Too Big to Jail

The New Untouchables

In an earlier era, the “Untouchables” of American lore were fiercely honest federal agents who went after the gangsters of their time. Now, the Untouchables are the bankster criminals of Wall Street who the feds and the chief law enforcement officer of the nation – the attorney general of the United States – refuse to prosecute.

And the banksters are criminals. The record is clear. They have engaged in massive, systematic fraud that cost and continue to cost the American people trillions of dollars – homeowners, investors, savers, municipal governments, school districts, the now unemployed and just about anybody who uses a credit card.

The banksters have amassed personal wealth on a scale that Al Capone could never have imagined. And they use it to buy protection.

I don’t mean they hand out bags of cash to politicians and law enforcement officers. That’s so yesterday.

Rather, the banksters and the other corporate criminals of modern America sponsor the careers of politicians and the people they put in the government, and reward them richly after their government “service.”

And they get results. They get to commit crimes on a scale never before imagined, involving sums of money never before imagined and never go to jail. They are not even prosecuted.

It was not always so. Back in the S&L scandal, nearly a thousand individuals were successfully prosecuted for their crimes by the Department of Justice (DOJ). And in the Enron scandal, the Bush Justice Department went after the accounting firm Arthur Anderson for its part in the fraud and put it out of business – 28,000 people lost their jobs.

That’s tough law enforcement.

But  a relatively unknown but well respected deputy attorney general in the Clinton administration thought that was too tough and proposed a new policy:  before companies were prosecuted for their crimes, prosecutors should consider the “collateral damage” of a successful prosecution – like the 28,000 people who lost their jobs over the misdeeds of a relative few.

Seems reasonable. But it was the birth of “Too Big to Fail.” And it gave the green light to those other accounting firms that  gave AAA ratings to the junk Wall Street peddled in the mortgage fraud that set off the 2008 crash.

That unknown deputy attorney general left the DOJ, became a partner of one of the major law firms that represents players in the Wall Street mortgage fraud business, then returned to Washington as attorney general for President Obama and applied his policy to the Too Big to Fail (TBTF) banks.

With a new twist. Not only must the TBTF banks not be prosecuted for widespread and massive fraud and criminality, but the CEOs and other executives who run those banks must also not be prosecuted. That might “destabilize the economy.”

Too Big to Fail became Too Big to Jail.

Far better, the attorney general and chief law enforcement officer of the United States argues, to allow criminals to run our biggest banks.

Far better for who?

If the past experience of other federal officials who formerly worked in Wall Street law firms or banks is any guide, when the attorney general leaves the government he will go back to the law firm he came from, earning a lot more money than he did previously. His deputy who was in charge of not prosecuting Wall Street did just that, at a reported $4 million  a year.

It’s called the “Round Trip Ticket” and is one reason why it is fair to say the federal government has been "captured" by Wall Street and the major corporations. 

In a recent interview, Rolling Stone investigative reporter Matt Taibbi described it this way:  “People who worked for the regulatory system, they usually grew out of the same corporate defense firms that represent these companies. And when they leave the regulatory system, they go back to these same corporate defense firms and they know they have 2 and 3 million dollar partnerships waiting for them…and they're not really gonna want to screw it up.”

Let me propose a law. All officers of the federal government - presidents, members of 

Congress, cabinet secretaries, agency heads, regulators and others in senior positions must publicly disclose their income and its sources for a period of ten years after leaving their positions. 

This law may not do much to bring the New Untouchables to justice, but at least the American people will begin to understand why they are untouchable.