The president has adopted the language of the 99%, and it's paying off for him. He's surged from a position slightly behind Mitt Romney in last month's CNN polling to a 52%-45% lead against the Republican this week. While other factors were involved, his new rhetoric about income inequality and forcing everybody to "play by the same rules" resonated especially well with voters who have seen their government enforce one rule of conduct for Wall Street and another for the rest of us.
Unfortunately, his Administration hasn't backed up that rhetoric with action. It has steadfastly refused to investigate and prosecute the bank crimes who brought this economy to its knees. So have the chief law enforcement officials for most states. Instead they're trying to cut sweetheart deals that would let crooked bankers go with a slap on the wrist.
People are getting fed up. Grassroots outrage against the lack of prosecutions is giving rise to organized citizen action who are protesting these injustices under a "fair settlement" banner. Will this public backlash become strong enough to finally force national and state governments to enforce the law and protect the economy?
The Excuse Makers
If excuses were investigations there'd be justice for everyone. But only a handful of state Attorneys General, led by New York's Eric Schneiderman, have been willing to stand up to big bankers and their friends in high places. The president himself has been serving as Excuse Maker-in-Chief, as when he told 60 Minutes that "Some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn't illegal."
That's right, of course, in a literal "what the meaning of 'is' is" sense... Some of the damaging behavior wasn't illegal. And some car accidents aren't caused by drunk drivers. But many, if not most of them, are. If a country road was littered with whisky bottles and corpses, and the county sheriff hadn't booked anyone for a DUI in three years, people would be asking why he's not doing his job.
That's what many people are asking about this president and his Justice Department.
You can't set your foot down around this place without stepping in excuses. Another Administration official told a bank-friendly reporter at the Wall Street Journal that it's too difficult to win convictions for crimes that are as as complicated as banking fraud. "Our job is too hard," the Justice Department seems to be saying.
But it wasn't too hard in the 1980s, when a fairly bank-friendly president named Ronald Reagan was running the Federal government. More than 1,000 bankers were convicted in the Savings & Loan scandal for crimes that were very similar to the ones that led to the 2008 financial crisis. A man named Bill Black led the investigations that resulted in those convictions, and the Obama Justice Department hasn't even asked for his advice.
It isn't hard for juries to understand lying, either, and stock fraud is usually a case of somebody lying to someone else. There seem to be some pretty clear-cut cases of it lying around waiting to be prosecuted, very possibly including some at my old employer AIG.
And it isn't hard to understand widespread and organized rings designed to forge court documents, commit perjury, and evade state taxes. And yet that's exactly what big banks did in order to commit massive foreclosure fraud on US homeowners.
People who are familiar with Wall Street fraud have come to believe that the Obama Justice Department just doesn't want to investigate and prosecute bankers.It's gone to great lengths to avoid prosecuting them. In fact, that's become so clear to Steve Linnick, Inspector General of the Federal Housing Finance Agency, that he's stopped referring potential criminal cases to the Justice Department at all. Instead he's started sending them to Mr. Schneiderman, who has broad power to bring prosecute financial wrongdoing under a 1927 New York law called the Martin Act.
There is one Attorney General for each of the fifty states. Each of them has the ability to prosecute the crimes committed by banks in their own jurisdictions. They can also cooperate with Mr. Schneiderman, whose authority under the Martin Act extends across state lines. That power gives state AGs another tool for protecting their state's residents from fraud and bringing criminal bankers to justice.
And yet, only a handful of brave Attorneys General are willing to enforce the law against bankers. In one way or another, Schneiderman's battle is also being waged by Martha Coakley in Massachusetts, Kamala Harris of California, Beau Biden of Delaware, Jack Conway of Kentucky, and Catherine Cortez Masto of Nevada.
That leaves forty-two other states whose AGs are refusing to enforce the law. And the Obama Administration isn't content to just let bad bankers go free to commit more crimes. It's also pressuring the AGs to accept a cushy deal with the banks that would leave crimes unpunished, homeowners unsafe, and bank fraud victims uncompensated.