Forgery. Perjury. Investor fraud. Bribery. Money laundering. Nothing speaks louder about the banks’ guilt than this evidence - nothing, that is, except the billions they’ve paid to settle the charges.
Whether it’s JPMorgan Chase settling bribery charges in Alabama, Wells Fargo settling charges of laundering drug-cartel money in Mexico, or the nation’s five largest banks buying their way out of widespread foreclosure fraud and tax evasion, never in history has so much evidence led to so little action. Investigators pinpointed the fraudulent activity of individual accountants in GE Capital’s settlement with the SEC, only to be dumbfounded to discover that no criminal indictments were handed down.
So it was nothing short of astonishing to hear the Secretary of the Treasury assert yesterday that no crimes were committed by America’s banks, saying that “most financial crises are caused by a mix of stupidity and greed and recklessness and risk-taking and hope” and adding “you can't legislate away stupidity and risk-taking and greed and recklessness.”
Geithner was doubling down on an assertion his boss made last December, when President 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.”
Deliberately or not, that sent a message to bankers that they could stop worrying about indictments - that is, if they ever had worried. Why would they? There’s been no investigation, no grilling, and no subpoenaing of bank executives’ emails or phone records.
Now the President’s really cracking down on Wall Street, we were told. He appointed New York State Attorney General Eric Schneiderman, who had been pursuing banks and resisting previous deals, to his previously lethargic mortgage fraud group.
“The mortgage fraud task force I announced in my State of the Union address retains its full authority to aggressively investigate the packaging and selling of risky mortgages that led to this crisis,” the President said on February 9. “Working closely with state attorneys general, we're going to keep at it until we hold those who broke the law fully accountable."
But then there were stories that the task force’s proposed staff hadn’t even been hired.
The Administration responded swiftly. Unnamed Justice Department employees joined Schneiderman’s press secretary in telling The Nation’s George Zolnick that the task force’s five co-chairs are in “constant communication” and “meet regularly.” Fifty attorneys and other employees were already working on the project, Zornick was told. (It was not made clear whether they were assigned to the task force full-time.)
Yesterday Zornick published a piece saying quoting former Democratic Rep. Brad Miller, an outspoken advocate for bank investigations, who made the explosive suggestion that, in Zornick’s words, “the working group was afraid of Wall Street.”
The real problem is this: As long as bankers know they won’t be prosecuted for committing crimes they’ll commit them again. Officials in the Justice Department and elsewhere privately express fears that it will be difficult to obtain convictions after so much time has passed, or in cases where intent is difficult to prove.
Comments like Mr. Geithner’s only add to the perception that bankers have a free pass to commit crimes without fear of prosecution. That’s not just an injustice. It’s also a threat to our economic security.