by Finian Cunningham
Global Research
August 1, 2011
If there is one thing that the office of President Barack Obama demonstrates it is that democracy does not exist in the United States. This may seem a rather outlandish statement. For many people, the fact that the 44th president is the first black man to preside over the White House – with its American colonial-style architecture – is a tribute to the triumph of US democracy.
But many other more telling facts indicate that Obama is but a figurehead of an unelected government in the US. This unelected power of corporate elites – commercial, financial, military – governs with the same core policies regardless of who is sitting in the White House. Whether these policies are on social, economic or foreign matters, the elected president must obey the direction ordained by the unelected elite. That kind of untrammeled power structure conforms more closely in practice to dictatorship, not democracy.
As Michael Hudson and Ellen Brown reveal in their analyses of the US budget debacle, Obama is pathetically doing the bidding of Wall Street – much like an errand boy [1] [2].
Brown writes: “The debt crisis was created, not by a social safety net bought and paid for by the taxpayers, but by a banking system taken over by Wall Street gamblers. The gamblers lost their bets and were bailed out at the expense of the taxpayers; and if anyone should be held to account, it is these gamblers.
“The debt ceiling crisis is a manufactured one, engineered to extort concessions that will lock the middle class in debt peonage for decades to come. Congress is empowered by the Constitution to issue the money it needs to pay its debts.”
Obama’s servile toeing of Wall Street’s line is not the behavior of a free leader boldly defending the interests of the people and the greater good. Rather, his behaviour is that of one doing what he is told to do – and doing it with grateful deference.
In this way, of course, Obama is hardly different from his predecessors. But of difference is just how blatant the White House is now appearing to function as a mere tool of the rich and powerful elite.
The irony is that Obama’s election was presented as a potent symbol of American democracy; the truth is that the two-party system has become a threadbare cover for immense feebleness when it comes to serving the diktat of elite power as opposed to the good of the people. “The most powerful office in the world” would be more accurately referenced as “the most feeble purveyor of elite interests”.
Obama’s presence in the White House indulges a superficial moral/political correctness while the masters whip us all into austere servitude.
The US “war on terror” is another illustration of America’s dictatorship of the elite – and Obama’s pathetic servile role of carrying out the masters’ orders in defiance of the will of the people.
Recall that Obama’s bid for presidential election in 2008 was avowedly based on ending the US-led wars in Afghanistan and Iraq. He also denounced his incumbent rival George W. Bush over the use of special powers that enabled such aberrations as the Guantanamo Bay concentration camp and a host of draconian home security policies infringing on civil rights
Obama also signaled in his inaugural speech – reiterated again soon after in Cairo – that under his watch the US was resetting foreign policy – turning away from the militarist policies of Bush to a more enlightened approach for settling conflicts with the Muslim World and Iran in particular. “If they unclench their fist, we will extend our hand,” Obama declared with seemingly heartfelt eloquence.
But on every count, Obama has reneged on his supposed opposition to the US “war on terror”. Indeed, under his watch, the US has expanded its militarist foreign policy – which is apparently predicated on the belief that “western democracy is threatened by Islamic extremism”. Obama has done nothing to roll back draconian home security policies, indeed appears to have extended them. And he continues his predecessor’s deception of conflating Iran and its alleged nuclear ambitions as part of this phony “Islamic extremists” narrative.
To perform such a disgraceful U-turn on so many election promises, the presidency of Barack Obama is clear proof that the holder of office in the White House is not the one who is setting policy – rather, he is following policy that is set by unelected others.
When news broke about the massacre in Norway where more than 70 people were killed in a twin bomb and gun attack, Obama reacted like an automaton of the unelected power system, instead of like an independent, reasonable political leader. Even though it was clear within hours of the atrocity that the perpetrator was a blond-haired Norwegian with fascist and deeply Islamophobic views, nevertheless Obama reacted immediately to present it as an act of Islamic terrorism.
Speaking from the White House, Obama said: “It's a reminder that the entire international community has a stake in preventing this kind of terror from occurring, and that we have to work co-operatively together both on intelligence and in terms of prevention of these kinds of horrible attacks.”
The president may not have used the words “Islamic terrorism” but it is clear that he was invoking the massacre as part of the “war on terror” which is predicated on the notion of Islamic terrorism.
In this mindset, Obama was not alone. British Prime Minister David Cameron moved into action stations, saying that British intelligence would help their Norwegian counterparts to track down the culprits – again implying that the perpetrators were part of an international organization – which in war on terror code means an Islamic organization.
The US and British news media also jumped to the conclusion that the Norwegian attacks must have something to with Al Qaeda or some other “Jihadist” group.
That such a widespread and erroneous reflex response from Western political leaders and news media – the so-called free press – can be elicited so uncritically shows how trenchantly the war on terror and its Islamophobic mindset are embedded.
The consequences of this are deeply disturbing. For a start, such a mindset of the Western political and media establishment can only lead to further Islamophobia in these societies. There were reports of hate attacks against ordinary Muslims across Europe immediately after the Norway atrocity, no doubt caused by the malign and erroneous way that politicians and the media attributed the incident to Islamists.
Even more disturbing is that the war on terror mindset fomented by Western governments and media over the past 10 years has led to the creation of lunatic fascist psychopaths like Anders Behring Breivik who carried out the Norway mass murder. Breivik and others like him think that Europe and the US must be defended from some kind of Muslim threat. This kind of logic does not conjure from thin air. It is rather the logical conclusion of the war on terror mindset that Western governments and news media have pushed down the throats of their citizens for a decade.
The sad part is that the majority of Western citizens are not convinced by the phony crusading of their governments and media, nor of the alleged threat of Islamic extremists. Most people realize that whatever Islamic extremists operate, they are either a creation of Western intelligence or a backlash against Western imperialism. That is why Obama’s avowed election promises to end America’s criminal wars and reset foreign policy on a more reasonable, democratic footing got him elected.
The even sadder part is that as Obama’s ineffectual election shows, the US (and its Western lackeys) is being driven further and further into bankrupting, criminal wars of aggression that will cause more victims of violence and social mayhem at home and abroad. And it’s all because democracy in the US (and elsewhere in the West) is non-existent. The US is a dictatorship. And Mr Obama is too ineffectual (save for the masters) and irrelevant to be even loosely called its dictator.
NOTES
[1] http://www.globalresearch.ca/index.php?context=va&aid=25825
[2] http://www.globalresearch.ca/index.php?context=va&aid=25842
Showing posts with label Plutocracy. Show all posts
Showing posts with label Plutocracy. Show all posts
Monday, August 1, 2011
Monday, July 25, 2011
The Real Crime: Concentration of Power
By Ralph Gomory
July 21, 2011 "Huffington Post" --- We are missing the lesson of the current British outrage over Murdoch just as we missed the lesson of the financial crisis in America.
Was the real crime in England that employees of the News of the World illegally hacked the cell phone of a missing girl? Was the real financial crime in America illegal acts such as Ponzi schemes or insider trading? The answer is no in both cases.
The real crime in England was legal, not illegal; it was that one man had the power to influence large parts of the British parliament and was credited with a major influence in electing whichever government he favored. No one in government dared to cross him until an emotion-provoking illegal act unleashed a public outcry. That outcry has, at least temporarily, liberated the members of Parliament from their fear of being smeared by Murdoch's newspapers if they dared to be hostile to his interests or beliefs.
Was the real crime in America illegal acts? No. Despite the press devoted to Madoff, the real crime, here as in England, was legal. Selling subprime mortgages to people who could never pay them back was legal. Rating agencies certifying to the high quality of the resulting worthless securities was legal. The whole web of interacting CDO's was legal. It was the legal, though strongly unethical, actions of a powerful Wall Street dedicated to self-enrichment at any price that brought down the U.S. economy. And, though we are still far from recovering from that disaster, the power of money has prevented any fundamental reform of the financial sector.
In both countries, the real crime is the concentration of power that allows these things to happen.
How Power is Used
Power can be exerted through both the stick and the carrot. In England, members of Parliament feared being smeared in the powerful Murdoch newspapers, and they also knew that if they accommodated his views or interests, they could profit from his support.
In the United States, members of Congress understand that Wall Street money and corporate money can either be used to defeat them or to support their campaigns. They also know that if they are sufficiently influential in the right direction, lobbying jobs that are far more financially rewarding than their present occupation await them when they retire from Congress
Money can extend its power to other parts of government, too. In England, part of the police force became a Murdoch ally in ferreting out more news about important stories. In America, regulatory bodies, established to protect the public interest, become blind to risky behavior and kind to the industry. And these examples are some entries in a long list of possibilities.
The Tyranny of Government
It has been common throughout history for the concentration of power to be in governments, often but not always monarchies or dictatorships, and for the leaders of such governments to act to enrich themselves and their friends. In the years preceding the American Revolution, the British government's restrictions on colonial manufacturing, the Navigation Acts, the tax on stamps, and the tax on tea, brought revenue to the British Crown and profits to British merchants and manufacturers at the expense of the colonies, but also produced a revolution. This tyranny by governments is the type of oppression which the Tea Party is constantly reminding us of, but today's tyranny is of a different type.
The Tyranny of Wealth
The problem today is not the tyranny of government, but rather the concentration of money, and hence power, in Wall Street and in the largest corporations. And it is clear that enough money can buy political power.
Both Wall Street and the major corporations have added to their strong direct effect on the economy a decisive effect on the actions of governmental bodies. It is their influence on the federal government that caused the regulatory bodies to stand back from regulation and encouraged the excesses of the financial sector in the years leading up to the crash. It was the federal government, led by Wall Street alumni, that rescued the financial institutions so that they are now posting record profits despite having impoverished the nation. It was the overwhelming lobbying power of the financial sector that prevented the passage of meaningful financial reform. The banks that were too big to fail are, with the concurrence of both political parties, now bigger than ever. And the actions of the U.S. Supreme Court, permitting the unrestricted use of corporate and Wall Street money for campaigns, are adding to this effect.
The declared goal of most major U.S. corporations today is to make their stock as valuable as possible. As more than two-thirds of all stock is held by the wealthiest five percent in the country, this corporate goal amounts in practice to simply making the wealthy wealthier and increasing the extreme concentration of wealth and power that already exists in America today. And if making the stock as valuable as possible means sending jobs and technology abroad, while holding down wages at home, so be it.
Yet it is to this same corporate leadership that the government turns for policy advice on how to create jobs and revive the economy.
Today
Today we have a concentration of wealth unmatched since the days immediately preceding the Great Depression in 1929. This wealth and power, concentrated in Wall Street and in the major corporations, is being used for the enrichment of the already wealthy. Unfortunately, that enrichment is one that does not raise all boats. As statistics clearly show, the big boats are rising rapidly and the small boats are not doing well.
After the Great Depression, the U.S. government acted to lessen the power of concentrated wealth. It separated commercial from investment banking, insured bank deposits, enacted social security, and facilitated unions as a counter-force to corporations. It even became to some extent the employer of last resort.
But the power of wealth today over both political parties is now such that new government actions are mainly words that cover real inaction, and even that limited action is often described as the actions of a too large and too powerful government.
Today, the threat of tyranny comes not from the government, but from the concentration of wealth and power outside government, and from the influence on government of that great concentration of wealth and power.
July 21, 2011 "Huffington Post" --- We are missing the lesson of the current British outrage over Murdoch just as we missed the lesson of the financial crisis in America.
Was the real crime in England that employees of the News of the World illegally hacked the cell phone of a missing girl? Was the real financial crime in America illegal acts such as Ponzi schemes or insider trading? The answer is no in both cases.
The real crime in England was legal, not illegal; it was that one man had the power to influence large parts of the British parliament and was credited with a major influence in electing whichever government he favored. No one in government dared to cross him until an emotion-provoking illegal act unleashed a public outcry. That outcry has, at least temporarily, liberated the members of Parliament from their fear of being smeared by Murdoch's newspapers if they dared to be hostile to his interests or beliefs.
Was the real crime in America illegal acts? No. Despite the press devoted to Madoff, the real crime, here as in England, was legal. Selling subprime mortgages to people who could never pay them back was legal. Rating agencies certifying to the high quality of the resulting worthless securities was legal. The whole web of interacting CDO's was legal. It was the legal, though strongly unethical, actions of a powerful Wall Street dedicated to self-enrichment at any price that brought down the U.S. economy. And, though we are still far from recovering from that disaster, the power of money has prevented any fundamental reform of the financial sector.
In both countries, the real crime is the concentration of power that allows these things to happen.
How Power is Used
Power can be exerted through both the stick and the carrot. In England, members of Parliament feared being smeared in the powerful Murdoch newspapers, and they also knew that if they accommodated his views or interests, they could profit from his support.
In the United States, members of Congress understand that Wall Street money and corporate money can either be used to defeat them or to support their campaigns. They also know that if they are sufficiently influential in the right direction, lobbying jobs that are far more financially rewarding than their present occupation await them when they retire from Congress
Money can extend its power to other parts of government, too. In England, part of the police force became a Murdoch ally in ferreting out more news about important stories. In America, regulatory bodies, established to protect the public interest, become blind to risky behavior and kind to the industry. And these examples are some entries in a long list of possibilities.
The Tyranny of Government
It has been common throughout history for the concentration of power to be in governments, often but not always monarchies or dictatorships, and for the leaders of such governments to act to enrich themselves and their friends. In the years preceding the American Revolution, the British government's restrictions on colonial manufacturing, the Navigation Acts, the tax on stamps, and the tax on tea, brought revenue to the British Crown and profits to British merchants and manufacturers at the expense of the colonies, but also produced a revolution. This tyranny by governments is the type of oppression which the Tea Party is constantly reminding us of, but today's tyranny is of a different type.
The Tyranny of Wealth
The problem today is not the tyranny of government, but rather the concentration of money, and hence power, in Wall Street and in the largest corporations. And it is clear that enough money can buy political power.
Both Wall Street and the major corporations have added to their strong direct effect on the economy a decisive effect on the actions of governmental bodies. It is their influence on the federal government that caused the regulatory bodies to stand back from regulation and encouraged the excesses of the financial sector in the years leading up to the crash. It was the federal government, led by Wall Street alumni, that rescued the financial institutions so that they are now posting record profits despite having impoverished the nation. It was the overwhelming lobbying power of the financial sector that prevented the passage of meaningful financial reform. The banks that were too big to fail are, with the concurrence of both political parties, now bigger than ever. And the actions of the U.S. Supreme Court, permitting the unrestricted use of corporate and Wall Street money for campaigns, are adding to this effect.
The declared goal of most major U.S. corporations today is to make their stock as valuable as possible. As more than two-thirds of all stock is held by the wealthiest five percent in the country, this corporate goal amounts in practice to simply making the wealthy wealthier and increasing the extreme concentration of wealth and power that already exists in America today. And if making the stock as valuable as possible means sending jobs and technology abroad, while holding down wages at home, so be it.
Yet it is to this same corporate leadership that the government turns for policy advice on how to create jobs and revive the economy.
Today
Today we have a concentration of wealth unmatched since the days immediately preceding the Great Depression in 1929. This wealth and power, concentrated in Wall Street and in the major corporations, is being used for the enrichment of the already wealthy. Unfortunately, that enrichment is one that does not raise all boats. As statistics clearly show, the big boats are rising rapidly and the small boats are not doing well.
After the Great Depression, the U.S. government acted to lessen the power of concentrated wealth. It separated commercial from investment banking, insured bank deposits, enacted social security, and facilitated unions as a counter-force to corporations. It even became to some extent the employer of last resort.
But the power of wealth today over both political parties is now such that new government actions are mainly words that cover real inaction, and even that limited action is often described as the actions of a too large and too powerful government.
Today, the threat of tyranny comes not from the government, but from the concentration of wealth and power outside government, and from the influence on government of that great concentration of wealth and power.
Friday, April 8, 2011
The Peasants Need Pitchforks
By Robert Scheer
April 06, 2011 "TruthDig" -- - A “working class hero,” John Lennon told us in his song of that title, “is something to be/ Keep you doped with religion and sex and TV/ And you think you’re so clever and classless and free/ But you’re still fucking peasants as far as I can see.”
The delusion of a classless America in which opportunity is equally distributed is the most effective deception perpetrated by the moneyed elite that controls all the key levers of power in what passes for our democracy. It is a myth blown away by Nobel Prize winner Joseph E. Stiglitz in the current issue of Vanity Fair. In an article titled “Of the 1%, by the 1%, for the 1%” Stiglitz states that the top thin layer of the superwealthy controls 40 percent of all wealth in what is now the most sharply class-divided of all developed nations:
“Americans have been watching protests against repressive regimes that concentrate massive wealth in the hands of an elite few. Yet, in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.”
That is the harsh reality obscured by the media’s focus on celebrity gossip, sports rivalries and lotteries, situations in which the average person can pretend that he or she is plugged into the winning side. The illusion of personal power substitutes consumer sovereignty—which smartphone to purchase—for real power over the decisions that affect our lives. Even though most Americans accept that the political game is rigged, we have long assumed that the choices we make in the economic sphere as to career and home are matters that respond to our wisdom and will. But the banking tsunami that wiped out so many jobs and so much homeownership has demonstrated that most Americans have no real control over any of that, and while they suffer, the corporate rich reward themselves in direct proportion to the amount of suffering they have caused.
Instead of taxing the superrich on the bonuses dispensed by top corporations such as Exxon, Bank of America, General Electric, Chevron and Boeing, all of which managed to avoid paying any federal corporate taxes last year, the politicians of both parties in Congress are about to accede to the Republican demand that programs that help ordinary folks be cut to pay for the programs that bailed out the banks.
It is a reality further obscured by the academic elite, led by economists who receive enormous payoffs from Wall Street in speaking and consulting fees, and their less privileged university colleagues who are so often dependent upon wealthy sponsors for their research funding. Then there are the media, which are indistinguishable parts of the corporate-owned culture and which with rare exception pretend that we are all in the same lifeboat while they fawn in their coverage of those who bilk us and also dispense fat fees to top pundits. Complementing all that is the dark distraction of the faux populists, led by tea party demagogues, who blame unions and immigrants for the crimes of Wall Street hustlers.
My book on the banking meltdown, “The Great American Stickup,” begins with the following words. “They did it. Yes, there is a ‘they’: the captains of finance, their lobbyists, and allies among leading politicians of both parties, who together destroyed an American regulatory system that had been functioning splendidly. …” They got to rewrite the laws to enable their massive greed over everything from the tax codes to the sale of toxic derivatives over the past quarter century, smashing the American middle class and with it the nation’s experiment in democracy.
The lobbyists are deliberately bipartisan in their bribery, and the authors of our demise are equally marked as Democrats and Republicans. Ronald Reagan first effectively sang the siren song of ending government’s role in corporate crime prevention, but it was Democrat Bill Clinton who accomplished much of that goal. It is the enduring conceit of the top Democratic leaders that they are valiantly holding back the forces of evil when they actually have continuously been complicit.
The veterans of the Clinton years, so prominent in the Obama administration, still deny their role in the disaster of the last 25 years. Yet the sad tale of income inequality that Stiglitz laments is as much a result of their policies as those of their Republican rivals. In one of the best studies of this growing gap in income, economists Emmanuel Saez and Thomas Piketty found that during Clinton’s tenure in the White House the income of the top 1 percent increased by 10.1 percent per year, while that of the other 99 percent of Americans increased by only 2.4 percent a year. Thanks to President Clinton’s deregulation and the save-the-rich policies of George W. Bush, the situation deteriorated further from 2002 to 2006, a period in which the top 1 percent increased its income 11 percent annually while the rest of Americans had a truly paltry gain of 1 percent per year.
And that was before the meltdown that wiped out the jobs and home values of so many tens of millions of American families. “The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles,” Stiglitz concludes, “but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.” (Editor's bold emphasis throughout)
Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.
April 06, 2011 "TruthDig" -- - A “working class hero,” John Lennon told us in his song of that title, “is something to be/ Keep you doped with religion and sex and TV/ And you think you’re so clever and classless and free/ But you’re still fucking peasants as far as I can see.”
The delusion of a classless America in which opportunity is equally distributed is the most effective deception perpetrated by the moneyed elite that controls all the key levers of power in what passes for our democracy. It is a myth blown away by Nobel Prize winner Joseph E. Stiglitz in the current issue of Vanity Fair. In an article titled “Of the 1%, by the 1%, for the 1%” Stiglitz states that the top thin layer of the superwealthy controls 40 percent of all wealth in what is now the most sharply class-divided of all developed nations:
“Americans have been watching protests against repressive regimes that concentrate massive wealth in the hands of an elite few. Yet, in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.”
That is the harsh reality obscured by the media’s focus on celebrity gossip, sports rivalries and lotteries, situations in which the average person can pretend that he or she is plugged into the winning side. The illusion of personal power substitutes consumer sovereignty—which smartphone to purchase—for real power over the decisions that affect our lives. Even though most Americans accept that the political game is rigged, we have long assumed that the choices we make in the economic sphere as to career and home are matters that respond to our wisdom and will. But the banking tsunami that wiped out so many jobs and so much homeownership has demonstrated that most Americans have no real control over any of that, and while they suffer, the corporate rich reward themselves in direct proportion to the amount of suffering they have caused.
Instead of taxing the superrich on the bonuses dispensed by top corporations such as Exxon, Bank of America, General Electric, Chevron and Boeing, all of which managed to avoid paying any federal corporate taxes last year, the politicians of both parties in Congress are about to accede to the Republican demand that programs that help ordinary folks be cut to pay for the programs that bailed out the banks.
It is a reality further obscured by the academic elite, led by economists who receive enormous payoffs from Wall Street in speaking and consulting fees, and their less privileged university colleagues who are so often dependent upon wealthy sponsors for their research funding. Then there are the media, which are indistinguishable parts of the corporate-owned culture and which with rare exception pretend that we are all in the same lifeboat while they fawn in their coverage of those who bilk us and also dispense fat fees to top pundits. Complementing all that is the dark distraction of the faux populists, led by tea party demagogues, who blame unions and immigrants for the crimes of Wall Street hustlers.
My book on the banking meltdown, “The Great American Stickup,” begins with the following words. “They did it. Yes, there is a ‘they’: the captains of finance, their lobbyists, and allies among leading politicians of both parties, who together destroyed an American regulatory system that had been functioning splendidly. …” They got to rewrite the laws to enable their massive greed over everything from the tax codes to the sale of toxic derivatives over the past quarter century, smashing the American middle class and with it the nation’s experiment in democracy.
The lobbyists are deliberately bipartisan in their bribery, and the authors of our demise are equally marked as Democrats and Republicans. Ronald Reagan first effectively sang the siren song of ending government’s role in corporate crime prevention, but it was Democrat Bill Clinton who accomplished much of that goal. It is the enduring conceit of the top Democratic leaders that they are valiantly holding back the forces of evil when they actually have continuously been complicit.
The veterans of the Clinton years, so prominent in the Obama administration, still deny their role in the disaster of the last 25 years. Yet the sad tale of income inequality that Stiglitz laments is as much a result of their policies as those of their Republican rivals. In one of the best studies of this growing gap in income, economists Emmanuel Saez and Thomas Piketty found that during Clinton’s tenure in the White House the income of the top 1 percent increased by 10.1 percent per year, while that of the other 99 percent of Americans increased by only 2.4 percent a year. Thanks to President Clinton’s deregulation and the save-the-rich policies of George W. Bush, the situation deteriorated further from 2002 to 2006, a period in which the top 1 percent increased its income 11 percent annually while the rest of Americans had a truly paltry gain of 1 percent per year.
And that was before the meltdown that wiped out the jobs and home values of so many tens of millions of American families. “The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles,” Stiglitz concludes, “but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.” (Editor's bold emphasis throughout)
Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.
Sunday, February 20, 2011
Why Isn't Wall Street in Jail?
Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them
By Matt Taibbi
February 17, 2011 "Rolling Stone" -- Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.
"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."
I put down my notebook. "Just that?"
"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."
Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.
The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses.
Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.
Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."
To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."
But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.
Just ask the people who tried to do the right thing.
Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power.
The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality.
But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement.
The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak.
That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets.
Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.
The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.
In the hierarchy of the SEC, the chief accountant plays a major role in working to pursue misleading and phony financial disclosures. Turner held the post a decade ago, when one of the most significant cases was swallowed up by the SEC bureaucracy. In the late 1990s, the agency had an open-and-shut case against the Rite Aid drugstore chain, which was using diabolical accounting tricks to cook their books. But instead of moving swiftly to crack down on such scams, the SEC shoved the case into the "deal with it later" file. "The Philadelphia office literally did nothing with the case for a year," Turner recalls. "Very much like the New York office with Madoff."
The Rite Aid case dragged on for years — and by the time it was finished, similar accounting fiascoes at Enron and WorldCom had exploded into a full-blown financial crisis. The same was true for another SEC case that presaged the Enron disaster. The agency knew that appliance-maker Sunbeam was using the same kind of accounting scams to systematically hide losses from its investors. But in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap — widely regarded as one of the biggest assholes in the history of American finance — was a fine of $500,000. Dunlap's net worth at the time was an estimated $100 million. The SEC also barred Dunlap from ever running a public company again — forcing him to retire with a mere $99.5 million. Dunlap passed the time collecting royalties from his self-congratulatory memoir. Its title: Mean Business.
The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency's failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America's most powerful bankers.
Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. "It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalls. "And he wasn't just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day." A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million.
After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg's who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg's case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. "Mack is busting my chops" to give him a piece of the action, Samberg told an employee in an e-mail.
A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank's clients, as it happened, was a firm called Heller Financial. We don't know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter's annual salary for just a few minutes of work.
The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn't likely to fly, explaining that Mack had "powerful political connections." (The investment banker had been a fundraising "Ranger" for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)
Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank's regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.
Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target's firm is being represented not only by Eliot Spitzer's former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC's enforcement division — not Aguirre's boss, but his boss's boss's boss's boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.
Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.
Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, "O.J.'s search for the real killers.") It wasn't until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case.
"At best, the picture shows extraordinarily lax enforcement by the SEC," Senate investigators would later conclude. "At worse, the picture is colored with overtones of a possible cover-up."
Episodes like this help explain why so many Wall Street executives felt emboldened to push the regulatory envelope during the mid-2000s. Over and over, even the most obvious cases of fraud and insider dealing got gummed up in the works, and high-ranking executives were almost never prosecuted for their crimes. In 2003, Freddie Mac coughed up $125 million after it was caught misreporting its earnings by $5 billion; nobody went to jail. In 2006, Fannie Mae was fined $400 million, but executives who had overseen phony accounting techniques to jack up their bonuses faced no criminal charges. That same year, AIG paid $1.6 billion after it was caught in a major accounting scandal that would indirectly lead to its collapse two years later, but no executives at the insurance giant were prosecuted.
All of this behavior set the stage for the crash of 2008, when Wall Street exploded in a raging Dresden of fraud and criminality. Yet the SEC and the Justice Department have shown almost no inclination to prosecute those most responsible for the catastrophe — even though they had insiders from the two firms whose implosions triggered the crisis, Lehman Brothers and AIG, who were more than willing to supply evidence against top executives.
In the case of Lehman Brothers, the SEC had a chance six months before the crash to move against Dick Fuld, a man recently named the worst CEO of all time by Portfolio magazine. A decade before the crash, a Lehman lawyer named Oliver Budde was going through the bank's proxy statements and noticed that it was using a loophole involving Restricted Stock Units to hide tens of millions of dollars of Fuld's compensation. Budde told his bosses that Lehman's use of RSUs was dicey at best, but they blew him off. "We're sorry about your concerns," they told him, "but we're doing it." Disturbed by such shady practices, the lawyer quit the firm in 2006.
Then, only a few months after Budde left Lehman, the SEC changed its rules to force companies to disclose exactly how much compensation in RSUs executives had coming to them. "The SEC was basically like, 'We're sick and tired of you people fucking around — we want a picture of what you're holding,'" Budde says. But instead of coming clean about eight separate RSUs that Fuld had hidden from investors, Lehman filed a proxy statement that was a masterpiece of cynical lawyering. On one page, a chart indicated that Fuld had been awarded $146 million in RSUs. But two pages later, a note in the fine print essentially stated that the chart did not contain the real number — which, it failed to mention, was actually $263 million more than the chart indicated. "They fucked around even more than they did before," Budde says. (The law firm that helped craft the fine print, Simpson Thacher & Bartlett, would later receive a lucrative federal contract to serve as legal adviser to the TARP bailout.)
Budde decided to come forward. In April 2008, he wrote a detailed memo to the SEC about Lehman's history of hidden stocks. Shortly thereafter, he got a letter back that began, "Dear Sir or Madam." It was an automated e-response.
"They blew me off," Budde says.
Over the course of that summer, Budde tried to contact the SEC several more times, and was ignored each time. Finally, in the fateful week of September 15th, 2008, when Lehman Brothers cracked under the weight of its reckless bets on the subprime market and went into its final death spiral, Budde became seriously concerned. If the government tried to arrange for Lehman to be pawned off on another Wall Street firm, as it had done with Bear Stearns, the U.S. taxpayer might wind up footing the bill for a company with hundreds of millions of dollars in concealed compensation. So Budde again called the SEC, right in the middle of the crisis. "Look," he told regulators. "I gave you huge stuff. You really want to take a look at this."
But the feds once again blew him off. A young staff attorney contacted Budde, who once more provided the SEC with copies of all his memos. He never heard from the agency again.
"This was like a mini-Madoff," Budde says. "They had six solid months of warnings. They could have done something."
Three weeks later, Budde was shocked to see Fuld testifying before the House Government Oversight Committee and whining about how poor he was. "I got no severance, no golden parachute," Fuld moaned. When Rep. Henry Waxman, the committee's chairman, mentioned that he thought Fuld had earned more than $480 million, Fuld corrected him and said he believed it was only $310 million.
The true number, Budde calculated, was $529 million. He contacted a Senate investigator to talk about how Fuld had misled Congress, but he never got any response. Meanwhile, in a demonstration of the government's priorities, the Justice Department is proceeding full force with a prosecution of retired baseball player Roger Clemens for lying to Congress about getting a shot of steroids in his ass. "At least Roger didn't screw over the world," Budde says, shaking his head.
Fuld has denied any wrongdoing, but his hidden compensation was only a ripple in Lehman's raging tsunami of misdeeds. The investment bank used an absurd accounting trick called "Repo 105" transactions to conceal $50 billion in loans on the firm's balance sheet. (That's $50 billion, not million.) But more than a year after the use of the Repo 105s came to light, there have still been no indictments in the affair. While it's possible that charges may yet be filed, there are now rumors that the SEC and the Justice Department may take no action against Lehman. If that's true, and there's no prosecution in a case where there's such overwhelming evidence — and where the company is already dead, meaning it can't dump further losses on investors or taxpayers — then it might be time to assume the game is up. Failing to prosecute Fuld and Lehman would be tantamount to the state marching into Wall Street and waving the green flag on a new stealing season.
The most amazing noncase in the entire crash — the one that truly defies the most basic notion of justice when it comes to Wall Street supervillains — is the one involving AIG and Joe Cassano, the nebbishy Patient Zero of the financial crisis. As chief of AIGFP, the firm's financial products subsidiary, Cassano repeatedly made public statements in 2007 claiming that his portfolio of mortgage derivatives would suffer "no dollar of loss" — an almost comically obvious misrepresentation. "God couldn't manage a $60 billion real estate portfolio without a single dollar of loss," says Turner, the agency's former chief accountant. "If the SEC can't make a disclosure case against AIG, then they might as well close up shop."
As in the Lehman case, federal prosecutors not only had plenty of evidence against AIG — they also had an eyewitness to Cassano's actions who was prepared to tell all. As an accountant at AIGFP, Joseph St. Denis had a number of run-ins with Cassano during the summer of 2007. At the time, Cassano had already made nearly $500 billion worth of derivative bets that would ultimately blow up, destroy the world's largest insurance company, and trigger the largest government bailout of a single company in U.S. history. He made many fatal mistakes, but chief among them was engaging in contracts that required AIG to post billions of dollars in collateral if there was any downgrade to its credit rating.
St. Denis didn't know about those clauses in Cassano's contracts, since they had been written before he joined the firm. What he did know was that Cassano freaked out when St. Denis spoke with an accountant at the parent company, which was only just finding out about the time bomb Cassano had set. After St. Denis finished a conference call with the executive, Cassano suddenly burst into the room and began screaming at him for talking to the New York office. He then announced that St. Denis had been "deliberately excluded" from any valuations of the most toxic elements of the derivatives portfolio — thus preventing the accountant from doing his job. What St. Denis represented was transparency — and the last thing Cassano needed was transparency.
Another clue that something was amiss with AIGFP's portfolio came when Goldman Sachs demanded that the firm pay billions in collateral, per the terms of Cassano's deadly contracts. Such "collateral calls" happen all the time on Wall Street, but seldom against a seemingly solvent and friendly business partner like AIG. And when they do happen, they are rarely paid without a fight. So St. Denis was shocked when AIGFP agreed to fork over gobs of money to Goldman Sachs, even while it was still contesting the payments — an indication that something was seriously wrong at AIG. "When I found out about the collateral call, I literally had to sit down," St. Denis recalls. "I had to go home for the day."
After Cassano barred him from valuating the derivative deals, St. Denis had no choice but to resign. He got another job, and thought he was done with AIG. But a few months later, he learned that Cassano had held a conference call with investors in December 2007. During the call, AIGFP failed to disclose that it had posted $2 billion to Goldman Sachs following the collateral calls.
"Investors therefore did not know," the Financial Crisis Inquiry Commission would later conclude, "that AIG's earnings were overstated by $3.6 billion."
"I remember thinking, 'Wow, they're just not telling people,'" St. Denis says. "I knew. I had been there. I knew they'd posted collateral."
A year later, after the crash, St. Denis wrote a letter about his experiences to the House Government Oversight Committee, which was looking into the AIG collapse. He also met with investigators for the government, which was preparing a criminal case against Cassano. But the case never went to court. Last May, the Justice Department confirmed that it would not file charges against executives at AIGFP. Cassano, who has denied any wrongdoing, was reportedly told he was no longer a target.
Shortly after that, Cassano strolled into Washington to testify before the Financial Crisis Inquiry Commission. It was his first public appearance since the crash. He has not had to pay back a single cent out of the hundreds of millions of dollars he earned selling his insane pseudo-insurance policies on subprime mortgage deals. Now, out from under prosecution, he appeared before the FCIC and had the enormous balls to compliment his own business acumen, saying his atom-bomb swaps portfolio was, in retrospect, not that badly constructed. "I think the portfolios are withstanding the test of time," he said.
"They offered him an excellent opportunity to redeem himself," St. Denis jokes.
In the end, of course, it wasn't just the executives of Lehman and AIGFP who got passes. Virtually every one of the major players on Wall Street was similarly embroiled in scandal, yet their executives skated off into the sunset, uncharged and unfined. Goldman Sachs paid $550 million last year when it was caught defrauding investors with crappy mortgages, but no executive has been fined or jailed — not even Fabrice "Fabulous Fab" Tourre, Goldman's outrageous Euro-douche who gleefully e-mailed a pal about the "surreal" transactions in the middle of a meeting with the firm's victims. In a similar case, a sales executive at the German powerhouse Deutsche Bank got off on charges of insider trading; its general counsel at the time of the questionable deals, Robert Khuzami, now serves as director of enforcement for the SEC.
Another major firm, Bank of America, was caught hiding $5.8 billion in bonuses from shareholders as part of its takeover of Merrill Lynch. The SEC tried to let the bank off with a settlement of only $33 million, but Judge Jed Rakoff rejected the action as a "facade of enforcement." So the SEC quintupled the settlement — but it didn't require either Merrill or Bank of America to admit to wrongdoing. Unlike criminal trials, in which the facts of the crime are put on record for all to see, these Wall Street settlements almost never require the banks to make any factual disclosures, effectively burying the stories forever. "All this is done at the expense not only of the shareholders, but also of the truth," says Rakoff. Goldman, Deutsche, Merrill, Lehman, Bank of America ... who did we leave out? Oh, there's Citigroup, nailed for hiding some $40 billion in liabilities from investors. Last July, the SEC settled with Citi for $75 million. In a rare move, it also fined two Citi executives, former CFO Gary Crittenden and investor-relations chief Arthur Tildesley Jr. Their penalties, combined, came to a whopping $180,000.
Throughout the entire crisis, in fact, the government has taken exactly one serious swing of the bat against executives from a major bank, charging two guys from Bear Stearns with criminal fraud over a pair of toxic subprime hedge funds that blew up in 2007, destroying the company and robbing investors of $1.6 billion. Jurors had an e-mail between the defendants admitting that "there is simply no way for us to make money — ever" just three days before assuring investors that "there's no basis for thinking this is one big disaster." Yet the case still somehow ended in acquittal — and the Justice Department hasn't taken any of the big banks to court since.
All of which raises an obvious question: Why the hell not?
Gary Aguirre, the SEC investigator who lost his job when he drew the ire of Morgan Stanley, thinks he knows the answer.
Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country's leading lawyers who represent Wall Street, as well as some of the government's top cops from both the SEC and the Justice Department.
Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. "They were chummier in that environment," says Aguirre, who plunked down $2,200 to attend the conference.
Aguirre saw a lot of familiar faces at the conference, for a simple reason: Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police. Aguirre didn't see Paul Berger, an associate director of enforcement who had rebuffed his attempts to interview Mack — maybe because Berger was tied up at his lucrative new job at Debevoise & Plimpton, the same law firm that Morgan Stanley employed to intervene in the Mack case. But he did see Mary Jo White, the former U.S. attorney, who was still at Debevoise & Plimpton. He also saw Linda Thomsen, the former SEC director of enforcement who had been so helpful to White. Thomsen had gone on to represent Wall Street as a partner at the prestigious firm of Davis Polk & Wardwell.
Two of the government's top cops were there as well: Preet Bharara, the U.S. attorney for the Southern District of New York, and Robert Khuzami, the SEC's current director of enforcement. Bharara had been recommended for his post by Chuck Schumer, Wall Street's favorite senator. And both he and Khuzami had served with Mary Jo White at the U.S. attorney's office, before Mary Jo went on to become a partner at Debevoise. What's more, when Khuzami had served as general counsel for Deutsche Bank, he had been hired by none other than Dick Walker, who had been enforcement director at the SEC when it slow-rolled the pivotal fraud case against Rite Aid.
"It wasn't just one rotation of the revolving door," says Aguirre. "It just kept spinning. Every single person had rotated in and out of government and private service."
The Revolving Door isn't just a footnote in financial law enforcement; over the past decade, more than a dozen high-ranking SEC officials have gone on to lucrative jobs at Wall Street banks or white-shoe law firms, where partnerships are worth millions. That makes SEC officials like Paul Berger and Linda Thomsen the equivalent of college basketball stars waiting for their first NBA contract. Are you really going to give up a shot at the Knicks or the Lakers just to find out whether a Wall Street big shot like John Mack was guilty of insider trading? "You take one of these jobs," says Turner, the former chief accountant for the SEC, "and you're fit for life."
Fit — and happy. The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White introduced Bharara, her old pal from the U.S. attorney's office.
"I want to first say how pleased I am to be here," Bharara responded. Then, addressing White, he added, "You've spawned all of us. It's almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein."
Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. "I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year," he said. "They've done a real service to the country, to the financial community, and not to mention a lot of your law practices."
Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC's director of enforcement, talked about a new "cooperation initiative" the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.
"We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client."
Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department."
When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants "get answers" regarding the status of their criminal cases, he initially doesn't believe it. Then I send him a transcript of the comment. "I am very, very surprised by Khuzami's statement, which does seem to me to be contrary to past practice — and not a good thing," the former prosecutor says.
Earlier this month, when Sen. Chuck Grassley found out about Khuzami's comments, he sent the SEC a letter noting that the agency's own enforcement manual not only prohibits such "answer getting," it even bars the SEC from giving defendants the Justice Department's phone number. "Should counsel or the individual ask which criminal authorities they should contact," the manual reads, "staff should decline to answer, unless authorized by the relevant criminal authorities." Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. "We collaborate with the SEC, but they do not consult with us when they resolve their cases," Assistant Attorney General Lanny Breuer assured Congress in January. "They do that independently."
Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank's executives. According to a letter that was sent to Sen. Grassley's office, Khuzami had a "secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend" of his and "who was counsel for the company." The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge.
All of this paints a disturbing picture of a closed and corrupt system, a timeless circle of friends that virtually guarantees a collegial approach to the policing of high finance. Even before the corruption starts, the state is crippled by economic reality: Since law enforcement on Wall Street requires serious intellectual firepower, the banks seize a huge advantage from the start by hiring away the top talent. Budde, the former Lehman lawyer, says it's well known that all the best legal minds go to the big corporate law firms, while the "bottom 20 percent go to the SEC." Which makes it tough for the agency to track devious legal machinations, like the scheme to hide $263 million of Dick Fuld's compensation.
"It's such a mismatch, it's not even funny," Budde says.
But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers.
As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. "The betrayal that this represents by Obama to everybody is just — we're not ready to believe it," says Budde, a classmate of the president from their Columbia days. "He's really fucking us over like that? Really? That's really a JP Morgan guy, really?"
Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would "demean the seriousness" of the offenses.
So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?
The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.
This article appears in the March 3, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive February 18.
By Matt Taibbi
February 17, 2011 "Rolling Stone" -- Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.
"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."
I put down my notebook. "Just that?"
"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."
Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.
The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses.
Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.
Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."
To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."
But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.
Just ask the people who tried to do the right thing.
Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power.
The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality.
But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement.
The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak.
That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets.
Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.
The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.
In the hierarchy of the SEC, the chief accountant plays a major role in working to pursue misleading and phony financial disclosures. Turner held the post a decade ago, when one of the most significant cases was swallowed up by the SEC bureaucracy. In the late 1990s, the agency had an open-and-shut case against the Rite Aid drugstore chain, which was using diabolical accounting tricks to cook their books. But instead of moving swiftly to crack down on such scams, the SEC shoved the case into the "deal with it later" file. "The Philadelphia office literally did nothing with the case for a year," Turner recalls. "Very much like the New York office with Madoff."
The Rite Aid case dragged on for years — and by the time it was finished, similar accounting fiascoes at Enron and WorldCom had exploded into a full-blown financial crisis. The same was true for another SEC case that presaged the Enron disaster. The agency knew that appliance-maker Sunbeam was using the same kind of accounting scams to systematically hide losses from its investors. But in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap — widely regarded as one of the biggest assholes in the history of American finance — was a fine of $500,000. Dunlap's net worth at the time was an estimated $100 million. The SEC also barred Dunlap from ever running a public company again — forcing him to retire with a mere $99.5 million. Dunlap passed the time collecting royalties from his self-congratulatory memoir. Its title: Mean Business.
The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency's failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America's most powerful bankers.
Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. "It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalls. "And he wasn't just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day." A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million.
After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg's who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg's case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. "Mack is busting my chops" to give him a piece of the action, Samberg told an employee in an e-mail.
A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank's clients, as it happened, was a firm called Heller Financial. We don't know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter's annual salary for just a few minutes of work.
The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn't likely to fly, explaining that Mack had "powerful political connections." (The investment banker had been a fundraising "Ranger" for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)
Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank's regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.
Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target's firm is being represented not only by Eliot Spitzer's former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC's enforcement division — not Aguirre's boss, but his boss's boss's boss's boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.
Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.
Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, "O.J.'s search for the real killers.") It wasn't until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case.
"At best, the picture shows extraordinarily lax enforcement by the SEC," Senate investigators would later conclude. "At worse, the picture is colored with overtones of a possible cover-up."
Episodes like this help explain why so many Wall Street executives felt emboldened to push the regulatory envelope during the mid-2000s. Over and over, even the most obvious cases of fraud and insider dealing got gummed up in the works, and high-ranking executives were almost never prosecuted for their crimes. In 2003, Freddie Mac coughed up $125 million after it was caught misreporting its earnings by $5 billion; nobody went to jail. In 2006, Fannie Mae was fined $400 million, but executives who had overseen phony accounting techniques to jack up their bonuses faced no criminal charges. That same year, AIG paid $1.6 billion after it was caught in a major accounting scandal that would indirectly lead to its collapse two years later, but no executives at the insurance giant were prosecuted.
All of this behavior set the stage for the crash of 2008, when Wall Street exploded in a raging Dresden of fraud and criminality. Yet the SEC and the Justice Department have shown almost no inclination to prosecute those most responsible for the catastrophe — even though they had insiders from the two firms whose implosions triggered the crisis, Lehman Brothers and AIG, who were more than willing to supply evidence against top executives.
In the case of Lehman Brothers, the SEC had a chance six months before the crash to move against Dick Fuld, a man recently named the worst CEO of all time by Portfolio magazine. A decade before the crash, a Lehman lawyer named Oliver Budde was going through the bank's proxy statements and noticed that it was using a loophole involving Restricted Stock Units to hide tens of millions of dollars of Fuld's compensation. Budde told his bosses that Lehman's use of RSUs was dicey at best, but they blew him off. "We're sorry about your concerns," they told him, "but we're doing it." Disturbed by such shady practices, the lawyer quit the firm in 2006.
Then, only a few months after Budde left Lehman, the SEC changed its rules to force companies to disclose exactly how much compensation in RSUs executives had coming to them. "The SEC was basically like, 'We're sick and tired of you people fucking around — we want a picture of what you're holding,'" Budde says. But instead of coming clean about eight separate RSUs that Fuld had hidden from investors, Lehman filed a proxy statement that was a masterpiece of cynical lawyering. On one page, a chart indicated that Fuld had been awarded $146 million in RSUs. But two pages later, a note in the fine print essentially stated that the chart did not contain the real number — which, it failed to mention, was actually $263 million more than the chart indicated. "They fucked around even more than they did before," Budde says. (The law firm that helped craft the fine print, Simpson Thacher & Bartlett, would later receive a lucrative federal contract to serve as legal adviser to the TARP bailout.)
Budde decided to come forward. In April 2008, he wrote a detailed memo to the SEC about Lehman's history of hidden stocks. Shortly thereafter, he got a letter back that began, "Dear Sir or Madam." It was an automated e-response.
"They blew me off," Budde says.
Over the course of that summer, Budde tried to contact the SEC several more times, and was ignored each time. Finally, in the fateful week of September 15th, 2008, when Lehman Brothers cracked under the weight of its reckless bets on the subprime market and went into its final death spiral, Budde became seriously concerned. If the government tried to arrange for Lehman to be pawned off on another Wall Street firm, as it had done with Bear Stearns, the U.S. taxpayer might wind up footing the bill for a company with hundreds of millions of dollars in concealed compensation. So Budde again called the SEC, right in the middle of the crisis. "Look," he told regulators. "I gave you huge stuff. You really want to take a look at this."
But the feds once again blew him off. A young staff attorney contacted Budde, who once more provided the SEC with copies of all his memos. He never heard from the agency again.
"This was like a mini-Madoff," Budde says. "They had six solid months of warnings. They could have done something."
Three weeks later, Budde was shocked to see Fuld testifying before the House Government Oversight Committee and whining about how poor he was. "I got no severance, no golden parachute," Fuld moaned. When Rep. Henry Waxman, the committee's chairman, mentioned that he thought Fuld had earned more than $480 million, Fuld corrected him and said he believed it was only $310 million.
The true number, Budde calculated, was $529 million. He contacted a Senate investigator to talk about how Fuld had misled Congress, but he never got any response. Meanwhile, in a demonstration of the government's priorities, the Justice Department is proceeding full force with a prosecution of retired baseball player Roger Clemens for lying to Congress about getting a shot of steroids in his ass. "At least Roger didn't screw over the world," Budde says, shaking his head.
Fuld has denied any wrongdoing, but his hidden compensation was only a ripple in Lehman's raging tsunami of misdeeds. The investment bank used an absurd accounting trick called "Repo 105" transactions to conceal $50 billion in loans on the firm's balance sheet. (That's $50 billion, not million.) But more than a year after the use of the Repo 105s came to light, there have still been no indictments in the affair. While it's possible that charges may yet be filed, there are now rumors that the SEC and the Justice Department may take no action against Lehman. If that's true, and there's no prosecution in a case where there's such overwhelming evidence — and where the company is already dead, meaning it can't dump further losses on investors or taxpayers — then it might be time to assume the game is up. Failing to prosecute Fuld and Lehman would be tantamount to the state marching into Wall Street and waving the green flag on a new stealing season.
The most amazing noncase in the entire crash — the one that truly defies the most basic notion of justice when it comes to Wall Street supervillains — is the one involving AIG and Joe Cassano, the nebbishy Patient Zero of the financial crisis. As chief of AIGFP, the firm's financial products subsidiary, Cassano repeatedly made public statements in 2007 claiming that his portfolio of mortgage derivatives would suffer "no dollar of loss" — an almost comically obvious misrepresentation. "God couldn't manage a $60 billion real estate portfolio without a single dollar of loss," says Turner, the agency's former chief accountant. "If the SEC can't make a disclosure case against AIG, then they might as well close up shop."
As in the Lehman case, federal prosecutors not only had plenty of evidence against AIG — they also had an eyewitness to Cassano's actions who was prepared to tell all. As an accountant at AIGFP, Joseph St. Denis had a number of run-ins with Cassano during the summer of 2007. At the time, Cassano had already made nearly $500 billion worth of derivative bets that would ultimately blow up, destroy the world's largest insurance company, and trigger the largest government bailout of a single company in U.S. history. He made many fatal mistakes, but chief among them was engaging in contracts that required AIG to post billions of dollars in collateral if there was any downgrade to its credit rating.
St. Denis didn't know about those clauses in Cassano's contracts, since they had been written before he joined the firm. What he did know was that Cassano freaked out when St. Denis spoke with an accountant at the parent company, which was only just finding out about the time bomb Cassano had set. After St. Denis finished a conference call with the executive, Cassano suddenly burst into the room and began screaming at him for talking to the New York office. He then announced that St. Denis had been "deliberately excluded" from any valuations of the most toxic elements of the derivatives portfolio — thus preventing the accountant from doing his job. What St. Denis represented was transparency — and the last thing Cassano needed was transparency.
Another clue that something was amiss with AIGFP's portfolio came when Goldman Sachs demanded that the firm pay billions in collateral, per the terms of Cassano's deadly contracts. Such "collateral calls" happen all the time on Wall Street, but seldom against a seemingly solvent and friendly business partner like AIG. And when they do happen, they are rarely paid without a fight. So St. Denis was shocked when AIGFP agreed to fork over gobs of money to Goldman Sachs, even while it was still contesting the payments — an indication that something was seriously wrong at AIG. "When I found out about the collateral call, I literally had to sit down," St. Denis recalls. "I had to go home for the day."
After Cassano barred him from valuating the derivative deals, St. Denis had no choice but to resign. He got another job, and thought he was done with AIG. But a few months later, he learned that Cassano had held a conference call with investors in December 2007. During the call, AIGFP failed to disclose that it had posted $2 billion to Goldman Sachs following the collateral calls.
"Investors therefore did not know," the Financial Crisis Inquiry Commission would later conclude, "that AIG's earnings were overstated by $3.6 billion."
"I remember thinking, 'Wow, they're just not telling people,'" St. Denis says. "I knew. I had been there. I knew they'd posted collateral."
A year later, after the crash, St. Denis wrote a letter about his experiences to the House Government Oversight Committee, which was looking into the AIG collapse. He also met with investigators for the government, which was preparing a criminal case against Cassano. But the case never went to court. Last May, the Justice Department confirmed that it would not file charges against executives at AIGFP. Cassano, who has denied any wrongdoing, was reportedly told he was no longer a target.
Shortly after that, Cassano strolled into Washington to testify before the Financial Crisis Inquiry Commission. It was his first public appearance since the crash. He has not had to pay back a single cent out of the hundreds of millions of dollars he earned selling his insane pseudo-insurance policies on subprime mortgage deals. Now, out from under prosecution, he appeared before the FCIC and had the enormous balls to compliment his own business acumen, saying his atom-bomb swaps portfolio was, in retrospect, not that badly constructed. "I think the portfolios are withstanding the test of time," he said.
"They offered him an excellent opportunity to redeem himself," St. Denis jokes.
In the end, of course, it wasn't just the executives of Lehman and AIGFP who got passes. Virtually every one of the major players on Wall Street was similarly embroiled in scandal, yet their executives skated off into the sunset, uncharged and unfined. Goldman Sachs paid $550 million last year when it was caught defrauding investors with crappy mortgages, but no executive has been fined or jailed — not even Fabrice "Fabulous Fab" Tourre, Goldman's outrageous Euro-douche who gleefully e-mailed a pal about the "surreal" transactions in the middle of a meeting with the firm's victims. In a similar case, a sales executive at the German powerhouse Deutsche Bank got off on charges of insider trading; its general counsel at the time of the questionable deals, Robert Khuzami, now serves as director of enforcement for the SEC.
Another major firm, Bank of America, was caught hiding $5.8 billion in bonuses from shareholders as part of its takeover of Merrill Lynch. The SEC tried to let the bank off with a settlement of only $33 million, but Judge Jed Rakoff rejected the action as a "facade of enforcement." So the SEC quintupled the settlement — but it didn't require either Merrill or Bank of America to admit to wrongdoing. Unlike criminal trials, in which the facts of the crime are put on record for all to see, these Wall Street settlements almost never require the banks to make any factual disclosures, effectively burying the stories forever. "All this is done at the expense not only of the shareholders, but also of the truth," says Rakoff. Goldman, Deutsche, Merrill, Lehman, Bank of America ... who did we leave out? Oh, there's Citigroup, nailed for hiding some $40 billion in liabilities from investors. Last July, the SEC settled with Citi for $75 million. In a rare move, it also fined two Citi executives, former CFO Gary Crittenden and investor-relations chief Arthur Tildesley Jr. Their penalties, combined, came to a whopping $180,000.
Throughout the entire crisis, in fact, the government has taken exactly one serious swing of the bat against executives from a major bank, charging two guys from Bear Stearns with criminal fraud over a pair of toxic subprime hedge funds that blew up in 2007, destroying the company and robbing investors of $1.6 billion. Jurors had an e-mail between the defendants admitting that "there is simply no way for us to make money — ever" just three days before assuring investors that "there's no basis for thinking this is one big disaster." Yet the case still somehow ended in acquittal — and the Justice Department hasn't taken any of the big banks to court since.
All of which raises an obvious question: Why the hell not?
Gary Aguirre, the SEC investigator who lost his job when he drew the ire of Morgan Stanley, thinks he knows the answer.
Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country's leading lawyers who represent Wall Street, as well as some of the government's top cops from both the SEC and the Justice Department.
Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. "They were chummier in that environment," says Aguirre, who plunked down $2,200 to attend the conference.
Aguirre saw a lot of familiar faces at the conference, for a simple reason: Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police. Aguirre didn't see Paul Berger, an associate director of enforcement who had rebuffed his attempts to interview Mack — maybe because Berger was tied up at his lucrative new job at Debevoise & Plimpton, the same law firm that Morgan Stanley employed to intervene in the Mack case. But he did see Mary Jo White, the former U.S. attorney, who was still at Debevoise & Plimpton. He also saw Linda Thomsen, the former SEC director of enforcement who had been so helpful to White. Thomsen had gone on to represent Wall Street as a partner at the prestigious firm of Davis Polk & Wardwell.
Two of the government's top cops were there as well: Preet Bharara, the U.S. attorney for the Southern District of New York, and Robert Khuzami, the SEC's current director of enforcement. Bharara had been recommended for his post by Chuck Schumer, Wall Street's favorite senator. And both he and Khuzami had served with Mary Jo White at the U.S. attorney's office, before Mary Jo went on to become a partner at Debevoise. What's more, when Khuzami had served as general counsel for Deutsche Bank, he had been hired by none other than Dick Walker, who had been enforcement director at the SEC when it slow-rolled the pivotal fraud case against Rite Aid.
"It wasn't just one rotation of the revolving door," says Aguirre. "It just kept spinning. Every single person had rotated in and out of government and private service."
The Revolving Door isn't just a footnote in financial law enforcement; over the past decade, more than a dozen high-ranking SEC officials have gone on to lucrative jobs at Wall Street banks or white-shoe law firms, where partnerships are worth millions. That makes SEC officials like Paul Berger and Linda Thomsen the equivalent of college basketball stars waiting for their first NBA contract. Are you really going to give up a shot at the Knicks or the Lakers just to find out whether a Wall Street big shot like John Mack was guilty of insider trading? "You take one of these jobs," says Turner, the former chief accountant for the SEC, "and you're fit for life."
Fit — and happy. The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White introduced Bharara, her old pal from the U.S. attorney's office.
"I want to first say how pleased I am to be here," Bharara responded. Then, addressing White, he added, "You've spawned all of us. It's almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein."
Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. "I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year," he said. "They've done a real service to the country, to the financial community, and not to mention a lot of your law practices."
Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC's director of enforcement, talked about a new "cooperation initiative" the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.
"We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client."
Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department."
When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants "get answers" regarding the status of their criminal cases, he initially doesn't believe it. Then I send him a transcript of the comment. "I am very, very surprised by Khuzami's statement, which does seem to me to be contrary to past practice — and not a good thing," the former prosecutor says.
Earlier this month, when Sen. Chuck Grassley found out about Khuzami's comments, he sent the SEC a letter noting that the agency's own enforcement manual not only prohibits such "answer getting," it even bars the SEC from giving defendants the Justice Department's phone number. "Should counsel or the individual ask which criminal authorities they should contact," the manual reads, "staff should decline to answer, unless authorized by the relevant criminal authorities." Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. "We collaborate with the SEC, but they do not consult with us when they resolve their cases," Assistant Attorney General Lanny Breuer assured Congress in January. "They do that independently."
Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank's executives. According to a letter that was sent to Sen. Grassley's office, Khuzami had a "secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend" of his and "who was counsel for the company." The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge.
All of this paints a disturbing picture of a closed and corrupt system, a timeless circle of friends that virtually guarantees a collegial approach to the policing of high finance. Even before the corruption starts, the state is crippled by economic reality: Since law enforcement on Wall Street requires serious intellectual firepower, the banks seize a huge advantage from the start by hiring away the top talent. Budde, the former Lehman lawyer, says it's well known that all the best legal minds go to the big corporate law firms, while the "bottom 20 percent go to the SEC." Which makes it tough for the agency to track devious legal machinations, like the scheme to hide $263 million of Dick Fuld's compensation.
"It's such a mismatch, it's not even funny," Budde says.
But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers.
As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. "The betrayal that this represents by Obama to everybody is just — we're not ready to believe it," says Budde, a classmate of the president from their Columbia days. "He's really fucking us over like that? Really? That's really a JP Morgan guy, really?"
Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would "demean the seriousness" of the offenses.
So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?
The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.
This article appears in the March 3, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive February 18.
Monday, January 17, 2011
America's Economic and Social Crisis
Editor's NOTE:
It is clear that the Federal Reserve System exists for the benefit of the plutocrats and against the interests of the populace.
Recall that prior to the assassination of John F. Kennedy, there was talk in the nation of abolishing the Federal Reserve. This policy prescription of the Kennedy administration no doubt contributed to the multiple reasons (on the part of the assassination conspirators) why the power elites wanted him killed. In the almost 50 years since the murder of JFK, the situation has only worsened.
The Federal Reserve is not only complicating the true economic progress of the nation, it serves an otherwise unnecessary function. Ellen Brown's solution outlined below is worthy of consideration.
--Dr. J. P. Hubert
The Fed has Spoken: No Bailout for Main Street
by Ellen Brown
Global Research
January 13, 2011
The Federal Reserve was set up by bankers for bankers, and it has served them well. Out of the blue, it came up with $12.3 trillion in nearly interest-free credit to bail the banks out of a credit crunch they created. That same credit crisis has plunged state and local governments into insolvency, but the Fed has now delivered its ultimatum: there will be no “quantitative easing” for municipal governments.
On January 7, according to the Wall Street Journal, Federal Reserve Chairman Ben Bernanke announced that the Fed had ruled out a central bank bailout of state and local governments. "We have no expectation or intention to get involved in state and local finance," he said in testimony before the Senate Budget Committee. The states "should not expect loans from the Fed."
So much for the proposal of President Barack Obama, reported in Reuters a year ago, to have the Fed buy municipal bonds to cut the heavy borrowing costs of cash-strapped cities and states.
The credit woes of state and municipal governments are a direct result of Wall Street’s malfeasance. Their borrowing costs first shot up in 2008, when the “monoline” bond insurers lost their own credit ratings after gambling in derivatives. The Fed’s low-interest facilities could have been used to restore local government credit, just as it was used to restore the credit of the banks. But Chairman Bernanke has now vetoed that plan.
Why? It can hardly be argued that the Fed doesn’t have the money. The collective budget deficit of the states for 2011 is projected at $140 billion, a mere drop in the bucket compared to the sums the Fed managed to come up with to bail out the banks. According to data recently released, the central bank provided roughly $3.3 trillion in liquidity and $9 trillion in short-term loans and other financial arrangements to banks, multinational corporations, and foreign financial institutions following the credit crisis of 2008.
The argument may be that continuing the Fed’s controversial “quantitative easing” program (easing credit conditions by creating money with accounting entries) will drive the economy into hyperinflation. But creating $12.3 trillion for the banks – nearly 100 times the sum needed by state governments -- did not have that dire effect. Rather, the money supply is shrinking – by some estimates, at the fastest rate since the Great Depression. Creating another $140 billion would hardly affect the money supply at all.
Why didn’t the $12.3 trillion drive the economy into hyperinflation? Because, contrary to popular belief, when the Fed engages in “quantitative easing,” it is not simply printing money and giving it away. It is merely extending CREDIT, creating an overdraft on the account of the borrower to be paid back in due course. The Fed is simply replacing expensive credit from private banks (which also create the loan money on their books) with cheap credit from the central bank.
So why isn’t the Fed open to advancing this cheap credit to the states? According to Mr. Bernanke, its hands are tied. He says the Fed language is limited by statute to buying municipal government debt with maturities of six months or less that is directly backed by tax or other assured revenue, a form of debt that makes up less than 2% of the overall muni market. Congress imposed that restriction, and only Congress can change it.
That may sound like he is passing the buck, but he is probably right. Bailing out state and local governments IS outside the Fed’s mandate. The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. No others need apply. The Federal Reserve is the bankers’ own private club, and its legal structure keeps all non-members out.
Earlier Central Bank Ventures into Commercial Lending
That is how the Fed is structured today, but it hasn’t always been that way. In 1934, Section 13(b) was added to the Federal Reserve Act, authorizing the Fed to “make credit available for the purpose of supplying working capital to established industrial and commercial businesses.” This long-forgotten section was implemented and remained in effect for 24 years. In a 2002 article called “Lender of More Than Last Resort” posted on the Minneapolis Fed’s website, David Fettig summarized its provisions as follows:
· [Federal] Reserve banks could make loans to any established businesses, including businesses begun that year (a change from earlier legislation that limited funds to more established enterprises).
· Reserve banks were permitted to participate [share in loans] with lending institutions, but only if the latter assumed 20 percent of the risk.
· No limitation was placed on the amount of a single loan.
· A Reserve bank could make a direct loan only to a business in its district.
Today, that venture into commercial banking sounds like a radical departure from the Fed’s given role; but at the time it evidently seemed like a reasonable alternative. Fettig notes that “the Fed was still less than 20 years old and many likely remembered the arguments put forth during the System's founding, when some advocated that the discount window should be open to all comers, not just member banks.” In Australia and other countries, the central bank was then assuming commercial as well as central bank functions.
Section 13(b) was repealed in 1958, but one state has kept its memory alive. In North Dakota, the publicly owned Bank of North Dakota (BND) acts as a “mini-Fed” for the state. Like the Federal Reserve of the 1930s and 1940s, the BND makes loans to local businesses and participates in loans made by local banks.
The BND has helped North Dakota escape the credit crisis. In 2009, when other states were teetering on bankruptcy, North Dakota sported the largest surplus it had ever had. Other states, prompted by their own budget crises to explore alternatives, are now looking to North Dakota for inspiration.
The “Unusual and Exigent Circumstances” Exception
Although Section 13(b) was repealed, the Federal Reserve Act retained enough vestiges of it in 2008 to allow the Fed to intervene to save a variety of non-bank entities from bankruptcy. The problem was that the tool was applied selectively. The recipients were major corporate players, not local businesses or local governments. Fettig writes:
Section 13(b) may be a memory, . . . but Section 13 paragraph 3 . . . is alive and well in the Federal Reserve Act. . . . [T]his amendment allows, "in unusual and exigent circumstances," a Reserve bank to advance credit to individuals, partnerships and corporations that are not depository institutions.
In 2008, the Fed bailed out investment company Bear Stearns and insurer AIG, neither of which was a bank. John Nichols reports in The Nation that Bear Stearns got almost $1 trillion in short-term loans, with interest rates as low as 0.5%. The Fed also made loans to other corporations, including GE, McDonald’s, and Verizon.
In 2010, Section 13(3) was modified by the Dodd-Frank bill, which replaced the phrase “individuals, partnerships and corporations” with the vaguer phrase “any program or facility with broad-based eligibility.” As explained in the notes to the bill:
Only Broad-Based Facilities Permitted. Section 13(3) is modified to remove the authority to extend credit to specific individuals, partnerships and corporations. Instead, the Board may authorize credit under section 13(3) only under a program or facility with “broad-based eligibility.”
What programs have “broad-based eligibility” isn’t clear from a reading of the Section, but long-term municipal bonds are evidently excluded. Mr. Bernanke said that if municipal defaults became a problem, it would be in Congress’ hands, not his.
Congress could change the law, just as it did in 1934, 1958, and 2010. It could change the law to allow the Fed to help Main Street just as it helped Wall Street. But as Senator Dick Durbin blurted out on a radio program in April 2009, Congress is owned by the banks. Changes in the law today are more likely to go the other way. Mike Whitney, writing in December 2010, noted:
So far, not one CEO or CFO of a major investment bank or financial institution has been charged, arrested, prosecuted, or convicted in what amounts to the largest incident of securities fraud in history. In the much-smaller Savings and Loan investigation, more than 1,000 people were charged and convicted. . . . [T]he system is broken and the old rules no longer apply.
The old rules no longer apply because they have been changed to suit the moneyed interests that hold Congress and the Fed captive. The law has been changed not only to keep the guilty out of jail but to preserve their exorbitant profits and bonuses at the expense of their victims.
To do this, the Federal Reserve had to take “extraordinary measures.” They were extraordinary but not illegal, because the Fed’s congressional mandate made them legal. Nobody’s permission even had to be sought. Section 13(3) of the Federal Reserve Act allows it to do what it needs to do in unusual and exigent circumstances to save its constituents.
If you’re a bank, it seems, anything goes.
So Who Will Save the States?
Highlighting the immediacy of the local government budget crisis, The Wall Street Journal quoted Meredith Whitney, a banking analyst who recently turned to analyzing state and local finances. She said on a recent broadcast of CBS's "60 Minutes" that the U.S. could see "50 to 100 sizable defaults" in 2011 among its local governments, amounting to "hundreds of billions of dollars."
If the Fed could so easily come up with 12.3 trillion dollars to save the banks, why can’t it find a few hundred billion under the mattress to save the states? Obviously it could, if Congress were inclined to put non-bank lending back into the Fed’s job description. Then why isn’t that being done? The cynical view is that the states are purposely being kept on the edge of bankruptcy, because the banks that hold Congress hostage want the interest income and the control.
Whatever the reason, Congress is standing down while the nation is sinking. Congress must summon the courage to take needed action; and that action is not to impose “austerity” by cutting services, at a time when an already-squeezed populace most needs them. Rather, it is to create the jobs that will generate real productivity. To do this, Congress would not even have to go through the Federal Reserve. It could issue its own debt-free money and spend it on repairing and modernizing our decaying infrastructure, among other needed works. Congress’ task will become easier if the people stand with them in demanding action, but Congress is now so gridlocked that change may still be long in coming.
In the meantime, the states could take matters in their own hands and set up their own state-owned banks, on the model of the Bank of North Dakota. They could then have their own very-low-interest credit lines, just as the Wall Street banks do. Rather than spending or selling off valuable public assets, or hoarding them in massive rainy day funds made necessary by the lack of ready credit, states could LEVERAGE their assets into a very strong and abundant local credit system, following the accepted business practices of the Wall Street banks themselves.
The Public Banking Institute is being launched on January 13 to explore that alternative. For more information, see THIS...
It is clear that the Federal Reserve System exists for the benefit of the plutocrats and against the interests of the populace.
Recall that prior to the assassination of John F. Kennedy, there was talk in the nation of abolishing the Federal Reserve. This policy prescription of the Kennedy administration no doubt contributed to the multiple reasons (on the part of the assassination conspirators) why the power elites wanted him killed. In the almost 50 years since the murder of JFK, the situation has only worsened.
The Federal Reserve is not only complicating the true economic progress of the nation, it serves an otherwise unnecessary function. Ellen Brown's solution outlined below is worthy of consideration.
--Dr. J. P. Hubert
The Fed has Spoken: No Bailout for Main Street
by Ellen Brown
Global Research
January 13, 2011
The Federal Reserve was set up by bankers for bankers, and it has served them well. Out of the blue, it came up with $12.3 trillion in nearly interest-free credit to bail the banks out of a credit crunch they created. That same credit crisis has plunged state and local governments into insolvency, but the Fed has now delivered its ultimatum: there will be no “quantitative easing” for municipal governments.
On January 7, according to the Wall Street Journal, Federal Reserve Chairman Ben Bernanke announced that the Fed had ruled out a central bank bailout of state and local governments. "We have no expectation or intention to get involved in state and local finance," he said in testimony before the Senate Budget Committee. The states "should not expect loans from the Fed."
So much for the proposal of President Barack Obama, reported in Reuters a year ago, to have the Fed buy municipal bonds to cut the heavy borrowing costs of cash-strapped cities and states.
The credit woes of state and municipal governments are a direct result of Wall Street’s malfeasance. Their borrowing costs first shot up in 2008, when the “monoline” bond insurers lost their own credit ratings after gambling in derivatives. The Fed’s low-interest facilities could have been used to restore local government credit, just as it was used to restore the credit of the banks. But Chairman Bernanke has now vetoed that plan.
Why? It can hardly be argued that the Fed doesn’t have the money. The collective budget deficit of the states for 2011 is projected at $140 billion, a mere drop in the bucket compared to the sums the Fed managed to come up with to bail out the banks. According to data recently released, the central bank provided roughly $3.3 trillion in liquidity and $9 trillion in short-term loans and other financial arrangements to banks, multinational corporations, and foreign financial institutions following the credit crisis of 2008.
The argument may be that continuing the Fed’s controversial “quantitative easing” program (easing credit conditions by creating money with accounting entries) will drive the economy into hyperinflation. But creating $12.3 trillion for the banks – nearly 100 times the sum needed by state governments -- did not have that dire effect. Rather, the money supply is shrinking – by some estimates, at the fastest rate since the Great Depression. Creating another $140 billion would hardly affect the money supply at all.
Why didn’t the $12.3 trillion drive the economy into hyperinflation? Because, contrary to popular belief, when the Fed engages in “quantitative easing,” it is not simply printing money and giving it away. It is merely extending CREDIT, creating an overdraft on the account of the borrower to be paid back in due course. The Fed is simply replacing expensive credit from private banks (which also create the loan money on their books) with cheap credit from the central bank.
So why isn’t the Fed open to advancing this cheap credit to the states? According to Mr. Bernanke, its hands are tied. He says the Fed language is limited by statute to buying municipal government debt with maturities of six months or less that is directly backed by tax or other assured revenue, a form of debt that makes up less than 2% of the overall muni market. Congress imposed that restriction, and only Congress can change it.
That may sound like he is passing the buck, but he is probably right. Bailing out state and local governments IS outside the Fed’s mandate. The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. No others need apply. The Federal Reserve is the bankers’ own private club, and its legal structure keeps all non-members out.
Earlier Central Bank Ventures into Commercial Lending
That is how the Fed is structured today, but it hasn’t always been that way. In 1934, Section 13(b) was added to the Federal Reserve Act, authorizing the Fed to “make credit available for the purpose of supplying working capital to established industrial and commercial businesses.” This long-forgotten section was implemented and remained in effect for 24 years. In a 2002 article called “Lender of More Than Last Resort” posted on the Minneapolis Fed’s website, David Fettig summarized its provisions as follows:
· [Federal] Reserve banks could make loans to any established businesses, including businesses begun that year (a change from earlier legislation that limited funds to more established enterprises).
· Reserve banks were permitted to participate [share in loans] with lending institutions, but only if the latter assumed 20 percent of the risk.
· No limitation was placed on the amount of a single loan.
· A Reserve bank could make a direct loan only to a business in its district.
Today, that venture into commercial banking sounds like a radical departure from the Fed’s given role; but at the time it evidently seemed like a reasonable alternative. Fettig notes that “the Fed was still less than 20 years old and many likely remembered the arguments put forth during the System's founding, when some advocated that the discount window should be open to all comers, not just member banks.” In Australia and other countries, the central bank was then assuming commercial as well as central bank functions.
Section 13(b) was repealed in 1958, but one state has kept its memory alive. In North Dakota, the publicly owned Bank of North Dakota (BND) acts as a “mini-Fed” for the state. Like the Federal Reserve of the 1930s and 1940s, the BND makes loans to local businesses and participates in loans made by local banks.
The BND has helped North Dakota escape the credit crisis. In 2009, when other states were teetering on bankruptcy, North Dakota sported the largest surplus it had ever had. Other states, prompted by their own budget crises to explore alternatives, are now looking to North Dakota for inspiration.
The “Unusual and Exigent Circumstances” Exception
Although Section 13(b) was repealed, the Federal Reserve Act retained enough vestiges of it in 2008 to allow the Fed to intervene to save a variety of non-bank entities from bankruptcy. The problem was that the tool was applied selectively. The recipients were major corporate players, not local businesses or local governments. Fettig writes:
Section 13(b) may be a memory, . . . but Section 13 paragraph 3 . . . is alive and well in the Federal Reserve Act. . . . [T]his amendment allows, "in unusual and exigent circumstances," a Reserve bank to advance credit to individuals, partnerships and corporations that are not depository institutions.
In 2008, the Fed bailed out investment company Bear Stearns and insurer AIG, neither of which was a bank. John Nichols reports in The Nation that Bear Stearns got almost $1 trillion in short-term loans, with interest rates as low as 0.5%. The Fed also made loans to other corporations, including GE, McDonald’s, and Verizon.
In 2010, Section 13(3) was modified by the Dodd-Frank bill, which replaced the phrase “individuals, partnerships and corporations” with the vaguer phrase “any program or facility with broad-based eligibility.” As explained in the notes to the bill:
Only Broad-Based Facilities Permitted. Section 13(3) is modified to remove the authority to extend credit to specific individuals, partnerships and corporations. Instead, the Board may authorize credit under section 13(3) only under a program or facility with “broad-based eligibility.”
What programs have “broad-based eligibility” isn’t clear from a reading of the Section, but long-term municipal bonds are evidently excluded. Mr. Bernanke said that if municipal defaults became a problem, it would be in Congress’ hands, not his.
Congress could change the law, just as it did in 1934, 1958, and 2010. It could change the law to allow the Fed to help Main Street just as it helped Wall Street. But as Senator Dick Durbin blurted out on a radio program in April 2009, Congress is owned by the banks. Changes in the law today are more likely to go the other way. Mike Whitney, writing in December 2010, noted:
So far, not one CEO or CFO of a major investment bank or financial institution has been charged, arrested, prosecuted, or convicted in what amounts to the largest incident of securities fraud in history. In the much-smaller Savings and Loan investigation, more than 1,000 people were charged and convicted. . . . [T]he system is broken and the old rules no longer apply.
The old rules no longer apply because they have been changed to suit the moneyed interests that hold Congress and the Fed captive. The law has been changed not only to keep the guilty out of jail but to preserve their exorbitant profits and bonuses at the expense of their victims.
To do this, the Federal Reserve had to take “extraordinary measures.” They were extraordinary but not illegal, because the Fed’s congressional mandate made them legal. Nobody’s permission even had to be sought. Section 13(3) of the Federal Reserve Act allows it to do what it needs to do in unusual and exigent circumstances to save its constituents.
If you’re a bank, it seems, anything goes.
So Who Will Save the States?
Highlighting the immediacy of the local government budget crisis, The Wall Street Journal quoted Meredith Whitney, a banking analyst who recently turned to analyzing state and local finances. She said on a recent broadcast of CBS's "60 Minutes" that the U.S. could see "50 to 100 sizable defaults" in 2011 among its local governments, amounting to "hundreds of billions of dollars."
If the Fed could so easily come up with 12.3 trillion dollars to save the banks, why can’t it find a few hundred billion under the mattress to save the states? Obviously it could, if Congress were inclined to put non-bank lending back into the Fed’s job description. Then why isn’t that being done? The cynical view is that the states are purposely being kept on the edge of bankruptcy, because the banks that hold Congress hostage want the interest income and the control.
Whatever the reason, Congress is standing down while the nation is sinking. Congress must summon the courage to take needed action; and that action is not to impose “austerity” by cutting services, at a time when an already-squeezed populace most needs them. Rather, it is to create the jobs that will generate real productivity. To do this, Congress would not even have to go through the Federal Reserve. It could issue its own debt-free money and spend it on repairing and modernizing our decaying infrastructure, among other needed works. Congress’ task will become easier if the people stand with them in demanding action, but Congress is now so gridlocked that change may still be long in coming.
In the meantime, the states could take matters in their own hands and set up their own state-owned banks, on the model of the Bank of North Dakota. They could then have their own very-low-interest credit lines, just as the Wall Street banks do. Rather than spending or selling off valuable public assets, or hoarding them in massive rainy day funds made necessary by the lack of ready credit, states could LEVERAGE their assets into a very strong and abundant local credit system, following the accepted business practices of the Wall Street banks themselves.
The Public Banking Institute is being launched on January 13 to explore that alternative. For more information, see THIS...
Sunday, January 9, 2011
A Destructive Crossroads
Dylan Ratigan
January 8, 2011 06:54 PM
Huffington Post
We find ourselves at a violent crossroads. Whether you are a national voice or an individual without a voice -- there are simple questions we all must ask ourselves today. As individuals wrestle with either a modest or an extreme sense of unfairness in the American political system, the question we have to ask ourselves is "What are we going to do with that energy?
Whatever is to be said about the state of the gunman today, whether he had psychological issues or not, he was angry. Across America today, people are angry. They may choose to channel that anger in a number of either self-destructive or destructive ways. But whatever any of our feelings are, our challenge and our obligation is to channel that energy into a path based on resolution. For a path based on destruction is just that, destruction.
There are two categories of people. The first category is those in the powerful elite -- whether you are an active serving political leader in the legislature, a former political leader, governor or president, a leader of a non-profit group, or the leader of a political organization ranging from the NRA, MoveOn.org and the Sierra Club, or whether you are a national or local broadcaster focusing on political issues or some form of political strategist or advisor. This is the power class: The group that has a clear avenue of expression and power inside the political process, inside the political media, and inside politically organized institutions.
Or you may find yourself as the vast majority of Americans do, as a passive observer with little sense beyond your ability to vote -- without having an avenue to express your beliefs and ideas when it comes to the national conversation.
Both the power class and the passive class are experiencing this sense of frustration and unfairness to one degree or another. As the internalization of that energy is self-destructive, it begs the question... How do we as a nation, both as the power class and the passive class, express and ultimately resolve the ongoing unfairness that exists in this country to this day? Though we may not like to believe it, grave unfairness has existed since this country's founding. Yet, the beauty of the idea that is America is the principle of a government beholden to all of its citizens. As frustrating as the unfairness may appear to be, it is imperative we understand the context that this country has always represented: the ideals of quality and freedom. But our country has always fallen short -- it has always been an ongoing process of trying to close the gap between that unfairness and our ideals.
Today, we find ourselves at a violent crossroads in American history as a result of our inability, or unwillingness to find a healthy outlet to resolve these problems. We now have two options. Internalize the energy into a sea of bile and resentment that will cause you to become less effective, productive and beneficial to those in your life. Internalizing this energy without finding a positive recourse is a recipe for personal disaster. I speak from experience. Internalizing that energy of unfairness, that frustration and that anger is a recipe for self-destruction from a personal to a national level. We now find ourselves with a desperate need for an outlet for that energy, a need for an outlet that solves our problems rather than destroying ourselves or those around us. So I pose two questions: For the power class, how are you using the energy of frustration and anger that revolves around the unfairness of this country? Are you using it as a tool to manipulate your environment in order to accumulate power, wealth, fame, or some other self-serving manifestation?
For the passive class, have you chosen to deal with your knowledge of this unfairness either through denial of its existence, or through a logical apathy founded upon the belief that nothing you do will matter?
It goes without saying that the events of today are a wake-up call for every American, regardless of their position in this society. And as we stand as a group at this violent fork in the road, will those within the power class take this wakeup call to acknowledge the responsibility they have to utilize their influence to serve the interests of increased fairness in America -- even if that requires the suffering of personal losses or losses among your powerbase ?
Understand that whether we like it or not, the personal indulgence of this exploitation by some in order to accumulate wealth and power is done so at a mortal danger to all Americans -- each likely as concerned for the wellbeing of this country as you, the passive class, may believe yourself to be.
America is in a desperate need of engagement by all of its citizens, and we all must understand that the luxury of denial and logical apathy among the passive can no longer be afforded. What we witnessed today is the worst expression of human nature. The unresolved frustration that led to today's events not only took the lives of at least five people, but also destroyed the life of the shooter himself in the ultimate act of self-destruction. Shockwaves will be sent through the legislative body of America for months to come.
The path of destruction of ourselves, or of others, is an easy path. The path of resolution, shared sacrifice, and the brutal honesty necessary for those who are benefitting the most from the culture of unfairness that plagues this country today must be addressed.
It is easy for someone like myself or anybody else to get up on a soapbox and point fingers as to who may be given bad guy, or where a given failure, may exist. But, setting a path to resolve the unfairness that plagues this country will originate not by looking outward at those whom we believe are perpetrating a given unfairness, but through a period of brutally honest inward reflection into the values that each of us apply to the ways we make the decisions in our days, from one minute to the next.
It is through investment in internal reflection that we can open the door to the knowledge that only our own happiness and fulfillment can manifest a peaceful path to resolving the problems that we face as a nation.
Through that reflection, those in power can ask themselves whether they can muster the necessary courage to reject the forces of their own ego and their own paycheck to make what they know is the right decision.
Through that reflection, the passive class can muster the strength to shed the protections of denial and apathy.
While your voice may feel hollow by itself, the possibility of becoming part of a national chorus of awakened can serve as a deeper foundation for the compassion and wisdom to accept our own shortfalls and those of our leadership as we continue the national trip toward a more fair and free America We find ourselves at a violent crossroads. Whether you are a national voice or an individual without a voice -- there are simple questions we all must ask ourselves today. As individuals wrestle with either a modest or an extreme sense of unfairness in the American political system, the question we have to ask ourselves is "What are we going to do with that energy?
Whatever is to be said about the state of the gunman today, whether he had psychological issues or not, he was angry. Across America today, people are angry. They may choose to channel that anger in a number of either self-destructive or destructive ways. But whatever any of our feelings are, our challenge and our obligation is to channel that energy into a path based on resolution. For a path based on destruction is just that, destruction.
There are two categories of people. The first category is those in the powerful elite -- whether you are an active serving political leader in the legislature, a former political leader, governor or president, a leader of a non-profit group, or the leader of a political organization ranging from the NRA, MoveOn.org and the Sierra Club, or whether you are a national or local broadcaster focusing on political issues or some form of political strategist or advisor. This is the power class: The group that has a clear avenue of expression and power inside the political process, inside the political media, and inside politically organized institutions.
Or you may find yourself as the vast majority of Americans do, as a passive observer with little sense beyond your ability to vote -- without having an avenue to express your beliefs and ideas when it comes to the national conversation.
Both the power class and the passive class are experiencing this sense of frustration and unfairness to one degree or another. As the internalization of that energy is self-destructive, it begs the question... How do we as a nation, both as the power class and the passive class, express and ultimately resolve the ongoing unfairness that exists in this country to this day? Though we may not like to believe it, grave unfairness has existed since this country's founding. Yet, the beauty of the idea that is America is the principle of a government beholden to all of its citizens. As frustrating as the unfairness may appear to be, it is imperative we understand the context that this country has always represented: the ideals of quality and freedom. But our country has always fallen short -- it has always been an ongoing process of trying to close the gap between that unfairness and our ideals.
Today, we find ourselves at a violent crossroads in American history as a result of our inability, or unwillingness to find a healthy outlet to resolve these problems. we now have two options. Internalize the energy into a sea of bile and resentment that will cause you to become less effective, productive and beneficial to those in your life. Internalizing this energy without finding a positive recourse is a recipe for personal disaster. I speak from experience. Internalizing that energy of unfairness, that frustration and that anger is a recipe for self-destruction from a personal to a national level. We now find ourselves with a desperate need for an outlet for that energy, a need for an outlet that solves our problems rather than destroying ourselves or those around us. So I pose two questions: For the power class, how are you using the energy of frustration and anger that revolves around the unfairness of this country? Are you using it as a tool to manipulate your environment in order to accumulate power, wealth, fame, or some other self-serving manifestation?
For the passive class, have you chosen to deal with your knowledge of this unfairness either through denial of its existence, or through a logical apathy founded upon the belief that nothing you do will matter?
It goes without saying that the events of today are a wake-up call for every American, regardless of their position in this society. And as we stand as a group at this violent fork in the road, will those within the power class take this wakeup call to acknowledge the responsibility they have to utilize their influence to serve the interests of increased fairness in America -- even if that requires the suffering of personal losses or losses among your powerbase ?
Understand that whether we like it or not, the personal indulgence of this exploitation by some in order to accumulate wealth and power is done so at a mortal danger to all Americans -- each likely as concerned for the wellbeing of this country as you, the passive class, may believe yourself to be.
America is in a desperate need of engagement by all of its citizens, and we all must understand that the luxury of denial and logical apathy among the passive can no longer be afforded. What we witnessed today is the worst expression of human nature. The unresolved frustration that led to today's events not only took the lives of at least five people, but also destroyed the life of the shooter himself in the ultimate act of self-destruction. Shockwaves will be sent through the legislative body of America for months to come.
The path of destruction of ourselves, or of others, is an easy path. The path of resolution, shared sacrifice, and the brutal honesty necessary for those who are benefitting the most from the culture of unfairness that plagues this country today must be addressed.
It is easy for someone like myself or anybody else to get up on a soapbox and point fingers as to who may be given bad guy, or where a given failure, may exist. But, setting a path to resolve the unfairness that plagues this country will originate not by looking outward at those whom we believe are perpetrating a given unfairness, but through a period of brutally honest inward reflection into the values that each of us apply to the ways we make the decisions in our days, from one minute to the next.
It is through investment in internal reflection that we can open the door to the knowledge that only our own happiness and fulfillment can manifest a peaceful path to resolving the problems that we face as a nation.
Through that reflection, those in power can ask themselves whether they can muster the necessary courage to reject the forces of their own ego and their own paycheck to make what they know is the right decision.
Through that reflection, the passive class can muster the strength to shed the protections of denial and apathy.
While your voice may feel hollow by itself, the possibility of becoming part of a national chorus of awakened can serve as a deeper foundation for the compassion and wisdom to accept our own shortfalls and those of our leadership as we continue the national trip toward a more fair and free America
January 8, 2011 06:54 PM
Huffington Post
We find ourselves at a violent crossroads. Whether you are a national voice or an individual without a voice -- there are simple questions we all must ask ourselves today. As individuals wrestle with either a modest or an extreme sense of unfairness in the American political system, the question we have to ask ourselves is "What are we going to do with that energy?
Whatever is to be said about the state of the gunman today, whether he had psychological issues or not, he was angry. Across America today, people are angry. They may choose to channel that anger in a number of either self-destructive or destructive ways. But whatever any of our feelings are, our challenge and our obligation is to channel that energy into a path based on resolution. For a path based on destruction is just that, destruction.
There are two categories of people. The first category is those in the powerful elite -- whether you are an active serving political leader in the legislature, a former political leader, governor or president, a leader of a non-profit group, or the leader of a political organization ranging from the NRA, MoveOn.org and the Sierra Club, or whether you are a national or local broadcaster focusing on political issues or some form of political strategist or advisor. This is the power class: The group that has a clear avenue of expression and power inside the political process, inside the political media, and inside politically organized institutions.
Or you may find yourself as the vast majority of Americans do, as a passive observer with little sense beyond your ability to vote -- without having an avenue to express your beliefs and ideas when it comes to the national conversation.
Both the power class and the passive class are experiencing this sense of frustration and unfairness to one degree or another. As the internalization of that energy is self-destructive, it begs the question... How do we as a nation, both as the power class and the passive class, express and ultimately resolve the ongoing unfairness that exists in this country to this day? Though we may not like to believe it, grave unfairness has existed since this country's founding. Yet, the beauty of the idea that is America is the principle of a government beholden to all of its citizens. As frustrating as the unfairness may appear to be, it is imperative we understand the context that this country has always represented: the ideals of quality and freedom. But our country has always fallen short -- it has always been an ongoing process of trying to close the gap between that unfairness and our ideals.
Today, we find ourselves at a violent crossroads in American history as a result of our inability, or unwillingness to find a healthy outlet to resolve these problems. We now have two options. Internalize the energy into a sea of bile and resentment that will cause you to become less effective, productive and beneficial to those in your life. Internalizing this energy without finding a positive recourse is a recipe for personal disaster. I speak from experience. Internalizing that energy of unfairness, that frustration and that anger is a recipe for self-destruction from a personal to a national level. We now find ourselves with a desperate need for an outlet for that energy, a need for an outlet that solves our problems rather than destroying ourselves or those around us. So I pose two questions: For the power class, how are you using the energy of frustration and anger that revolves around the unfairness of this country? Are you using it as a tool to manipulate your environment in order to accumulate power, wealth, fame, or some other self-serving manifestation?
For the passive class, have you chosen to deal with your knowledge of this unfairness either through denial of its existence, or through a logical apathy founded upon the belief that nothing you do will matter?
It goes without saying that the events of today are a wake-up call for every American, regardless of their position in this society. And as we stand as a group at this violent fork in the road, will those within the power class take this wakeup call to acknowledge the responsibility they have to utilize their influence to serve the interests of increased fairness in America -- even if that requires the suffering of personal losses or losses among your powerbase ?
Understand that whether we like it or not, the personal indulgence of this exploitation by some in order to accumulate wealth and power is done so at a mortal danger to all Americans -- each likely as concerned for the wellbeing of this country as you, the passive class, may believe yourself to be.
America is in a desperate need of engagement by all of its citizens, and we all must understand that the luxury of denial and logical apathy among the passive can no longer be afforded. What we witnessed today is the worst expression of human nature. The unresolved frustration that led to today's events not only took the lives of at least five people, but also destroyed the life of the shooter himself in the ultimate act of self-destruction. Shockwaves will be sent through the legislative body of America for months to come.
The path of destruction of ourselves, or of others, is an easy path. The path of resolution, shared sacrifice, and the brutal honesty necessary for those who are benefitting the most from the culture of unfairness that plagues this country today must be addressed.
It is easy for someone like myself or anybody else to get up on a soapbox and point fingers as to who may be given bad guy, or where a given failure, may exist. But, setting a path to resolve the unfairness that plagues this country will originate not by looking outward at those whom we believe are perpetrating a given unfairness, but through a period of brutally honest inward reflection into the values that each of us apply to the ways we make the decisions in our days, from one minute to the next.
It is through investment in internal reflection that we can open the door to the knowledge that only our own happiness and fulfillment can manifest a peaceful path to resolving the problems that we face as a nation.
Through that reflection, those in power can ask themselves whether they can muster the necessary courage to reject the forces of their own ego and their own paycheck to make what they know is the right decision.
Through that reflection, the passive class can muster the strength to shed the protections of denial and apathy.
While your voice may feel hollow by itself, the possibility of becoming part of a national chorus of awakened can serve as a deeper foundation for the compassion and wisdom to accept our own shortfalls and those of our leadership as we continue the national trip toward a more fair and free America We find ourselves at a violent crossroads. Whether you are a national voice or an individual without a voice -- there are simple questions we all must ask ourselves today. As individuals wrestle with either a modest or an extreme sense of unfairness in the American political system, the question we have to ask ourselves is "What are we going to do with that energy?
Whatever is to be said about the state of the gunman today, whether he had psychological issues or not, he was angry. Across America today, people are angry. They may choose to channel that anger in a number of either self-destructive or destructive ways. But whatever any of our feelings are, our challenge and our obligation is to channel that energy into a path based on resolution. For a path based on destruction is just that, destruction.
There are two categories of people. The first category is those in the powerful elite -- whether you are an active serving political leader in the legislature, a former political leader, governor or president, a leader of a non-profit group, or the leader of a political organization ranging from the NRA, MoveOn.org and the Sierra Club, or whether you are a national or local broadcaster focusing on political issues or some form of political strategist or advisor. This is the power class: The group that has a clear avenue of expression and power inside the political process, inside the political media, and inside politically organized institutions.
Or you may find yourself as the vast majority of Americans do, as a passive observer with little sense beyond your ability to vote -- without having an avenue to express your beliefs and ideas when it comes to the national conversation.
Both the power class and the passive class are experiencing this sense of frustration and unfairness to one degree or another. As the internalization of that energy is self-destructive, it begs the question... How do we as a nation, both as the power class and the passive class, express and ultimately resolve the ongoing unfairness that exists in this country to this day? Though we may not like to believe it, grave unfairness has existed since this country's founding. Yet, the beauty of the idea that is America is the principle of a government beholden to all of its citizens. As frustrating as the unfairness may appear to be, it is imperative we understand the context that this country has always represented: the ideals of quality and freedom. But our country has always fallen short -- it has always been an ongoing process of trying to close the gap between that unfairness and our ideals.
Today, we find ourselves at a violent crossroads in American history as a result of our inability, or unwillingness to find a healthy outlet to resolve these problems. we now have two options. Internalize the energy into a sea of bile and resentment that will cause you to become less effective, productive and beneficial to those in your life. Internalizing this energy without finding a positive recourse is a recipe for personal disaster. I speak from experience. Internalizing that energy of unfairness, that frustration and that anger is a recipe for self-destruction from a personal to a national level. We now find ourselves with a desperate need for an outlet for that energy, a need for an outlet that solves our problems rather than destroying ourselves or those around us. So I pose two questions: For the power class, how are you using the energy of frustration and anger that revolves around the unfairness of this country? Are you using it as a tool to manipulate your environment in order to accumulate power, wealth, fame, or some other self-serving manifestation?
For the passive class, have you chosen to deal with your knowledge of this unfairness either through denial of its existence, or through a logical apathy founded upon the belief that nothing you do will matter?
It goes without saying that the events of today are a wake-up call for every American, regardless of their position in this society. And as we stand as a group at this violent fork in the road, will those within the power class take this wakeup call to acknowledge the responsibility they have to utilize their influence to serve the interests of increased fairness in America -- even if that requires the suffering of personal losses or losses among your powerbase ?
Understand that whether we like it or not, the personal indulgence of this exploitation by some in order to accumulate wealth and power is done so at a mortal danger to all Americans -- each likely as concerned for the wellbeing of this country as you, the passive class, may believe yourself to be.
America is in a desperate need of engagement by all of its citizens, and we all must understand that the luxury of denial and logical apathy among the passive can no longer be afforded. What we witnessed today is the worst expression of human nature. The unresolved frustration that led to today's events not only took the lives of at least five people, but also destroyed the life of the shooter himself in the ultimate act of self-destruction. Shockwaves will be sent through the legislative body of America for months to come.
The path of destruction of ourselves, or of others, is an easy path. The path of resolution, shared sacrifice, and the brutal honesty necessary for those who are benefitting the most from the culture of unfairness that plagues this country today must be addressed.
It is easy for someone like myself or anybody else to get up on a soapbox and point fingers as to who may be given bad guy, or where a given failure, may exist. But, setting a path to resolve the unfairness that plagues this country will originate not by looking outward at those whom we believe are perpetrating a given unfairness, but through a period of brutally honest inward reflection into the values that each of us apply to the ways we make the decisions in our days, from one minute to the next.
It is through investment in internal reflection that we can open the door to the knowledge that only our own happiness and fulfillment can manifest a peaceful path to resolving the problems that we face as a nation.
Through that reflection, those in power can ask themselves whether they can muster the necessary courage to reject the forces of their own ego and their own paycheck to make what they know is the right decision.
Through that reflection, the passive class can muster the strength to shed the protections of denial and apathy.
While your voice may feel hollow by itself, the possibility of becoming part of a national chorus of awakened can serve as a deeper foundation for the compassion and wisdom to accept our own shortfalls and those of our leadership as we continue the national trip toward a more fair and free America
Sunday, November 28, 2010
People from Varied and Diverse Backgrounds all Recognize Growing Fascist State
Power and the Tiny Acts of Rebellion
By Chris Hedges
November 23, 2010 "Truthdig" -- There is no hope left for achieving significant reform or restoring our democracy through established mechanisms of power. The electoral process has been hijacked by corporations. The judiciary has been corrupted and bought. The press shuts out the most important voices in the country and feeds us the banal and the absurd. Universities prostitute themselves for corporate dollars. Labor unions are marginal and ineffectual forces. The economy is in the hands of corporate swindlers and speculators. And the public, enchanted by electronic hallucinations, remains passive and supine. We have no tools left within the power structure in our fight to halt unchecked corporate pillage.
The liberal class, which Barack Obama represents, was never endowed with much vision or courage, but it did occasionally respond when pressured by popular democratic movements. This was how we got the New Deal, civil rights legislation and the array of consumer legislation pushed through by Ralph Nader and his allies in the Democratic Party. The complete surrendering of power, however, to corporate interests means that those of us who seek nonviolent yet profound change have no one within the power elite we can trust for support. The corporate coup has ossified the structures of power. It has obliterated all checks on corporate malfeasance. It has left us stripped of the tools of mass organization that once nudged the system forward toward justice.
Obama knows where power lies and serves these centers of power. The tragedy—if tragedy is the right word—is that Obama, after selling his soul to corporations, has been discarded. Corporate power doesn’t need brand Obama anymore. They have found new brands in the tea party, Sarah Palin and Glenn Beck. Obama has been abandoned by those who once bundled contributions for him by the millions of dollars. Obama and the Democratic Party will, I expect, spend the next two years being even more obsequious to corporate power. Obama clearly loves the pomp and privilege of statecraft that much. But I am not sure it will work.
Reformers on the outside, while they remain militant and faithful to issues of justice, nevertheless depend on the liberal establishment to respond to public pressure. If these reformers cannot pressure the liberal class and the power elite to evoke real change, they become ineffectual. Our fate is intimately tied to the liberals who have betrayed us. We speak in the language of policies and issues. We will find it harder and harder, given our impotence, to compete with the impassioned calls for new glory, revenge and moral purity that resonate with a public beset by foreclosures, long-term unemployment, bankruptcies and a medical system that abandons them. Once any political system ossifies, once all mechanisms for reform close, the lunatic fringe of a society, as I saw in Yugoslavia, rises out of the moral swamp to take control. The reformers, however well meaning and honest, finally have nothing to offer. They are disarmed.
We have reached a point where stunted and deformed individuals, whose rapacious greed fuels the plunge of tens of millions of Americans into abject poverty and misery, determine the moral fiber of the nation. It is no more morally justifiable to kill someone for profit than it is to kill that person for religious fanaticism. And yet, from health companies to the oil and natural gas industry to private weapons contractors, individual death and the wholesale death of the ecosystem have become acceptable corporate business. The mounting human misery in the United States, which could lead to the sporadic bursts of anger we have seen on the streets of France, will be met with severe repression from the security and surveillance state, which always accompanies the rise of the corporate state. The one method left open by which we can respond—massive street protests, the destruction of corporate property and violence—will become the excuse to impose total tyranny. The intrusive pat-downs at airports may soon become a fond memory of what it was like when we still had a little freedom left.
All reform movements, from the battle for universal health care to the struggle for alternative energy and sane environmental controls to financial regulation to an end to our permanent war economy, have run into this new, terrifying configuration of power. They have confronted an awful truth. We do not count. And they have been helpless to respond as those who are most skilled in the manipulation of hate lead a confused populace to call for their own enslavement.
Dr. Margaret Flowers, a pediatrician from Maryland who volunteers for Physicians for a National Health Program, knows what it is like to challenge the corporate leviathan. She was blacklisted by the corporate media. She was locked out of the debate on health care reform by the Democratic Party and liberal organizations such as MoveOn. She was abandoned by those in Congress who had once backed calls for a rational health care policy. And when she and seven other activists demanded that the argument for universal health care be considered at the hearings held by Senate Finance Committee Chairman Max Baucus, they were forcibly removed from the hearing room.
“The reform process exposed how broken our system is,” Flowers said when we spoke a few days ago. “The health reform debate was never an actual debate. Those in power were very reluctant to have single-payer advocates testify or come to the table. They would not seriously consider our proposal because it was based on evidence of what works. And they did not want this evidence placed before the public. They needed the reform to be based on what they thought was politically feasible and acceptable to the industries that fund their campaigns.”
“There was nobody in the House or the Senate who held fast on universal health care,” she lamented. “Sen. [Bernie] Sanders from Vermont introduced a single-payer bill, S 703. He introduced an amendment that would have substituted S 703 for what the Senate was putting together. We had to push pretty hard to get that to the Senate floor, but in the end he was forced by the leadership to withdraw it. He was our strongest person. In the House we saw Chairman John Conyers, who is the lead sponsor for the House single-payer bill, give up pushing for single-payer very early in the process in 2009. Dennis Kucinich pushed to get an amendment that would help give states the ability to pass single-payer. He was not successful in getting that kept in the final House bill. He held out for the longest, but in the end he caved.”
“You can’t effect change from the inside,” she has concluded. “We have a huge imbalance of power. Until we have a shift in power we won’t get effective change in any area, whether financial, climate, you name it. With the wealth inequalities, with the road we are headed down, we face serious problems. Those who work and advocate for social and economic justice have to now join together. We have to be independent of political parties and the major funders. The revolution will not be funded. This is very true.”
“Those who are working for effective change are not going to get foundation dollars,” she stated. “Once a foundation or a wealthy individual agrees to give money they control how that money is used. You have to report to them how you spend that money. They control what you can and cannot do. Robert Wood Johnson [the foundation], for example, funds many public health departments. They fund groups that advocate for health care reform, but those groups are not allowed to pursue or talk about single-payer. Robert Wood Johnson only supports work that is done to create what they call public/private partnership. And we know this is totally ineffective. We tried this before. It is allowing private insurers to exist but developing programs to fill the gaps. Robert Wood Johnson actually works against a single-payer health care system. The Health Care for America Now coalition was another example. It only supported what the Democrats supported. There are a lot of activist groups controlled by the Democratic Party, including Families USA and MoveOn. MoveOn is a very good example. If you look at polls of Democrats on single-payer, about 80 percent support it. But at MoveOn meetings, which is made up mostly of Democrats, when people raised the idea of working for single-payer they were told by MoveOn leaders that the organization was not doing that. And this took place while the Democrats were busy selling out women’s rights, immigrant rights to health care and abandoning the public option. Yet all these groups continued to work for the bill. They argued, in the end, that the health care bill had to be supported because it was not really about health care. It was about the viability of President Obama and the Democratic Party. This is why, in the end, we had to pass it.”
“The Democrats and the Republicans give the illusion that there are differences between them,” said Dr. Flowers. “This keeps the public divided. It weakens opposition. We fight over whether a Democrat will get elected or a Republican will get elected. We vote for the lesser evil, but meanwhile the policies the two parties enact are not significantly different. There were no Democrats willing to hold the line on single-payer. Not one. I don’t see this changing until we radically shift the balance of power by creating a larger and broader social movement.”
The corporate control of every aspect of American life is mirrored in the corporate control of health care. And there are no barriers to prevent corporate domination of every sector of our lives.
“We are at a crisis,” Flowers said. “Health care providers, particularly those in primary care, are finding it very difficult to sustain an independent practice. We are seeing greater and greater corporatization of our health care. Practices are being taken over by these large corporations. You have absolutely no voice when it comes to dealing with the insurance company. They tell you what your reimbursements will be. They make it incredibly difficult and complex to get reimbursed. The rules are arbitrary and change frequently.”
“This new legislation [passed earlier this year] does not change any of that,” she said. “It does not make it easier for doctors. It adds more administrative complexity. We are going to continue to have a shortage of doctors. As the new law rolls out they are giving waivers as the provisions kick in because corporations like McDonald’s say they can’t comply. Insurance companies such as WellPoint, UnitedHealth Group, Aetna, Cigna and Humana that were mandated to sell new policies to children with pre-existing conditions announced they were not going to do it. They said they were going to stop selling new policies to children. So they got waivers from the Obama administration allowing them to charge higher premiums. Health care costs are going to rise faster. The Center for Medicare and Medicaid Services estimated that after the legislation passed, our health care costs would rise more steeply than if we had done nothing. The Census Bureau reports that the number of uninsured in the U.S. jumped 10 percent to 51 million people in 2009. About 5.8 million were able to go on public programs, but a third of our population under the age of 65 was uninsured for some portion of 2009. The National Health Insurance Survey estimates that we now have 58 or 59 million uninsured. And the trend is toward underinsurance. These faulty insurance products leave people financially vulnerable if they have a serious accident or illness. They also have financial barriers to care. Co-pays and deductibles cause people to delay or avoid getting the care they need. And all these trends will worsen.”
In Manuel de Lope’s novel “The Wrong Blood,” set during the first rumblings that led to the Spanish Civil War, he writes “... nobody knew this at the time and those who had premonitions wouldn’t go so far as to believe them, because fear rejects what intuition accepts.”
But the signs are now so palpable that even fear is not working. Our worst premonitions are becoming reality. Our intuition has proved correct. We are reaching the breaking point. An explosion, unless we halt the increased pressure, seems inevitable. And what is left for those of us who cannot embrace the contaminants of violence? If the system shuts us out how can we influence it through nonviolent mechanisms of popular protest? How can we restore a civil society? How can we battle back against those who will mobilize hatred to cement into place an American fascism?
I do not know if we can win this battle. I suspect we cannot. But I do know that if we stop resisting, if we stop rebelling, something fundamental will die within us. As the corporate vise tightens, as the vast corporate system begins to break down with fossil fuel decline, extreme climate change and the expansion of global poverty, even mundane and ordinary acts to assert our common humanity and justice will be condemned as subversive.
It is time to think of resistance in a new way, something that is no longer carried out to reform a system but as an end in itself. African-Americans understood this during the long night of slavery. German opposition leaders understood it under the Nazis. Dissidents in the former Soviet Union knew this during the nightmare of communism. Resistance in these closed systems was local and often solitary. It was done with the understanding that evil must always be defied. The tiny acts of rebellion—day after day, month after month, year after year and decade after decade—exposed to everyone who witnessed them the heartlessness, cruelty and inhumanity of the oppressor. They were acts of truth and beauty. We must take to the street. We must jam as many wrenches into the corporate system as we can. We must not make it easy for them. But we also must no longer live in self-delusion. This is a battle that will outlive us. And if we fight, even with this tragic vision, we will lead lives worth living and keep alive another way of being.
By Chris Hedges
November 23, 2010 "Truthdig" -- There is no hope left for achieving significant reform or restoring our democracy through established mechanisms of power. The electoral process has been hijacked by corporations. The judiciary has been corrupted and bought. The press shuts out the most important voices in the country and feeds us the banal and the absurd. Universities prostitute themselves for corporate dollars. Labor unions are marginal and ineffectual forces. The economy is in the hands of corporate swindlers and speculators. And the public, enchanted by electronic hallucinations, remains passive and supine. We have no tools left within the power structure in our fight to halt unchecked corporate pillage.
The liberal class, which Barack Obama represents, was never endowed with much vision or courage, but it did occasionally respond when pressured by popular democratic movements. This was how we got the New Deal, civil rights legislation and the array of consumer legislation pushed through by Ralph Nader and his allies in the Democratic Party. The complete surrendering of power, however, to corporate interests means that those of us who seek nonviolent yet profound change have no one within the power elite we can trust for support. The corporate coup has ossified the structures of power. It has obliterated all checks on corporate malfeasance. It has left us stripped of the tools of mass organization that once nudged the system forward toward justice.
Obama knows where power lies and serves these centers of power. The tragedy—if tragedy is the right word—is that Obama, after selling his soul to corporations, has been discarded. Corporate power doesn’t need brand Obama anymore. They have found new brands in the tea party, Sarah Palin and Glenn Beck. Obama has been abandoned by those who once bundled contributions for him by the millions of dollars. Obama and the Democratic Party will, I expect, spend the next two years being even more obsequious to corporate power. Obama clearly loves the pomp and privilege of statecraft that much. But I am not sure it will work.
Reformers on the outside, while they remain militant and faithful to issues of justice, nevertheless depend on the liberal establishment to respond to public pressure. If these reformers cannot pressure the liberal class and the power elite to evoke real change, they become ineffectual. Our fate is intimately tied to the liberals who have betrayed us. We speak in the language of policies and issues. We will find it harder and harder, given our impotence, to compete with the impassioned calls for new glory, revenge and moral purity that resonate with a public beset by foreclosures, long-term unemployment, bankruptcies and a medical system that abandons them. Once any political system ossifies, once all mechanisms for reform close, the lunatic fringe of a society, as I saw in Yugoslavia, rises out of the moral swamp to take control. The reformers, however well meaning and honest, finally have nothing to offer. They are disarmed.
We have reached a point where stunted and deformed individuals, whose rapacious greed fuels the plunge of tens of millions of Americans into abject poverty and misery, determine the moral fiber of the nation. It is no more morally justifiable to kill someone for profit than it is to kill that person for religious fanaticism. And yet, from health companies to the oil and natural gas industry to private weapons contractors, individual death and the wholesale death of the ecosystem have become acceptable corporate business. The mounting human misery in the United States, which could lead to the sporadic bursts of anger we have seen on the streets of France, will be met with severe repression from the security and surveillance state, which always accompanies the rise of the corporate state. The one method left open by which we can respond—massive street protests, the destruction of corporate property and violence—will become the excuse to impose total tyranny. The intrusive pat-downs at airports may soon become a fond memory of what it was like when we still had a little freedom left.
All reform movements, from the battle for universal health care to the struggle for alternative energy and sane environmental controls to financial regulation to an end to our permanent war economy, have run into this new, terrifying configuration of power. They have confronted an awful truth. We do not count. And they have been helpless to respond as those who are most skilled in the manipulation of hate lead a confused populace to call for their own enslavement.
Dr. Margaret Flowers, a pediatrician from Maryland who volunteers for Physicians for a National Health Program, knows what it is like to challenge the corporate leviathan. She was blacklisted by the corporate media. She was locked out of the debate on health care reform by the Democratic Party and liberal organizations such as MoveOn. She was abandoned by those in Congress who had once backed calls for a rational health care policy. And when she and seven other activists demanded that the argument for universal health care be considered at the hearings held by Senate Finance Committee Chairman Max Baucus, they were forcibly removed from the hearing room.
“The reform process exposed how broken our system is,” Flowers said when we spoke a few days ago. “The health reform debate was never an actual debate. Those in power were very reluctant to have single-payer advocates testify or come to the table. They would not seriously consider our proposal because it was based on evidence of what works. And they did not want this evidence placed before the public. They needed the reform to be based on what they thought was politically feasible and acceptable to the industries that fund their campaigns.”
“There was nobody in the House or the Senate who held fast on universal health care,” she lamented. “Sen. [Bernie] Sanders from Vermont introduced a single-payer bill, S 703. He introduced an amendment that would have substituted S 703 for what the Senate was putting together. We had to push pretty hard to get that to the Senate floor, but in the end he was forced by the leadership to withdraw it. He was our strongest person. In the House we saw Chairman John Conyers, who is the lead sponsor for the House single-payer bill, give up pushing for single-payer very early in the process in 2009. Dennis Kucinich pushed to get an amendment that would help give states the ability to pass single-payer. He was not successful in getting that kept in the final House bill. He held out for the longest, but in the end he caved.”
“You can’t effect change from the inside,” she has concluded. “We have a huge imbalance of power. Until we have a shift in power we won’t get effective change in any area, whether financial, climate, you name it. With the wealth inequalities, with the road we are headed down, we face serious problems. Those who work and advocate for social and economic justice have to now join together. We have to be independent of political parties and the major funders. The revolution will not be funded. This is very true.”
“Those who are working for effective change are not going to get foundation dollars,” she stated. “Once a foundation or a wealthy individual agrees to give money they control how that money is used. You have to report to them how you spend that money. They control what you can and cannot do. Robert Wood Johnson [the foundation], for example, funds many public health departments. They fund groups that advocate for health care reform, but those groups are not allowed to pursue or talk about single-payer. Robert Wood Johnson only supports work that is done to create what they call public/private partnership. And we know this is totally ineffective. We tried this before. It is allowing private insurers to exist but developing programs to fill the gaps. Robert Wood Johnson actually works against a single-payer health care system. The Health Care for America Now coalition was another example. It only supported what the Democrats supported. There are a lot of activist groups controlled by the Democratic Party, including Families USA and MoveOn. MoveOn is a very good example. If you look at polls of Democrats on single-payer, about 80 percent support it. But at MoveOn meetings, which is made up mostly of Democrats, when people raised the idea of working for single-payer they were told by MoveOn leaders that the organization was not doing that. And this took place while the Democrats were busy selling out women’s rights, immigrant rights to health care and abandoning the public option. Yet all these groups continued to work for the bill. They argued, in the end, that the health care bill had to be supported because it was not really about health care. It was about the viability of President Obama and the Democratic Party. This is why, in the end, we had to pass it.”
“The Democrats and the Republicans give the illusion that there are differences between them,” said Dr. Flowers. “This keeps the public divided. It weakens opposition. We fight over whether a Democrat will get elected or a Republican will get elected. We vote for the lesser evil, but meanwhile the policies the two parties enact are not significantly different. There were no Democrats willing to hold the line on single-payer. Not one. I don’t see this changing until we radically shift the balance of power by creating a larger and broader social movement.”
The corporate control of every aspect of American life is mirrored in the corporate control of health care. And there are no barriers to prevent corporate domination of every sector of our lives.
“We are at a crisis,” Flowers said. “Health care providers, particularly those in primary care, are finding it very difficult to sustain an independent practice. We are seeing greater and greater corporatization of our health care. Practices are being taken over by these large corporations. You have absolutely no voice when it comes to dealing with the insurance company. They tell you what your reimbursements will be. They make it incredibly difficult and complex to get reimbursed. The rules are arbitrary and change frequently.”
“This new legislation [passed earlier this year] does not change any of that,” she said. “It does not make it easier for doctors. It adds more administrative complexity. We are going to continue to have a shortage of doctors. As the new law rolls out they are giving waivers as the provisions kick in because corporations like McDonald’s say they can’t comply. Insurance companies such as WellPoint, UnitedHealth Group, Aetna, Cigna and Humana that were mandated to sell new policies to children with pre-existing conditions announced they were not going to do it. They said they were going to stop selling new policies to children. So they got waivers from the Obama administration allowing them to charge higher premiums. Health care costs are going to rise faster. The Center for Medicare and Medicaid Services estimated that after the legislation passed, our health care costs would rise more steeply than if we had done nothing. The Census Bureau reports that the number of uninsured in the U.S. jumped 10 percent to 51 million people in 2009. About 5.8 million were able to go on public programs, but a third of our population under the age of 65 was uninsured for some portion of 2009. The National Health Insurance Survey estimates that we now have 58 or 59 million uninsured. And the trend is toward underinsurance. These faulty insurance products leave people financially vulnerable if they have a serious accident or illness. They also have financial barriers to care. Co-pays and deductibles cause people to delay or avoid getting the care they need. And all these trends will worsen.”
In Manuel de Lope’s novel “The Wrong Blood,” set during the first rumblings that led to the Spanish Civil War, he writes “... nobody knew this at the time and those who had premonitions wouldn’t go so far as to believe them, because fear rejects what intuition accepts.”
But the signs are now so palpable that even fear is not working. Our worst premonitions are becoming reality. Our intuition has proved correct. We are reaching the breaking point. An explosion, unless we halt the increased pressure, seems inevitable. And what is left for those of us who cannot embrace the contaminants of violence? If the system shuts us out how can we influence it through nonviolent mechanisms of popular protest? How can we restore a civil society? How can we battle back against those who will mobilize hatred to cement into place an American fascism?
I do not know if we can win this battle. I suspect we cannot. But I do know that if we stop resisting, if we stop rebelling, something fundamental will die within us. As the corporate vise tightens, as the vast corporate system begins to break down with fossil fuel decline, extreme climate change and the expansion of global poverty, even mundane and ordinary acts to assert our common humanity and justice will be condemned as subversive.
It is time to think of resistance in a new way, something that is no longer carried out to reform a system but as an end in itself. African-Americans understood this during the long night of slavery. German opposition leaders understood it under the Nazis. Dissidents in the former Soviet Union knew this during the nightmare of communism. Resistance in these closed systems was local and often solitary. It was done with the understanding that evil must always be defied. The tiny acts of rebellion—day after day, month after month, year after year and decade after decade—exposed to everyone who witnessed them the heartlessness, cruelty and inhumanity of the oppressor. They were acts of truth and beauty. We must take to the street. We must jam as many wrenches into the corporate system as we can. We must not make it easy for them. But we also must no longer live in self-delusion. This is a battle that will outlive us. And if we fight, even with this tragic vision, we will lead lives worth living and keep alive another way of being.
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