Financial Crime Investigation in the Great Recession, Where?
Why has there been surprising silence about financial crime investigations during the largest transfer of wealth from the public sector to the private sector in the history of the world? The entire global economy has cracked into pieces, but how much have you read about investigations of financial crime?
The following about the lack of financial crime investigation in the U.S. is assembled from two letters to Stan on April 14th, 2011:
Why has the press failed to report much on financial crime investigation or corruption during the Great Recession? Is it because financial crimes aren’t happening? Why does the media continue to fail to investigate financial crimes in Bernanke’s big bail-outs? Is it investigating but not finding anything? Is the press held back by unseen political mandates from on high? Is it blindness to the very idea that such things would be happening during the largest transfer of wealth from the public sector to the private sector in the history of the world with very little supervision? Is it the same kind of denial the rest of the populace is under as it sleeps in the poppy fields of Oz? Or does it just typically get such stories from the government, while the government isn’t isn’t in the financial crime investigation business anymore? So, few stories come forward. (We’ve had Madoff.)
Why is Congress not pushing harder for more investigation of financial crime? Cronyism? Involvement of congressmen in some of the schemes? Or (I think most likely) an inordinant love of Capitalists on the part of Republicans that raises capitalists to saint status and puts financial crimes outside the realms of tough investigation. (You know, the same ideology that makes them think billionaire bankers don’t need regulation because it would never be in there best interest to act greedy and pillage the populous.)
It seems attitude prevails among Republicans that capitalists must be protected from government at all costs so they can do the work of making the country prosper and creating jobs. Perhaps this includes not only protection from government regulation, but also protection from government investigation of financial crimes. Then, among both Democrats and Republicans, there is the desire to protect their financial supporters (cronyism).
The root to some answers regarding the lack of financial crime investigations in the U.S. found in some research shortly after I wrote the above letter to Stan:
Here, in that article on prosecution of financial crimes I just sen,t is a PRIME example of the failing of the Bush administration. It describes how Bush’s and Cheney’s misguided belief in unregulated capitalism led to a culture of gargantuan corruption: (I kind of thought that might be the key to why there have been so few reports about financial crime investigations.)
The university’s Transactional Records Access Clearinghouse indicates that in 1995, bank regulators referred 1,837 cases to the Justice Department. In 2006, that number had fallen to 75. In the four subsequent years, a period encompassing the worst of the crisis, an average of only 72 a year have been referred for criminal prosecution. (New York Times)
Under the Bush administration, an active Justice Department became inactive against Bush’s banking buddies to the point of almost complete inactivity. The numbers show a 95% drop (almost a complete drop) in the number banking cases being brought to justice! Bush liked to trust people who had a friendly smile and firm handshake, and his sense of loyalty (to good ol’ boys / cronies) was far higher than his concern for justice. As a result, he implemented changes in the justice department that inhibited prosecution of bankers and businessmen.
Ironically, the president most loved by conservative Christians CREATED a culture in which financial crimes flourished because there was too much trust in the good will of individual human beings to regulate themselves. In the Bush years, prosecution of bank crimes almost completely ended. The man seen as so good by conservative Christians had little concern for justice … if it was against his banking cronies … and I think conservative Christians did not see this because they had come to have too much trust in conservative governments and in capitalism in general — sometimes lauding both almost to the level of Christianity itself.
This article is the first I’ve seen that asks serious questions and points to problem areas, and it does not shield anyone, as it implies that nothing has gotten any better under Obama and states outright that the decline STARTED with Clinton. It was, however, the Bush years in which the precipitous drop occurred. Is there any wonder, after eight years of ignored justice, that corruption grew to the point where it created the great economic collapse we have witnessed under the Bush years? That is exactly what happens when crimes are not investigate. Financial corruption grows and ultimately leads to economic breakdown.
As Edmund Burke said, “All that is needed for evil to triumph is for good men to do nothing.” That is exactly what happens when leaders like Bush and Cheney tend to protect their cronies or to trust too much in the innate goodness of capitalists (mere human beings) to do the right thing for the many.
No they won’t do the right thing for the many without regulations! They will do the right thing for themselves in the short term because people tend to be more interested in short-term gain than long-term stability and more interested self-good than the good of the whole. Christians, as his primary support bloc, were completely asleep at the switch — all too willing to trust capitalism to regulate itself, removing both the regulators and the prosecutors. How can that NOT result in an environment where corruption flourishes? It always has.
So, why have there been so few financial crime investigation? The number of regulators, investigators and prosecutors has been so stripped down over the past decade that no one knows what financial crimes are being committed. It is now a time of running to catch up due to the failure of good men to do anything!