(December 23, 2011)
The government's refusal to investigate financial crimes committed by the banking
cartel and its Elites is nothing less than the willful destruction ofthe rule of law.
The present refusal of the Status Quo to impose the rule of law on financial crimes
is best captured by the Vietnam War-era quote: "We had to destroy the village to save it."
To save the fragile financial sector from the consequences of its systemic fraud and
embezzlement, the Federal government has purposefully destroyed the rule of law: the
laws governing banks and financial transactions are not being enforced, lest that enforcement
bring down the house of cards that enriches and sustains the political Elite.
Correspondent C.D. works in law enforcement, and so his perspective on this willful
destruction of the rule of law is informed by knowledge of the law and experience with
the enforcement of regulations:
It's very telling to me given my profession that I've not heard of any federal subpoenas
or search warrants being executed on the big banks on Wall Street regarding the crisis of 2008.
There is plenty of evidence in the public domain right now that could be used to generate
probable cause to get one or the other of these investigative tools to investigate the
various banks. Furthermore, the government has access to all sorts of information in the
form of records and reports that are mandated to be kept/submitted by those banks that
would most likely show evidence of illegal activity.
If the federal government really
wanted to investigate these crimes, they would have had agents and regulators down on Wall St.
serving warrants and subpoenas in the fall and winter of 2008. The power of the federal
government to investigate people and companies is enormous, if they choose to do so.
The fact that you have not seen this happen is NOT an accident! While there is a significant
amount of incompetence in government, that does not explain the current state of affairs.
In my considered opinion, there is a policy in place to not enforce certain laws on
certain people and in fact, there are policies in place that create as Bill Black says,
"a criminogenic environment".
One just needs to compare and contrast the government's
response to the S and L crisis and the 2008 crisis and you will see a big difference.
The government didn't become impotent in these intervening years; there are plenty of
regulators, agents, and prosecutors that would be able to successfully investigate and
prosecute the plethora of crimes committed by the banks. The reason that there aren't
FBI agents crawling all over Wall St. is that the top politicos don't want it to happen
or prosecutors can't make criminal cases, because of misfeasance and malfeasance on the
part of government officials at the SEC, CFTC, Treasury, etc. has tainted cases or don't
want to expose that same mis/malfeasance for various other reasons. End of story.
Furthermore, what good does it do to investigate these banks and fine them (usually with
paltry civil fines), when they are being bailed out through government and federal reserve
handouts and special loans? In these cases, we have one arm of the government trying to
bring some level of justice to these banks and we have another arm of government propping
up these same banks. These banks could literally take taxpayer money to pay their fines!
The bank executives that ran these banks into the ground should be investigated and
prosecuted, otherwise there is no deterrent to breaking the law; this is not rocket science.
Why are we supporting institutions that have been found to have repeatedly committed fraud,
anyway? Why do our local and state governments continue to do business with these banks,
when they've been found to be ripping off other local governments (e.g. JP Morgan).
It's like a case of financial Stockholm syndrome.
Our Founding Fathers must be turning in their graves. They put their lives on the line to
fight the rule of a tyrant and remove the influence of the predatory, monopolist East India
Trading Co. and now we find ourselves subjected to similar type conditions. It's crazy.
Our veterans fought for this?
I can't help but think that all of the things that John Perkins spoke about in his book
that we (our corporations, military, CIA, etc) did in other countries are finally coming
home to roost. All of the evil things that our government did on behalf of corporations
and banks are going to be done to us in one form or another, unless enough people wake up.
But perhaps it's the necessary feedback mechanism for people to realize that freedom is
not free and one cannot get a "free/discounted lunch" forever without paying a steep price.
Thank you, C.D. The reason given by the fixers and apparatchiks like Treasury
Secretary Geithner is that any exposure of the lies, corruption, fraud and embezzlement
would dismantle the last of the public's fragile faith in the nation's financial sector.
No One Is Above the law (Simon Johnson, author of 13 Bankers):
“The confidence in the system is so fragile still. The trust is gone. One poor earnings
report, a disclosure of a fraud, or a loss of faith in the dealings between one large bank
and another—a withdrawal of funds or refusal to clear trades—and it could result in a run,
just like Lehman.” (from Ron Suskind’s book 'Confidence Men', p.202)
Now three years later, the megabanks are even bigger, as is the risk they concentrate
(see my recent testimony to the Financial Institutions subcommittee of the Senate Banking
Committee for details.) Curiously, their precariousness, as much as their power, is
shielding these behemoths from the enforcement of financial fraud laws.
You see the irony here, of course: the trust Geithner et al. are so worried about is
being destroyed by their willful destruction of the rule of law. The banks and
the financial and political Elites are above the law now, and this abandonment of
"every person is equal before the law" is nothing less than the destruction of rule of law.
To "save" it banking cronies from financial losses, the Federal government's agencies
of enforcement and prosecution have dismantled the rule of law. Our government has
made it clear for all to see: protecting and coddling banking cronies and cartels is
more important than preserving democracy and the rule of law.
Is the risk posed by the banking cartel imploding in insolvency really worth the destruction
of the rule of law?
What sort of nation will we be left with if wealthy, politically powerful people are
routinely above the law because their financial wealth is considered more important than
either democracy or the rule of law?
For more on this topic, please read
Jim Puplava's interview of William Black (Financial Sense)
If this recession strikes you as different from previous downturns, you might
be interested in my new book
An Unconventional Guide to Investing in Troubled Times (print edition)
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