The attached CNN article describes in some detail the legal actions that Federal financial enforcement agencies are now pursuing against 17 of the largest banks on Wall Street for crimes and violations that contributed to the financial meltdown of 2008. I won't bother describing the allegations in detail - you can read the article if you're interested - but they boil down to misrepresentation and insider-trading. Although most Americans aren't this familiar with finance policies, insider trading isn't just some "evil thing monster banks do," it is a Federal crime - the same Federal crime Bernie Madoff, Martha Stewart, and the various EnRon executives went to prison for. Essentially, sellers of stocks and other financial assets are required to disclose the accurate worth of said assets the same way someone selling a house is required to disclose known structural integrity failures, but the penalties for misrepresenting the value of financial assets are far greater because sellers often hold dual roles - executive AND large stockholder in same corporation - and are prone to significant conflict of interest. The enforcement agencies are alleging the banks knew that the mortgages that the (now long-gone) mortgage brokers like Countrywide sold them were not worth what they were advertised as, yet they turned around and sold these mortgages to various investors claiming they are worth what the brokers said. There are also some allegations of not giving property owners the variety of options they were legally entitled to in 2010 during the foreclosure craze - known as "robo-signing" - but these will be a drop in the bucket compared to the insider trading allegations.
The obvious first reaction is "it's about damn time these banks faced some sort of accountability", but the political implications of this are far greater, and in my opinion this development does not go remotely far enough. The enforcement agencies answer directly to the President of the United States, often bypassing even the Department of the Treasury, so their sudden decision to actually do their jobs and enforce the law by prosecuting the fraudulent banks on Wall Street is a colossal change of policy for the White House. 3 years ago, the current President - then a Senator - took a day off from his own electoral campaign to vote in favor of a massive bailout bill that gave $1.4 Trillion to these same banks over a crisis brought about by the same crimes they are now being prosecuted for. As President, he then followed this up with some halfass attempts at new, more restrictive banking policies, citing the age-old myth that "free market failure" caused the crisis. Now, after 3 years and 2 elections that saw scores of politicians aligned with the interests of megabanks unceremoniously fired by voters and those proposing to audit and censure the Federal agencies swell in numbers, the Federal agencies and their boss the President have suddenly discovered that the banks committed a string of felonies to bring about this mess and can be prosecuted for it? This is a sick joke. The idea that the enforcement agencies didn't know what the banks were up to in 2008 should not seem credible to anyone over the age of 12, and in all honesty it would not excuse the agencies even if it were credible. If a bureaucracy charged with monitoring banks honestly did not understand what the banks were doing in 2008 - every member of said bureaucracy ought to be stripped of any professional licensure, handed a broom or shovel, and sent to contribute to the recovery by cleaning freeways; they've demonstrated that is all they are qualified for. This is a moot point in any case, because significant probes into the work of the Federal Reserve and other agencies launched by unlikely political allies Bernie Sanders and Ron Paul have already revealed that the agencies were well aware of the banks' misconduct and at best turned a blind eye to it; although I would not be surprised to find out that high-ranking officials were in collusion with the banks and profitted off their endeavors.
So, let's try to sum up what really happened. A sleazy pack of Wall Street CEOs committed strings of felonies openly in front of the Federal agencies charged with enforcing the policies that made their actions illegal and plausibly with said agencies' collusion, and when this string of felonies brought about a global economic meltdown, the politicians charged with overseeing the regulatory agencies gave these felons $1.4 Trillion in public money, and tried to pretend to fix the problem with new "preventive" laws - new laws for the banks to break and the agencies not to enforce. Why is any American surprised that these Wall Street tycoons walk around waving their dicks and feeling invincible while the world burns as a result of their antics?
The agencies have just admitted that all we had to do was prosecute the banks back in 2008 as they'd already committed felonies - and the deterrence effect of sending a few dozen more finance executives to join Madoff and Skilling in the Federal penetentiary for 2 or 3 decades would be all the prevention of another crisis we'd ever need. No need for any new laws, and certainly no need to reward these felons with a bailout - but don't get me started on that. Now, however, after 3 years of the worst economic swamp in almost a century, this alone is necessary but not sufficient. Congress must launch an independent investigation into the work of the Federal agencies and the Bush Jr. Administration to determine how much they knew of (and colluded with) the criminal activities of these banks, and pursue grand jury indictments against anyone that took bribes or just plain neglected to enforce the law. Otherwise, feeling threatened by the political climate, the agencies will simply use their old friends on Wall Street as scapegoats for the endeavors they undertook together, and in another decade when things calm down embark on a similar escapade with new banks knowing that they - the bureaucrats - will not be held accountable. The first people that have to be effectively deterred from breaking the law are those charged with enforcing it, otherwise they become nothing more than thugs for the highest-paying criminals they are supposed to bring to justice. This has already happened as I've described here, and in 2012, I urge Americans to strongly consider in their electoral behavior the stances of politicians on holding these bureaucrats accountable to avoid it happening again.
