"The Fed's
alphabet soup of cash-pumping....actions were so reckless that even the
outrageous anecdotes to which they gave rise can scarcely capture the lunacy
rampant in the Eccles Building. Thus, the nation's central bank actually
guaranteed upward of $200 million that had been borrowed by two New York
housewives to start a new business [in November 2008 - FJS]. Amazingly, the
purpose was to enable this intrepid duo to purchase large volumes of
securitized auto loans about which they knew nothing."
-David A. Stockman, The Great Deformation: The Corruption of Capitalism in
America, to be published in April 2013.
Recent attention devoted to banksters by
U.S. senators is noteworthy. Not definitive by any means, but the media
attention to what could have been ignored may foreshadow a comeuppance.
Members of the Senate Committee on Banking, Housing, and Urban Development did
not let Federal Reserve Chairman Ben S. Bernanke escape
"Too-Big-to-Jail" questions at a February 26, 2013 hearing. This is
alluded to in "Crony
Bureaucrat" and "Eating
the Fed for Lunch." Some might think the chairman's
elliptical answers an attempt to duck and cover but it is more probable his
mind simply drifted off, his wafting countenance familiar to travelers in the
Sahara beaten by a mind-numbing sun while draped on the back of an anemic camel
famished upon the outskirts of Chenachene.
However, it was not only
Simple Ben. The parade of government officials previously exempt from crony
questioning continues. Attorney General Eric Holder was put on the spot before
the Senate Judiciary Committee on March 6, 2013:
SENATOR CHARLES GRASSLEY (R-IA): "In the case of bank prosecution.
I'm concerned we have a mentality of 'too big to jail' in the financial sector,
spreading from fraud cases to terrorist financing to money laundering cases. I
would cite HSBC. I think we are on a slippery slope and that's background for
this question. I don't have recollection of DOJ prosecuting any high-profile
financial criminal convictions in either companies or
individuals...."
ATTORNEY GENERAL ERIC HOLDER: "....the concern that you have
raised is one that I, frankly, share. I'm not talking about HSBC here, that
would be inappropriate. But I am concerned that the size of some of these
institutions becomes so large that it does become difficult for us to prosecute
them when we are hit with indications that if we do prosecute - if we do bring
a criminal charge - it will have a negative impact on the national economy,
perhaps even the world economy. I think that is a function of the fact that
some of these institutions have become too large. Again, I'm not talking about
HSBC, this is more of a general comment. I think it has an inhibiting
influence, impact on our ability to bring resolutions that I think would be
more appropriate. I think that's something that we - you all [Congress] - need
to consider. The concern that you raised is actually one that I share."
The story of the Grassley-Holder discussion was published in the New York
Times under the headline: "Big Banks May be Getting Too Big to
Jail." The Times lectured the Attorney General: "Apparently,
Mr. Holder didn't get the memo. As you can imagine, both the left and the right
made hay of Mr. Holder's statement [one issue they agree upon, one issue they
may do something about - FJS], using it as a damning explanation for the lack
of prosecutions on Wall Street."
Holder's fear of big-bank failure is without merit. "The
Professor Who Did NOT Save the World" discussed some of what
the world may finally be willing to recognize.
David
A. Stockman's The Great Deformation: The Corruption of Capitalism in America
will be published in April. If public opinion is now tending to acknowledge
that it fell for the Hank Paulson-Ben Bernanke, phony, financial-terrorism
ploy, it will be timely to throw the book at the culprits. The AIG holding
company failure never jeopardized a single insurance policy. General Electric's
panic - more exactly, the panic instilled in (and by) Simple Ben and Treasury
Secretary Hank Paulson - was for the benefit of CEO Jeff Immelt.
Too-Big-to-Fail banks were not only loaded with bad assets, but also enough
good assets for the equity and bondholders to absorb losses.
The top, front-page headlines in the Friday, March 15, 2013, Financial Times
("J.P. Morgan Under Fire for London Whale Saga") and Wall Street
Journal ("Senate Slams Bank on 'Whale'") are encouraging. As was
the FT report that [Senator John] McCain "accused the bank of lying
when it told Senate investigators it had been fully transparent with
regulators." Both stories were referring to a "301-page report by the
Senate's Permanent Subcommittee on Investigations." And: "The panel
has the discretion to make referrals for criminal proceedings to the Justice
Department."
The Journal also published (on page
5) a story about a speech Dallas Federal Reserve President Richard Fisher will
deliver (not the media's normal practice) on Saturday, March 16, 2013,
noting it is unusual for a Fed official to address a partisan political
audience (the Conservative Political Action Conference). Fisher will be
"pitching his proposal to break up the biggest U.S. banks.... His presence
at the conference is the latest evidence of big-bank bashing's broad political
appeal."
As Stockman implicitly acknowledges in the
following, Ben S. Bernanke has already steered us off the financial cliff; all
that's left is to discover how much it hurts when we hit the ground. Still,
even if the banksters go on, it is imperative to rid us of Bernanke and his
fellow theorists:
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