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There’s No Recovery Because the Government Made it Official Policy Not to Prosecute Fraud
Posted By admin On July 9, 2011 @ 4:33 am In Featured Stories,Tile | Comments Disabled
Washington’s Blog 
July 9, 2011
Fraud caused the Great Depression and it has caused the current financial crisis . But fraud is not not being prosecuted, and so it will occur again and again, and prevent a sustainable economic recovery.
Nobel prize winning economist George Akerlof has demonstrated  that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Indeed, William Black notes  that we’ve known of this dynamic for “hundreds of years”.
Now mainstream journalists are starting to catch on.
Market Watch senior columnist Brett Arends writes :
No one has been punished. Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide, along with many others, cashed out hundreds of millions of dollars before the ship crashed into the rocks. Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains. But they aren’t in jail. They aren’t even under criminal prosecution. They got away scot-free. As a general rule, the worse you behaved from 2000 to 2008, the better you’ve been treated. And so the next crowd will do it again. Guaranteed.
Gretchen Morgenson and Louise Story point out  in the New York Times that:
As the financial storm brewed in the summer of 2008 … Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive , involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September. 
“If you do not punish crimes, there’s really no reason they won’t happen again,” said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. “I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space.”
(This appears to be true on both sides of the Atlantic .)
And Frank Rich reports  in a much-discussed piece in the New Yorker:
What haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression. There has been no legal, moral, or financial reckoning for the most powerful wrongdoers. Nor have there been meaningful reforms that might prevent a repeat catastrophe. Time may heal most wounds, but not these. Chronic unemployment remains a constant, painful reminder of the havoc inflicted on the bust’s innocent victims. As the ghost of Hamlet’s father might have it, America will be stalked by its foul and unresolved crimes until they “are burnt and purged away.”
- A d v e r t i s e m e n t
After the 1929 crash, and thanks in part to the legendary Ferdinand Pecora’s fierce thirties Senate hearings, America gained a Securities and Exchange Commission, the Public Utility Holding Company Act, and the Glass-Steagall Act to forestall a rerun. After the savings-and-loan debacle of the eighties, some 800 miscreants went to jail. But those who ran the central financial institutions of our fiasco escaped culpability (as did most of the institutions). As the indefatigable Matt Taibbi has tabulated , law enforcement on Obama’s watch rounded up 393,000 illegal immigrants last year and zero bankers. The Justice Department’s ballyhooed Operation Broken Trust has broken still more trust by chasing mainly low-echelon, one-off Madoff wannabes.
Those in executive suites at the top of that chain have long since fled the scene with the proceeds, while bleeding shareholders, investors, homeowners, and cashiered employees were left with the bills. The weak Dodd-Frank financial-reform law that rose from the ruins remains largely inoperative ….
Obama arrives at his reelection campaign not merely with a weak performance on Wall Street crime enforcement and reform but also with a scattershot record (at best) of focusing on the main concern of Main Street: joblessness. One is a consequence of the other. His failure to push back against the financial sector, sparing it any responsibility for the economy it tanked, empowered it to roll over his agenda with its own.
Unless and until there’s a purging of the crimes that brought our president to his unlikely Inauguration Day, much more in America than the second term of his administration will be at stake.
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URL to article: http://www.prisonplanet.com/theres-no-recovery-because-the-government-made-it-official-policy-not-to-prosecute-fraud.html
URLs in this post:
 Washington’s Blog: http://www.washingtonsblog.com/2011/07/theres-no-recovery-because-government.html
 Fraud caused the Great Depression and it has caused the current financial crisis: http://www.washingtonsblog.com/2010/10/fraud-caused-great-depression-and-this.html
 Numerous economists: http://www.washingtonsblog.com/2011/03/top-economists-trust-is-necessary-is.html
 demonstrated: http://www.examiner.com/economic-policy-in-national/nobel-prize-winning-economist-described-the-root-of-the-financial-crisis-1993
 notes: http://www.washingtonsblog.com/2011/02/william-black-slams-financial-crisis.html
 writes: http://www.marketwatch.com/story/the-next-worse-financial-crisis-2011-07-06
 point out: http://www.nytimes.com/2011/07/08/business/in-shift-federal-prosecutors-are-lenient-as-companies-break-the-law.html?_r=1
 The Justice Department’s directive: http://www.justice.gov/dag/readingroom/dag-memo-08282008.pdf
 told clients in a memo that September.: http://graphics8.nytimes.com/packages/pdf/business/20110629bank/sullivan.pdf
 both sides of the Atlantic: http://www.washingtonsblog.com/2011/01/failing-to-prosecute-financial-fraud-on.html
 reports: http://nymag.com/print/?/news/frank-rich/obama-economy/presidents-failure/
 Stock up with Fresh Food that lasts with eFoodsDirect (AD): http://www.efoodsdirect.com/
 Matt Taibbi has tabulated: http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216
 Another Nobel Economist Says We Have to Prosecute Fraud Or Else the Economy Won’t Recover: http://www.prisonplanet.com/another-nobel-economist-says-we-have-to-prosecute-fraud-or-else-the-economy-wont-recover.html
 Failure to Prosecute Fraud Causes Economic Downturns: http://www.prisonplanet.com/the-government-has-it-bass-ackwards-failing-to-prosecute-criminal-fraud-by-the-big-banks-is-killing-%e2%80%93-not-saving-%e2%80%93-the-economy.html
 Failing to Prosecute Financial Fraud – On Either Side of the Atlantic – Is Extending Our Economic Crisis: http://www.prisonplanet.com/failing-to-prosecute-financial-fraud-on-either-side-of-the-atlantic-is-extending-our-economic-crisis.html
 Failing to Prosecute Wall Street Fraud Is Extending Our Economic Problems: http://www.prisonplanet.com/failing-to-prosecute-wall-street-fraud-is-extending-our-economic-problems.html
 Top Economists: Trust is Necessary for a Stable Economy … But Trust Won’t Be Restored Until We Prosecute Wall Street Fraud: http://www.prisonplanet.com/top-economists-trust-is-necessary-for-a-stable-economy-but-trust-wont-be-restored-until-we-prosecute-wall-street-fraud.html
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