal of regulations, is what created the crisis. IMO all of these companies and their leaders should be indicted as traitors, stripped of their assets, and jailed. At the conclusion of the movie, a tag line stated clearly, that now our financial system is even more vulnerable, wealth more concentrated than before. It will not be long until the crisis repeats itself. Take your money and leave America now. Its too broken to fix.
 
 
+5 # boudreaux 2011-05-25 08:00
I haven't read any of the comments on this site b/c I didn't want to be swayed by what I wanted to say...Private Banking!!!North Dakota is doing it and very succusful at it...since 2008 they have taken their own money and ran the banking industry out of their state and have a surplus...
There are I think about 13 more states that are in the running to do the same thing and I so hope that they get to do it!!! Can you IMAGINE what the goverment would do if they had no more of our money to waste on what they wanted to waste it on??? A REVOLOUTION AT LAST!!!
Congress would be protesting us...
 
 
+2 # Activista 2011-05-25 09:17
Obama is "serving" money interest to get reelected. The same congress. Reps and Demrats are screeming - we LOVE Israel to get AIPAC money. Netjenahu speech to congress was obscene - force Palestinians to accept Jewish = Apartheid State of Israel.
The US political system is corrupt and SICK.
 
 
-10 # Cassandra2011 2011-05-25 11:43
Quoting Activista:
Obama is "serving" money interest to get reelected. The same congress. Reps and Demrats are screeming - we LOVE Israel to get AIPAC money. Netjenahu speech to congress was obscene - force Palestinians to accept Jewish = Apartheid State of Israel.
The US political system is corrupt and SICK.

Yes, agree the US political system is corrupt and sick; but so are the knee-jerk, no-thought anti-Israel (=anti-Jewish) bigots apparently so fashionable these days... .
 
 
+3 # Capn Canard 2011-05-25 09:50
I believe that the problem is MONEY. The monetary system itself is inherently doomed to failure with Governments propping up systems which are nothing more that an illusion. The illusion which we call the free market capitalism. I don't see how we can fix without completely remaking a system based on a real tangible means of exchange. I suggest that we use TIME in lieu of money.
 
 
+1 # Dave W. 2011-05-25 12:26
Capn Canard, "I suggest that we use TIME instead of money." That would be PERFECT for the "illusionary" financial industry. The "past" is already gone. The "present" only exists at that precise second before becoming the past, and the "future" hasn't occurred yet. Perhaps the old saying "time is money" was "ahead" of it's time.
 
 
+3 # reiverpacific 2011-05-25 10:13
Knock-knock,--" Hullo" (and thanks Dave W. for getting to one of the nubs)!
Obama is already trying to raise his stated 1 Bn (that's "Billions" folks!) that he needs for re-election. That alone should stop many people from voting for him. And who d'you think he is courting to raise this sum?
How many people and displaced former home -owners could that sum help? But RSN readers and many other more passive citizens realize that.
This is the age of marketing and fear-driven sound-bytes which cloud issues and keep people on eggshells -and the major media up front to keep 'em dumb!
That's one reason why the people are not out on the streets, except for a few pockets like Wisconsin, where it may be a bit late but where at least Walker and his shills are being watched carefully until they can be recalled in January 2012 (my daughter lives there and keeps me current on these events and the skullduggery ongoing to cement the destruction while Walker still has time).
It's all part of the final drive to full-blown corporate state -and you all know what the less pretty name for THAT is!
 
 
+4 # Dave W. 2011-05-25 12:43
reiverpacific, Happy to be a "nubber!" Obama is now in full blown "campaign mode."
NOBODY in the financial industry is going to do ANY penance and the "full-blown corporate state" you speak of is perched like a vulture on the dead and decaying branches of America waiting to pick our bones clean. Wisconsin has always had a progressive streak so its no surprise Walker is facing stiff opposition there. Much of America however seems to have "Rumpelstiltski n" disorder.
 
 
+1 # Activista 2011-05-25 20:16
Banks (wall Street) are in principle Ponzi schemes (aka Madoff) -
like running Wars on the Chinese credit card.
WA has new budget - cutting schools and Social services
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN