"Some people," my mother used to say, "are just no damned good." This was from somebody who rarely used bad language around us, and it was usually said with an air of bemused resignation rather than white-hot rage. I've always leaned a little more toward the possibility of redemption myself. But the more I learn about Wall Street, the more I see the wisdom in Mom's words.
The latest lawsuit against Morgan Stanley raises the question again: Are a whole lot of Wall Street executives "just no damned good"? The evidence is overwhelming: They cheated. They lied. They used racial discrimination to make a fast buck at the expense of African Americans, ripped off their own investors (including working people's pension funds), and then took a huge bailout from the American people.
Then, once they were safely ensconced back on their plutocratic perch and raking in more unearned wealth, they quickly deployed huge amounts of that money -- to subvert our political process. That way they can loosen regulations on their own industry while forcing us to accept an austerity program like the "Simpson-Bowles" plan, which imposes even more hardship on the majority while offering even more tax breaks to people like Morgan Stanley's executives.
Did we mention that Erskine Bowles, co-author of that plan, is on the Board of Directors of Morgan Stanley?
"Pleased to meet you, Hope you guess my name ..."
If there's one area where our country prides itself on its moral progress, it's in our battle to eliminate racism and end the ruthless exploitation of racial minorities. Pride, meet Morgan Stanley.
The lawsuit was filed on behalf of five Detroit-area homeowners and Michigan Legal Services in the U.S. District Court in New York. It was filed by the American Civil Liberties Union, the ACLU of Michigan, the National Consumer Law Center, and a law firm.
This is the first time ripped-off borrowers are suing an investment bank directly, rather than the subprime lender who sold their loans to that bank. That's because, according to the suit, Morgan Stanley put up the money for these loans, then demanded that subprime lender New Century write a lot of high-risk loans that it knew borrowers would be unable to repay.
In other words: New Century was the front man, not the boss.
"But what's puzzling you is the nature of my game ..."
Why would Morgan Stanley do such a thing? That's easy. They wanted New Century to put as much money on the books as it could, as quickly as it could, so that it could bundle up these mortgages and sell them to investors with lies and deception.
Morgan Stanley defrauded homeowners by concealing the true nature of these loans and knowingly selling them a bad product. Then it defrauded investors by packaging up these phony assets and selling them as if they were worth their weight in plutonium.
This issue has come up before with Morgan Stanley, most notably in a settlement that the investment bank paid in order to end an investigation by Massachusetts Attorney General Martha Coakley into precisely the same kind of racial predation in that state.
"Just as every cop is a criminal, and all the sinners saints ..."
That Massachusetts settlement is pretty damning evidence against Morgan Stanley. They'll have their defenders, of course, but the bulk of their defense argument is likely to rest of the time-worn (and often false) argument that their behavior may have been immoral but was not illegal.