Wall Street Journal Considers Zero Prosecutions of Banks Excessive
The department of Justice claims they are cracking down on bank fraud but they are mostly imposing fines and targeting small fish
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to this edition of the Bill Black report.
Now joining us is Bill Black. He’s an associate professor of economics at law at the University of Missouri-Kansas City. He’s also a white-collar criminologist and former financial regulator. He is the author of the book The Best Way to Rob a Bank Is to Own One.
Thanks for being back on The Real News, Bill.
BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
DESVARIEUX: So, Bill, what are you working on this week?
BLACK: So we have one prompted by this incredibly over-the-top Wall Street Journal op-ed that thundered away about the terrible prosecutions of JPMorgan and the other main banksters. And, of course, there have been zero prosecutions of any of the banksters whose frauds caused the crisis. So The Wall Street Journal now takes the position that zero prosecutions is too many. In the course of this, the columnist threatened that they would counterattack against the government if they dared to continue to even say bad things–of course, not indict, but just criticize JPMorgan Chase–and they specifically alluded to what was done to the IRS.
Now, this is not the current made-up scandal about the IRS. This is the 1997 made-up scandal about the IRS.
So I look at what was that all about, since they’re threatening to do the same thing to the banking regulatory agencies if they criticize JPMorgan and the other huge bankers.
And it turns out that these–this is a whole series of hearings that were carefully orchestrated as a complete partisan hit on the IRS, in which they paraded people who supposedly were afraid for their life to testify. Now, these were supposed whistleblowers from the IRS who had typically been fired and such, and supposedly they were afraid for their lives, and they were disguising them and such and so forth. And it was immensely successful as political theater, except that when they actually looked after the facts, the GAO, the actual investigators, they found in every single case that they couldn’t substantiate a single one of these charges.
So it was completely made up, alleged that the IRS was, you know, this demonic group, and actually literally used–literally demonized it. The Republicans literally trotted out their website on Halloween to call the IRS a bunch of demons and such. That’s crazy enough in itself, right? But this was in the peak of the Clinton-Gore administration, and their big thing was reinventing government, and one of the mantras of reinventing government is that government workers are not the problem; they’re the solution, they’re the good people. And Gore had just given a big speech about this four months earlier.
So what did the Clinton-Gore administration do when it was faced with these partisan attacks that were completely made up, utterly scurrilous, against these four IRS officials? Well, they threw them under the bus, of course, and not only joined in the criticism without checking the facts and without allowing the government employees to give their side of the story, but actually praised–President Clinton actually praised the Republicans for holding this completely slanderous hearing.
And then the Clinton administration, under the rubric of reinventing government, created a reform package which had 200 points in it, created by who? Bob Rubin and Larry Summers, the two top guys in Treasury. And what this did was deliberately gut the IRS’s enforcement authority against the biggest tax cheats in the world.
And the statistics from all of this are horrific, that it became the absolute norm that if people even refused to file a tax return, wealthy people refused to to file a tax return year after year after year, the most typical response from the IRS was nothing. So this is what they’re threatening to unleash on the banking regulatory agencies. Last time around, the Democrats not only rolled over, but joined in this absurdity and made life safe for the wealthiest tax cheats in the world.
And now the question is: what is the Obama administration going to do in response to this latest threat by the Republicans to kneecap the regulators?
DESVARIEUX: [inaud.] follow what the Obama administration intends to do and check this story.
Thanks so much for joining us, Bill.
BLACK: Thank you very much.
DESVARIEUX: And thank you for joining us on The Real News Network.
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