It threatens all their dogma for a government programm to work and be strongly supported by the public.

Notice that while the anti-fraud community was unanimously up in arms warning against passage of the JOBS Act there was utter silence from AG Holder — our chief law enforcement officer. We will know that Obama is serious about prosecuting the elite financial frauds when he makes Patrick Fitzgerald, the U.S. Atty (ND IL – based in Chicago), the AG. Don’t hold your breath.

Call out individual senior regulators. Get on tem to act and create a drumbeat in which you stay on them. We need a clock that counts up the days (now, years) without a prosecution of even of the elite lending frauds that made the liar’s loans that drove this crisis. Follow-up on my letter to U.S. Attorney Wagner (E.D., CA — Sacramento, CA). He responded to a Huff Po journalist that it didn’t make any sense for a CEO to loot a company. CEOs cannot be frauds in his world. We convict scores of CEOs for looting “their” S&Ls, but he thinks this was the first “virgin crisis” (conceived without “sin”). It is no surprise that his distict is one of the epicenters of mortgage fraud.

Yes, the programs that drive the right crazy are the government efforts that succeed. Failed programs are no challenge to their paradigm, indeed, they are useful evidence to be cited. But programs that work, that reduce inequality and serve as automatic stabilizers that speed the recovery from recession — these are programs they detest and target for destruction.

It ‘s worse than that. These elite frauds are the leading destroyers of wealth and employment in the modern era. There is no “trickle down” — there is a “lahar” that devastates the folks that live below the summit when the volcano erupts. The lahar sweeps away their jobs, their pensions, and their homes. June can tell you about what it does to families.

We should be so lucky that they are “do nothings.” They have actively made things worse with the JOBS Act. We (the leading white collar criminologists), the SEC, the CFTC, and NASAA (the state securities supervisors) all warned that it was the most fraud-friendly bill since the Commodities Futures Modernization Act of 2000. I did a recent piece explaining that every disastrous financial deregulation measure since the Garn-St Germain Act of 1982 passed with enormous bipartisan support. The “kumbaya” moments when the parties join to do the bidding of finance (their leading contributors) are always cynical exercises that produce crises. Jamie is absolutely spot on to identify finance as the heart of the problem of inequality and recurrent, intensifying financial crises.

“It is not necessary to hope in order to persevere.” (Some historians, being scholars, doubt the attribution of this exact motto to the House of Orange, but even they concede that what they see as a more precise transalation of the motto had the same meaning as the quotation above.)

We (a group associated largely with UMKC economics and Modern Monetary Theory (MMT)) were amazed by our recent trip to Rimini, Italy. Over 2100 regular Italians paid to bring us over and sat for 2 1/2 days on folding chairs in a basketball stadium to participate in economics discussions. Two takeaways relevant to your new book: they were distressed by surging inequality and they were most grateful that we took on “There is no alternative” (TINA) and said there were other, better ways to respond to the Great Recession than austerity.

Marshall Auerback and I have been emphasizing for years that Spain should give us all the willies. It is by far the most opaque European nation with regard to its financial sector. The reported numbers (e.g., for bank losses and bank capital) suggest that there is no serious problem, but the numbers on unemployment are the worst in Europe. They have made hiding losses on real estate loans an art form.

Jamie, have you seen James Stewart’s endorsement of Paul Ryan’s budget plan as a serious basis for resolving the budget “crisis”? Ryan’s budget takes the already grossly extreme inequality and supercharges it. Ryan is an Ayn Rand devotee whose actions are easy to understand, but what is up with the Stewarts of the world that they treat inequality as a best a tertiary concern?

Bill Black

FYI, we all “know” that ACORN caused the financial crisis by extorting the oh-so-reluctant-to-make-bad-loans banks to make bad loans. Except, as I read last night, a Federal Reserve hearing on HOEPA in 2000, ACORN’s actual testimony was:

I’m Linnie Cobb, and I am a member of Oakland

ACORN. And I’m here today on behalf of the California

ACORN. We are a community organization of low- and

moderate-income people, and we are coming together to make

changes in our neighborhoods in Oakland, San Jose,

Sacramento and Los Angeles.

We have been working hard to keep our

neighborhoods safe from predatory lenders, or subprime

mortgage lenders who prey on our communities by convincing

234

residents to sign up for bad loans, which result in our

neighbors losing their homes.

We call on the Federal Reserve to take action

against predatory lenders that are destroying our dreams

of home ownership. At ACORN, our knowledge of predatory

lending comes directly from the community. We organize our

neighborhoods house by house, and block by block.

Unfortunately, we have found far too many of our neighbors

who have become victims of predatory lending practices.

You know I bet in your direction. They have some time to find their token Wall Street felon who actually played a material role in causing the crisis.

Eli,

The perfect movie allusion. Well done.

Billionaires don’t even need psychologists to boost their self-esteem — the financial press will write hagiography as SOP.

Hi Tom! Great book.

Best,
Bill

I listened to the Tea Party co-authors of the book released on Valentine’s Day. Both of them emphasized that it was Rick Santelli’s rant against the bailout that prompted their involvement in the Tea Party. That’s revealing. Bush proposed and passed TARP, the bailout of the banks and bankers that caused the crisis. TARP has very little good that can be said about it. The stimulus bill was designed and passed by Obama and is the reason why the U.S. has a mild recovery while the Eurozone is going into recession. TARP largely aided the perpetrators. Stimulus largely aided the victims. Yet, it was stimulus that enraged Santelli and the Tea Party.

Ayn Rand essentially defined away the looters who cause our recurrent, intensifying financial crises. She defines fraud as a physical assault that the law must prohibit and she says the role of government is to punish crime, but she doesn’t offer anyway of preventing elites from gaining wealth and dominant political power through fraud. She simply claims that these billionaires do not gain a true psychological triumph.

“The Metaphysical Versus the Man-Made,”
Philosophy: Who Needs It, 32
link to this entry

If some men attempt to survive by means of brute force or fraud, by looting, robbing, cheating or enslaving the men who produce, it still remains true that their survival is made possible only by their victims, only by the men who choose to think and to produce the goods which they, the looters, are seizing. Such looters are parasites incapable of survival, who exist by destroying those who are capable, those who are pursuing a course of action proper to man.
The men who attempt to survive, not by means of reason, but by means of force, are attempting to survive by the method of animals. But just as animals would not be able to survive by attempting the method of plants, by rejecting locomotion and waiting for the soil to feed them—so men cannot survive by attempting the method of animals, by rejecting reason and counting on productive men to serve as their prey. Such looters may achieve their goals for the range of a moment, at the price of destruction: the destruction of their victims and their own. As evidence, I offer you any criminal or any dictatorship.

I have worked my way to the end, so I will sign off now with renewed thanks to all of you and David, Bev, and Jane for making this possible.

Best,
Bill

Elizabeth Warren was one of the folks who got it right and according to the most recent poll she is in a very tough race.

No. Communism was also exceptionally criminogenic.

I agree that fines are typically useless against a financial firm. The federal banking and S&L regulators jointly terminated the rule and replaced it with a (deliberately) unenforceable “guideline.” I believe that the guideline remains in place. (There have been some statutory changes and the Fed, finally, used its authority on July 14, 2008 to adopt a rule under HOEPA that essentially forbade liar’s loans.) The “Reinventing Government” movement was hostile to regulation. Banking regulators (I personally witnessed this) were instructed to refer to (and think of) banks as their “clients.”

I don’t tell people who to vote for. I can tell you that I find Obama to be a huge disappointment and that I fear what would happen on a vast range of social issues if any of the current Republican candidates for their party’s nomination were elected President. (Rights for women, access to contraception, gay rights, judicial appointments, etc.) I understand folks who refuse to vote for what they see as the lesser of two evils. I see periods in which America has made astonishing gains, and I have not given up on the political process. I understand that others have, and I understand some of the reasons why. To me, hopelessness and despair are self-defeating.