There is a story that appeared yesterday in The New York Times that would have been worth reading if it had been published five years ago. In the article, the reporter, Edward Wyatt, analyzes the propensity of the largest financial institutions to violate securities laws despite having previously violated these same laws and made promises to the Securities and Exchange Commission never to violate them again.
The New York Times has a portentous way of writing such stories, as if the information they have uncovered is revelatory if not earthshattering. Case after case is presented, experts are interviewed and asked to provide analysis, and some weighty conclusions are reached. Readers should be left with at least a slight feeling of outrage that such things have been going on in high finance.
As an ex-subscriber to The New York Times, I too have been outraged by such stories, but not because I read them in the paper of record, which is not simply very late to the game of reporting on this phenomenon - it is too late. I’ve been outraged by these stories because I have been reading about this for years on internet blogs. Some of the most persistent reporters and analysts who write about this problem include Glenn Greenwald at Salon.com, Yves Smith at the Naked Capitalist blog, and Karl Denninger at the Market Ticker blog. All three of these writers have no doubt lost some readers over the years because they write about these stories over and over, and manage to maintain a sustained fury over the debasement of the rule of law that is evidenced by the way the big banks operate, and the inability or refusal of the government to do much about it.
These are the sort of people who have been criticized for years by The New York Times for sloppy reporting because they don’t have to live by the strict journalistic standards that are upheld every day by the mainstream media. Whether or not this is true – and for the most part these writers have been careful about ensuring that the facts they present are verified – it is definitely the case that mainstream media reporters and analysts have not taken the angry, vituperative, and in some cases vulgar tone that bloggers take when talking about the collapse of the rule of law.
Therein lies a problem, and it is one that the mainstream media is only now beginning to comprehend. The undermining of the US Constitution and the laws as passed by Congress, and the refusal by government to investigate or prosecute these violations, which are now rife, represent some of the most serious challenges imaginable to a democracy based on a republican form of government. Anyone who takes their responsibilities as a citizen of the US seriously should be outraged by these circumstances.
It would have helped, for example, if Mr. Wyatt had reached some more forceful and meaningful conclusions in his article. He could have included an investigation into the behavior of former SEC Chairman Christopher Cox, a Republican political hack who was appointed by George W. Bush to the SEC specifically for the purpose of de-fanging and spaying the agency. He could have told us how so many capable attorneys were forced out of their jobs by Christopher Cox, and how the Obama administration has failed to restaff the agency in any significant way. Rather than just tell us the fact that the SEC can only file civil actions against violators, and must refer suspected criminal behavior to the Justice Department for investigation and prosecution, he could have asked why the Justice Department has refused to pursue any prosecutions of financial industry executives, despite voluminous evidence of criminal behavior in the industry that has been unearthed by state attorneys general.
To be fair to Mr. Wyatt, maybe his first draft did indeed discuss these issues, but the editors struck such conclusions out. Either way, you get the impression that The New York Times is being reluctantly dragged along to investigate and report on matters that have been known to the general public for years, and which have in part motivated millions to protest at Tea Party rallies as well as Occupy Wall Street sit-ins. How many more years will it be, however, before The New York Times states in print what millions of Americans already understand: that these large financial institutions, by routinely violating the law, have themselves become criminal enterprises, allowed to deceive, cheat, and defraud their customers, thus afflicting great damage on the economy to the point of driving this nation into a depression.
Perhaps the editors of The New York Times still think such statements are incendiary and irresponsible, altogether unworthy of an establishment newspaper. If so, they should read the establishment version of such conclusions, written by the Attorney General of Nevada, Catherine Cortez Masto, In her complaint, Ms. Cortez Masto goes after Bank of America with as much sustained outrage as a government official can be allowed to muster. You cannot read how Bank of America has routinely violated its promises to the government to clean up its predatory and illegal behavior in its mortgage business, and not come away concluding that bank executives engage in ongoing criminal behavior simply because they can.
It is probably the case that these executives do not think of themselves as criminals at all. They probably view themselves as highly moral individuals, partly because they are several organizational levels above the areas of the bank that actually do the deceiving and defrauding of clients. In an interview over the weekend with CBS News, convicted criminal Jack Abramoff revealed how he routinely bribed at least 100 members of Congress, violated campaign finance laws every step of the way, and all along viewed himself as one of the most moral lobbyists in Washington because he gave away so much of his earnings to charity.
He did not recognize at the time the deceit he practiced on his clients, and the subversion of the rule of law that he perpetrated. It took a long prison sentence, away from the wiles and temptations of Washington, to open his eyes to the true nature of his behavior. He could not think of one Congressmen who was not a participant in this same, corrupt system, and who wouldn’t willingly accept free tickets to sporting events, free rides on corporate planes, free trips overseas, and other illicit emoluments, all at the cost of inserting some trifling language in a bit of legislation that netted millions of dollars of taxpayer money for the lobbyist and his clients.
Perhaps if a few banking executives had the luxury of time in prison, they might also conclude that their behavior constituted immoral, unethical, and illegal behavior. Unfortunately we won’t have the benefit of such bankerly insight, because bankers don’t go to prison. They aren’t even the subject of serious investigation by the Justice Department. It’s as if no one in Washington even questions their behavior.
This basic fact has not gone unnoticed by the people attending the Occupy Wall Street demonstrations. President Obama has done his best to position himself as a defender of the people, who have been victimized by mortgage scams and bank bailouts and outrageous bonuses for Wall Street executives. No doubt he would like to harness some of that commitment and enthusiasm – even if it is angry enthusiasm – of the OWS crowds to his own sagging reelection campaign.
President Obama doesn’t realize that he is, like the editors of The New York Times, too late. Americans may not know the fine details of the US Constitution, or the fact that it doesn’t ask for much from the President, but people remember that the President is required to “take care that the laws be faithfully executed.” It is an elegant and simple requirement of the job, and the emphasis is on the word “faithfully.” President Obama has consistently failed to live up to this Constitutional mandate, from the very earliest days of his administration, when he turned a blind eye to torture by government officials. It was much more convenient for him to ignore this criminal behavior as a matter of political expediency, just has he has ignored criminal behavior in the financial industry as a matter of campaign fund-raising expediency.
Like Jack Abramoff when he was a lobbyist, President Obama does not see himself as morally deficient in any way. In fact, if anyone is morally deficient in Washington, it is the bankers, because President Obama has recently said so. But he won’t go any farther; what the bankers did was immoral, “but it was not illegal.” So says the President of the United States, perhaps on the best advice he has received from the US Attorney General. Such advice, and such thinking, ignores the mass of evidence that is now in the public record that large financial institutions have repeatedly broken the law. The evidence is so overwhelming, and so hard to ignore, that even The New York Times has come around to educating its readers about all these illegalities.
Don’t be surprised if a little less than a year from now Barack Obama will be singing a different tune. He’ll be in the heat of a reelection campaign, and he will want to align himself to the overwhelming public and professional conclusion that the big banks are criminal enterprises. It will be of no use. As we’ve already seen with the OWS protests, people have moved on. The voters are treating Barack Obama with the greatest degree of contempt they can dish out to a politician: they are ignoring him. They don’t trust what he says, not when he has had four years to “take care that the laws be faithfully executed,” and has consistently, through deliberation or willful ignorance, failed to do so.