Glenn Greenwald, in a recent article on Salon, wrote the following:
In a 1795 letter, George Washington vowed that, “the executive branch of this government never has, nor will suffer, while I preside, any improper conduct of its officers to escape with impunity.” Thomas Jefferson—in an April 16, 1784, letter to Washington—argued that the foundation on which American justice must rest is “the denial of every preeminence.” It’s literally difficult to imagine how we could be further away from those core principles. That the culprits who caused one of the worst financial crises in modern history have been fully shielded from the consequences of their acts — set along side the torturers and illegal eavesdroppers who have been similarly protected — illustrates that quite compellingly.
On April 13, 2011, Senator Carl Levin, (D-Mich), and Senator Tom Coburn (R-Okla) released a 635-page final report on their inquiry into key causes of the financial crisis. The report outlines in detail how Wall Street executives cost millions of Americans their jobs and homes, while wiping out investors, and good businesses.
High risk lending, regulatory failures, inflated credit ratings, and Wall Street firms engaging in massive conflicts of interest, contaminated the U.S. financial system with toxic mortgages and undermined public trust in U.S. markets.
The report describes how bank executives knowingly made loans they knew were tainted by fraud or prone to early default. They then securitized hundreds of billions of dollars in these high risk, poor quality or fraudulent mortgages without full disclosure to investors, which weakened U.S. financial markets. For example, Washington Mutual sold some of its high-risk loans to Fannie Mae and Freddie Mac and played one off the other to make even more money.
According to the report, the most immediate cause of the financial crisis was the July 2007 mass ratings downgrades by Moody’s and Standard & Poor’s that exposed the risky nature of mortgage-related investments that, just months before, the same firms had deemed to be as safe as Treasury bills. The result was a collapse in the value of mortgage related securities which devastated investors. Credit rating agency personnel knew their ratings were bogus and delayed imposing tougher ratings criteria to enrich themselves and their clients. In the end, over 90% of the AAA ratings given to mortgage-backed securities in 2006 and 2007 were downgraded to junk status.
Investment banks, like Goldman Sachs, sold billions of dollars in mortgage-related investments and flooded financial markets with high-risk assets. When Goldman realized the mortgage market was in decline, it took actions to profit from that decline at the expense of its clients. For example, at the same time it was betting against the mortgage market as a whole, it aggressively marketed poor quality Collateralized Debt Obligations (CDOs) to its clients and then actively bet against them by taking large short positions on those transactions.
The Senate committee may turn over its findings to the DOJ for possible criminal prosecution. But, according to Glenn Greenwald, it is highly unlikely that any Wall Street executive will be prosecuted for their crimes.
Political and financial elites now enjoy virtually full-scale legal immunity for even the most egregious lawbreaking, while ordinary Americans, especially the poor and racial and ethnic minorities, are subjected to exactly the opposite treatment: the world’s largest prison state and most merciless justice system.
So far, no high-level culprits have been indicted or even meaningfully investigated, and few have suffered any financial repercussions from regulators or lawsuits.
According to Greenwald,
the overarching ‘principle’ of our justice system is that criminal prosecutions are only for ordinary rabble, not for those who are most politically and financially empowered. We have thus created precisely the two-tiered justice system against which the Founders most stridently warned and which contemporary legal scholars all agree is the hallmark of a lawless political culture.
He then offers compelling illustrations of facts and events to support his claim:
- When Bush officials were revealed to have established a worldwide torture regime and spied on Americans without the warrants required by law, President-elect Barack Obama, in January 2009, stated that he was unlikely to authorize a broad inquiry into the wrongdoings of the Bush administration.
- When Spanish prosecutors decided that it would criminally investigate the torture by American officials, one of the State Department cables obtained by WikiLeaks reveals how the Obama administration, worked with Republicans to pressure Spain to stop the prosecution.
- When telecoms g0t caught participating in Bush’s illegal eavesdropping program in violation of multiple federal statutes, on February 11th, 2008, the Senate voted to give retroactive immunity for telecoms. Eighteen Democrats Crossed over to vote for immunity.
- In June of 2009, a federal judge threw out more than three dozen lawsuits against major telecommunications companies hat had illegally assisted in the wiretapping without warrants program approved by President George W. Bush after the 2001 terrorist attacks.
- And when it was discovered that the CIA was destroying videotapes of its rough interrogation and waterboarding sessions with accused Terrorists—in the face of multiple court orders directing that they preserve such evidence, strongly suggesting obstruction of justice—in November of 2010 the Obama Justice Department decided not to bring criminal charges.
- And when it came time to decide what to do with one of the most brazen lawbreakers in the financial world— former Countrywide CEO Angelo Mozilo—in February of 2011, federal prosecutors ended a criminal investigation of Mozilo with no indictments. Mozilo dumped hundreds of millions of dollars of stock when he secretly knew that the loans Countrywide was originating couldn’t support the stock valuation. He then walked away with $170 million for destroying Countrywide through predatory lending.
It’s clear that the Angelo Mozilo and Lloyd Blankfeins of the world—who donate heavily to presidential and congressional campaigns—will never suffer the consequences of their illegal actions. As Greenwald reports, all of that stands in stark contrast to how ordinary Americans are treated by this same justice system “with incomparably harsh and merciless punishment.”