The government is a protection racket for the 1 percent

The financial crisis was clearly good for some people.

“In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

The government is a protection racket for the 1 percent
Bill Moyers and Michael Winship
Moyers & Company
April 21, 2014

The evidence of income inequality just keeps mounting. According to “Working for the Few,” a recent briefing paper from Oxfam, “In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

Our now infamous one percent own more than 35 percent of the nation’s wealth. Meanwhile, the bottom 40 percent of the country is in debt. Just this past Tuesday, the 15th of April — Tax Day — the AFL-CIO reported that last year the chief executive officers of 350 top American corporations were paid 331 times more money than the average US worker. Those executives made an average of $11.7 million dollars compared to the average worker who earned $35,239 dollars.

As that analysis circulated on Tax Day, the economic analyst Robert Reich reminded us that in addition to getting the largest percent of total national income in nearly a century, many in the one percent are paying a lower federal tax rate than a lot of people in the middle class. You may remember that an obliging Congress, of both parties, allows high rollers of finance the privilege of “carried interest,” a tax rate below that of their secretaries and clerks.

And at state and local levels, while the poorest fifth of Americans pay an average tax rate of over 11 percent, the richest one percent of the country pay — are you ready for this? — half that rate. Now, neither Nature nor Nature’s God drew up our tax codes; that’s the work of legislators — politicians — and it’s one way they have, as Chief Justice John Roberts might put it, of expressing gratitude to their donors: “Oh, Mr. Adelson, we so appreciate your generosity that we cut your estate taxes so you can give $8 billion as a tax-free payment to your heirs, even though down the road the public will have to put up $2.8 billion to compensate for the loss in tax revenue.”

All of which makes truly repugnant the argument, heard so often from courtiers of the rich, that inequality doesn’t matter. Of course it matters. Inequality is what has turned Washington into a protection racket for the one percent. It buys all those goodies from government: Tax breaks. Tax havens (which allow corporations and the rich to park their money in a no-tax zone). Loopholes. Favors like carried interest. And so on. As Paul Krugman writes in his New York Review of Books essay on Thomas Piketty’s Capital in the Twenty-First Century, “We now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action.”

Recently, researchers at Connecticut’s Trinity College ploughed through the data and concluded that the US Senate is responsive to the policy preferences of the rich, ignoring the poor. And now there’s that big study coming out in the fall from scholars at Princeton and Northwestern universities, based on data collected between 1981 and 2002. Their conclusion: “America’s claims to being a democratic society are seriously threatened… The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Instead, policy tends “to tilt towards the wishes of corporations and business and professional associations.”

Last month, Matea Gold of The Washington Post reported on a pair of political science graduate students who released a study confirming that money does equal access in Washington. Joshua Kalla and David Broockman drafted two form letters asking 191 members of Congress for a meeting to discuss a certain piece of legislation. One email said “active political donors” would be present; the second email said only that a group of “local constituents” would be at the meeting.

One guess as to which emails got the most response. Yes, more than five times as many legislators or their chiefs of staff offered to set up meetings with active donors than with local constituents. Why is it not corruption when the selling of access to our public officials upends the very core of representative government? When money talks and you have none, how can you believe in democracy?

Sad, that it’s come to this. The drift toward oligarchy that Thomas Piketty describes in his formidable new book on capital has become a mad dash. It will overrun us, unless we stop it.

Bankers are too big to jail, and Americans are too stupid to stop them

Why are these banksters free?

Because you simply can't mess with these guys. They are too big. They will destroy you if you mess with them.

There oughta be a law. But too many of the voters of America won't support it. They simply aren't well enough educated to know what's in their best interest. It kind of makes you wonder if our failing education system might not be, up to a point, at least, a tactic by the the elite to keep their power. And they even get the superficially liberal teachers union to buy into it. How? Small favors.

Members of the poor and middle classes of America admire the rich and powerful--no matter how they got their money and power.

Who's more greedy, the rich or the poor who vote to protect them? The right-wing poor think they're going to be rich, and they want to make sure they won't have to share with their current neighbors by paying taxes when they do get rich. They'd be smarter to support a flourishing middle, with the poor working their way up to the middle. That was the situation we had just a few decades ago.

(Note: part of the problem is the failure to vote by many low income citizens, and the tactics used by the rich to keep them from voting.)

See: Scientific study says we are an oligarchy

VIDEO: "The Untouchables"
VIDEO: A parody of Lanny Breuer's response is posted

Too Big to Jail
By David Cay Johnston
NEWSWEEK
April 16, 2014

Bankers behind the subprime collapse are lucky Congress and the White House refused to call in the one man who knows how to nail them.

When fraudulent banking nearly sank the global economy in 2008, one former government official knew exactly how to nail the crooks. And he'd already swooped in to clean up a similar mess.

More than two decades ago, during the savings and loan crisis, Bill Black exposed the Keating Five, senators who took big campaign contributions from the most infamous of the savings and loan executives and then tried to hide their crimes by stopping bank examiners from doing their job. The scandal ended the careers of three of those senators. One of them—John McCain—went on to run for president.

Black also helped prosecutors convict more than 3,000 crooked bankers, a third of them high-level executives. He also trained bank examiners and FBI agents in what to look for and showed prosecutors how to frame charges and present complicated evidence to juries in a compelling manner.

After that, Black, a lawyer, got a doctorate in criminology and developed a theory he calls "control fraud" to describe how corrupt bankers turn legitimate institutions into criminal enterprises. He devised techniques to help bank regulators quickly spot crooked banking practices, and rolled all this into a book,The Best Way to Rob a Bank Is to Own One.

With a track record like that, you might think Black would have been the first person President Barack Obama called when he took office five years ago as the economy was being gutted because of reckless and rapacious banking practices that plundered profits through subprime mortgages and devilish derivatives. A second Great Depression was stalking America, as the stock market was tanking and businesses small and large were hemorrhaging jobs.

The economy is still recovering from those cynical depredations, and many people are still wondering why no one has gone to jail for pushing us all to the brink of ruin.

But to this, day no one in the White House or the Justice Department, no one in the banking regulatory agencies, will return Black's calls. In 2012 he did get invited to brief Capitol Hill staffers on fraud by banks. He bought plane tickets to D.C. from Kansas City, Mo., where he teaches law and economics at the University of Missouri's law school there. But before the plane took off his phone rang. "I was told not to come," Black recalls. "The staff said they were afraid I would engage in too much bank bashing."

Federal officials say they have no need of Black's expertise because the FBI is diligently investigating crooked banks. They say that without providing any evidence that they have successfully completed any significant cases. Or are even doing much of anything.

In December 2011, after being buffeted by complaints that no one had gone to jail for nearly bankrupting the country, President Obama said on 60 Minutes, "Some of the most damaging behavior on Wall Street—in some cases some of the least ethical behavior on Wall Street—wasn't illegal." Black called me then, asking how the declaration, which he regarded as at best woefully uninformed, could get past the serious journalists who work on that show.

When Obama's explanation didn't quell the protests, the White House decided to pretend to flex its muscle. Attorney General Eric Holder announced in October 2012 that an interagency task force had generated 530 criminal charges for bank crimes involving more than $1 billion.... And then publicists at the Justice Department stonewalled reporters who asked for details, names and case numbers.



Black said then that Holder's boast was hooey—and said it again when the attorney general repeated the claim last year. And now the Justice Department's inspector general has issued a report that proves Black was right, that Holder and the Obama administration did nothing to prosecute those who racked in billions through illicit banking practices.

When the inspector general asked to see those 530 cases Holder claims to be so proud of, he saw "numerous significant errors and inaccuracies." The inspector general reported last month that "despite being aware of the serious flaws in these statistics," Holder and the Justice Department continued to cite them.

The report also notes that in 2009 Congress gave the FBI an additional $196 million to investigate mortgage fraud. However, the inspector general says, "the number of FBI agents investigating mortgage fraud as well as the number of pending investigations decreased" over the next two years.

Mortgage fraud became "a low priority, or not listed as a priority, for the FBI field offices we visited, including Baltimore, Los Angeles, Miami and New York," the report says. The extra money allotted to bust the perpetrators of the subprime meltdown was diverted elsewhere.

The Justice Department now admits it has brought only 107 criminal cases, not 530, and those misdeeds involved a paltry $95 million. Not one case involved any of the so-called "too big to fail" banks.

After a contrite Holder admitted while testifying before the Senate last year that he feared prosecuting the big banks would damage the economy further by impeding the recovery, some took to calling them the "too big to jail" banks. Black concurs.

He also says that it would have been easy to nail many of the "too big" players. He insists he could have landed big fish by the thousands instead of the few minnows the Obama administration so halfheartedly pursued.

What's Morality Got to Do With It?

The richly and luridly detailed report of the Financial Crisis Inquiry Commission, which Congress created and whose report it tossed unread into the round file, shows that fraud was open, deliberate and endemic in the financial world prior to the 2008 crisis.

The big questions: Why did Justice ignore those big fish? And did Obama and Holder lie to the American people, or were the misinformed?

A disturbing answer begins with an FBI announcement in 2004, years before the crisis. The nation's premier law enforcement agency said it had uncovered a growing problem with fraudulent mortgages and had taken on a partner to combat these crimes. That partner was the Mortgage Bankers Association, the trade association for banks that make such loans.

In announcing this partnership, the FBI said that—with help from its new partners—it would pursue two types of crimes. One fraud they would be chasing was borrowing money for a property the buyer could not afford in the hopes of quickly selling it at a higher price. The other was to living in a nicer house than the borrower could afford until foreclosure, which can take months or sometimes years.

Note that both of those types of fraud are directed at individuals, and there is no mention of fraud by banks. "The FBI accepted the mortgage bankers' view," Black says, "and explicitly rejected the fact that some banks were committing frauds against their customers and investors who bought fraudulent mortgages."

At the time the FBI partnered with the bankers to "investigate" mortgage fraud, the chief White House economic adviser was Gregory Mankiw, a Harvard economist on leave. At a 1993 conference on such frauds at the Brookings Institution, Mankiw had already declared that of course bankers steal from institutions when conditions are right. "Given the incentives that regulators set up, it would be irrational for operators of the savings and loans not to loot," he said.

Black calls that "Mankiw morality," and points out that high-level government officials have their own incentives to look the other way.

The Revolving Door Reward Black now commutes to Kansas City from suburban Minneapolis, where his wife of 33 years, June Carbone, an authority on family issues, holds an endowed chair at the University of Minnesota law school. He says the FBI and regulators can easily spot control frauds by scrutinizing disclosure statements sent to bank regulators and investors. The indicators: Extremely rapid growth of loans issued at above-average interest rates to borrowers with little or no equity and shrinking reserves for loans that go sour. The control fraud must eventually come to an end because bad loans will start souring. As insiders see the horizon race toward them, they press workers to issue loans faster and faster, with fewer and fewer limits so they can pocket as many fees, stock gains and bonuses as possible before the enterprise collapses. Another of Black's indicators of control fraud is inflated appraisals, which justify loaning more than a property is worth, sometimes several times more. Black notes that in the early 2000s more than 11,000 real estate appraisers signed petitions to federal bank regulators complaining that appraisers who gave honest estimates were blacklisted by big banks in favor of appraisers who overstated values. "How much more obvious an alarm did bank examiners and the FBI need?" Black asks, breaking into a smile. "But did anybody do anything? Nooooooo." Black says the FBI had witnesses galore eager to testify against fraudulent practices by the big banks, and this was confirmed in a January 2013 Frontline documentary called "The Untouchables". Correspondent Martin Smith asked Lanny Breuer, then Holder's chief of criminal prosecutions, why PBS was able to find many people who knew of bank crimes and were eager to testify, but Justice had not prosecuted a single high-level insider. Breuer replies that although he found Wall Street riven with "abominable greed," he lacked the proof beyond a reasonable doubt that "makes a criminal case." A parody of Breuer's response is posted at a website maintained by Black's colleagues at the University of Missouri-Kansas City law school. In it, Breuer says, "If I contact people who have firsthand knowledge of fraud, I am going to have to follow up! "Look at my suit," the parody voice continues, "if I prosecute the most powerful people in the world, what will be left of my career? Nothing. Nada.... I have a stellar career ahead of me if I use the revolving door in Washington properly. If I go after bankers, I'm going to end up like Bill Black, marginalized, an assistant professor at some small university somewhere.... " Black, a ruddy-faced man of 62, chuckled when I ask him about the parody video. It is true, he says, that he hasn't managed his career as shrewdly as he might have were he only looking to get rich. "I've created all sorts of obstacles to getting anyone to hire me or even listen to me," he says, smiling. "That's what happens in America these days when you just tell the truth and point out the obvious."

Pope Francis Takes on 'Unfettered Capitalism'

Pope Francis Takes on 'Unfettered Capitalism'
To the Point
KCRW
DEC 17, 2013
Host: Warren Olney

The leader of the Roman Catholic Church has called free-enterprise capitalism "a new tyranny" and called for new focus on serving the poor. We hear different views on what Pope Francis means about politics, economics and religion...
Pope Francis: God and Money (1:08PM)

The new Roman Catholic Pontiff shared his 77th birthday today with homeless people, one of whom brought his dog inside the Vatican. It was a visual example of Pope Francis' informality and modest lifestyle, in contrast to what he has called the "idolatry of money." In a recent statement he said, "It is vital that government leaders and financial leaders take heed and broaden their horizons, working to ensure that all citizens have dignified work, education and healthcare." This weekend, he denied right-wing accusations that he's a Marxist, while defending his criticism of capitalism and his focus on serving the poor. Is one of the world's most influential leaders pitting his church against the free market? Is he inserting religion into the realm of politics, or emphasizing the teachings of Jesus Christ, who warned against trying to serve both God and money?

Guests:


Jerry Z. Muller: Catholic University of America, Catholic University of America, Professor of History at Catholic University of America and author of The Mind and the Market: Capitalism in Western Thought

[Maura Larkins' comment: Mr. Muller looks like Albert Einstein, but he doesn't sound like Albert Einstein. Mr. Muller impressed me with his refusal to admit that unfettered capitalism was responsible for the global financial crisis. What are they teaching at Catholic University of America? How to ignore reality as one goes about accumulating wealth and power? I got the impression that Mr. Muller believes that Jesus would be an investment banker if he lived today, and would feel no guilt about the worldwide financial devastation caused by greed.]


Chris Lowney: Author of Pope Francis: Why He Leads the Way He Leads; one-time Jesuit seminarian who later worked as a managing director at the banking firm of JP Morgan
First Theme of Heroic Leadership: Self Awareness



Reza Aslan: University of California, Riverside, Professor of Creative Writing at the University of California-Riverside, founder of Aslan Media and member of the Council on Foreign Relations author of How to Win a Cosmic War: God, Globalization, and the End of the War on Terror, Tablet & Pen: Literary Landscapes from the Modern Middle East, No god but God: The Origins, Evolution, and Future of Islam (revised, updated edition for the tenth anniversary of 9/11) and Zealot: The Life and Times of Jesus of Nazareth; former contributing editor at the Daily Beast and Middle East analyst for public radio's Marketplace
http://en.wikipedia.org/wiki/Reza_Aslan


Mark Silk: Trinity College, Professor of Religion in Public Life at Trinity College in Hartford, Connecticut and Director of its Greenberg Center for the Study of Religion in Public Life; author of Unsecular Media: Making News of Religion in America and co-author of Making Capitalism Work, his blog, Spiritual Politics, is published by the Religion News Service
http://en.wikipedia.org/wiki/Mark_Silk


Links:

Limbaugh on Pope Francis' comments
Varney on Pope Francis
Silk's 'Unsecular Media: Making News of Religion in America'
Silk on Pope Francis v. the free marketeers
Lowney's 'Pope Francis: Why He Leads the Way He Leads'
Lowney on Pope Francis' 'radical views'
Muller's 'The Mind and the Market: Capitalism in Western Thought'
Aslan's 'Zealot: The Life and Times of Jesus of Nazareth'