Here’s a question: why is it that the perpetrators of the most massive financial deception in world history are not being prosecuted by anyone? I am referring to the recent collapse of the world’s economy that was directly caused by the collapse of the U.S. real estate market, which then led to truly massive losses in the world’s banks. When all is said and done, one finds that, at the heart of this debacle, there wasn’t a series of innocent mistakes in judgment. There was no “perfect storm” of random economic factors that all came together at the same time to inundate the world economy. None of the banking disasters would have happened if it were not for the deliberate deception that occurred on a scale that has never been seen before.
The deception was this: as the feeding frenzy increased in an overheated U.S. real estate market, banks became more eager to grant mortgages in order to get an even larger piece of the action. Eventually, these banks – normally conservative investment institutions – began granting loans to people who might not be able to easily repay the mortgages. Then the banks began giving mortgage loans to people who certainly could never repay the mortgages – their only hope would be to flip houses in an extremely hot market. Then the banks stopped even asking for proof of employment or income. The banks were handing out money like there was no tomorrow (which is today, by the way).
Why would the banks be so foolish when they used to be so practical? Could it be because they were flipping the mortgages even faster than the unemployed home buyers were flipping their houses? As Sarah Palin would say, “You betcha”. But how could the banks flip these toxic mortgages so easily? Wouldn’t the prospective buyers shun what is obviously a high risk investment? Not if the mortgages are sliced into pieces and put into different packages so the individual mortgages are unrecognizable. Right? Not if the banks can get a rating agency to give these “investments” a AAA rating instead of the ZZZ rating they deserved. Right? Of course.
So, before you could say, “flip my mortgage”, the banks – with the complicity of the ratings agencies – carried out a massive, worldwide deception and sold these collateralized debt obligations (CDOs) to other banks, foreign banks, and anyone else who thought they could make a quick buck in real estate. Of course, some of these buyers were not quite so sure about the massive profits they hoped to make so they bought insurance in case the mortgagees defaulted on their loans – these were called credit default swaps (CDSs) and the “insurance policies” were sold by companies like AIG. Some banks, knowing that the whole thing was sure to implode, bought CDSs without even buying the CDOs – which turned out to be a smart move for them, but not unlike laying down a bet on the roulette wheel in Las Vegas. OK, maybe it wasn’t just luck. Maybe they actually knew how toxic the CDOs were – so maybe they figured they were actually buying a sure thing when they bought the CDSs.
The thing I wonder about is this: our government has spent about a trillion dollars bailing out the banks who made the dumb investment decisions. This trillion dollar bill now rests upon the American taxpayer, who now turns out to be the great chump in this whole fiasco. Meanwhile, the banks (who should have borne the entire burden of the crash they created and simply vaporized, or gone to Hell or something) are now in good shape and have resumed their usurious ways, bleeding the American taxpayer with merciless interest rates.
But besides the banks – what about the guys who lied about the “AAA” securities – the rating agencies? Didn’t they commit a crime by mislabelling these product? They must have known that when these these “securities” were flipped to unsuspecting buyers that they were dealing in rotten garbage. Isn’t that a crime – like selling someone a car without an engine or selling someone a ticket on a defunct airline? The simple fact is that these CDOs were worthless and the banks must have known that. The securities rating agencies must have known that. These aren’t stupid people; they are well educated, well informed, and very well paid members of the establishment.
So where are the prosecutions? Where are the arrests? We all know that the Securities and Exchange Commission was asleep at the wheel for years, even refusing, time and again, to glance at Bernie Madoff, despite repeated warnings from people who knew he was running the greatest Ponzi scheme of all time. Yet even Bad Boy Bernie has had his day in court, and he’s been sentenced to 150 years in prison for causing financial harm that can’t begin to compare with the harm that has been caused by the Great Meltdown. But are the banks and the rating agencies even being investigated, let alone prosecuted? No. Nothing. Zip. Nada. On the contrary, we are giving them money – lots and lots of it.
So, is that it? That’s all the government is going to do? No more investigations? No more prosecutions? Is it now time to move on and let bygones be bygones? Shall we just forget it all happened? Am I missing something here? These people practically destroyed the economy of the entire world and we will be paying for this for the rest of our lives, and our children will be paying for it for their entire lives, and their children will be paying for it for their entire lives. And the U.S. government has nothing to say about the massive banking fraud and securities deceptions that were central to the whole thing? And everybody’s OK with that? I guess so…
All I can say is, ” Our American oligarchy is pretty slick, isn’t it?”
You have to at least admire that.
