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— Don Surber (@donsurber) April 25, 2015
Screw bipartisanship. Compromise brought you Dred Scott and Bloody Kansas. Radical Republicanism brought you the 13th, 14th and 15th Amendments.
I want the next Republican president to play hardball. Prosecute. Get the Clintons. Get Harry Reid. Get Nancy Pelosi. Wipe out and disbar every prosecutor in Wisconsin who ever used John Doe warrants. Definitely Lois Lerner deserves a special prosecutor.
And be subtle about it. Don't say a damned word. Just do it. President Bush put a dozen CEOs behind bars. Joshua Holland of ultra-liberal Bill Moyers blog wrote about it:
September 15th marked the fifth anniversary of Wall Street giant Lehman Brothers going into bankruptcy, which precipitated the Great Recession that lingers on today — it remains the largest bankruptcy in U.S. history. To date, no executives have faced prosecution for the widespread mortgage fraud that fueled the bubble.
Moyers and Company caught up with a man who knows a lot about fraud — and fraud prosecutions — to explain why that is, and what the possible consequences of letting Wall Street off the hook might be. William K. Black, now a professor of law at the University of Missouri at Kansas City, is a former bank regulator who played an integral role in throwing a number of high-level executives in jail for white-collar crimes during the savings and loan crisis in the 1980s. We spoke with Black by phone. A lightly edited transcript of our discussion is below.
Joshua Holland: To date, a few loan officers — small fish — have been convicted of various offenses related to the financial crash. But none of the big bankers have faced any charges. And it’s not that the government has been losing cases in the courts. There’s simply been no concerted effort to prosecute these guys. Can you contrast that with what happened during the savings and loan scandal of the 1980s, and also give us your sense of why this has been the case?
William Black: Sure. The savings and loan debacle was one-seventieth the size of the current crisis, both in terms of losses and the amount of fraud. In that crisis, the savings and loan regulators made over 30,000 criminal referrals, and this produced over 1,000 felony convictions in cases designated as “major” by the Department of Justice. But even that understates the degree of prioritization, because we, the regulators, worked very closely with the FBI and the Justice Department to create a list of the top 100 — the 100 worst fraud schemes. They involved roughly 300 savings and loans and 600 individuals, and virtually all of those people were prosecuted. We had a 90 percent conviction rate, which is the greatest success against elite white-collar crime (in terms of prosecution) in history.
In the current crisis, that same agency, the Office of Thrift Supervision, which was supposed to regulate, among others, Countrywide, Washington Mutual and IndyMac — which collectively made hundreds of thousands of fraudulent mortgage loans — made zero criminal referrals. The Office of the Comptroller of the Currency, which is supposed to regulate the largest national banks, made zero criminal referrals. The Federal Reserve appears to have made zero criminal referrals; it made three about discrimination. And the FDIC was smart enough to refuse to answer the question, but nobody thinks they made any material number of criminal referrals [either].
And what people don’t understand about the criminal justice system is there are roughly a million people employed in it — and of course, millions incarcerated in it. But of the million employees, 2,300 do elite white-collar investigations. And of those 2,300, you have to contrast that to the number of industries in the United States, which is over 1,300. Notice I didn’t say ‘corporations,’ I said ‘industries.’
So a couple of things should be obvious. First, the FBI agents will not have expertise in the industry. And second, they can’t patrol the beat. They have to wait until a criminal referral comes in, and won’t come from the bank itself. Banks don’t make criminal referrals against their CEOs.
It could episodically come from whistleblowers, but against an epidemic of fraud that can never work. It has to come overwhelmingly from the regulators. So when the regulators ceased making criminal referrals — which had nothing to do with an end of crime, obviously; it just had to do with a refusal to be involved in the prosecutorial effort anymore — they doomed us to a disaster where we would not succeed.
Back in the savings and loan crisis, people like me — and I did this personally a great deal of my time — trained not only our regulators, but also the FBI agents and assistant U.S. attorneys on how to identify fraud schemes, how to respond to them and how to document them. We also detailed our top examiners on the most complex frauds, so that they worked for the FBI as their internal experts, and then people like me testified as expert witnesses. And, again, we had prioritized so we were going against the absolute worst of the worst and most senior of the people. None of those things have happened now.
Because of changes in executive compensation, it’s very uncommon for people to blow the whistle in the modern era. What people often don’t understand is that executive compensation bonuses go down very low in the food chain. And so if I’m a boss and I see a crime being committed, it isn’t just that I risk losing my bonus, it’s that Fred and Mary who report to me — Fred with three kids about to go to college and Mary with a kid that has severe problems — they’ll lose their bonuses as well. And so it’s not even my greed — it’s my altruism that gets in the way.
And then the administration has never — both the Bush and the Obama administrations — made a call for the good people to come forward, the ones who fought against the frauds and were disciplined because they did so. And the Frontline special that investigated this found that as soon as word got out, they were deluged with people giving them information, and the common characteristic Frontline found was that the FBI had never even talked to them.
And of course, the Obama administration has been having an unholy war against whistleblowers.Time to put a dozen Democratic senators and Cabinet members behind bars.
Either the Rule of law applies or this is America SSR.
I don't want a for president or a preening pretender. I want someone who just gets it done