Friday, October 28, 2011

Crusading state-level Attorneys General seeking to take down corrupt financial industry - Maddow

This week a major focus on Rachel Maddow's show is the corrupt financial industry that nearly killed the U.S. economy.  The deed was enabled by corrupt business practices that were in turn enabled by relaxed regulatory regime.  Largely speaking, even though many companies in the financial industry died, bankrupted, merged, etc, the people who committed the practices are often still employed in the same financial industry, and the regulatory system around them has changed very little.

As Maddow recounts, earlier in this decade a crusading NY Attorney General, Elliot Spitzer, took down several corrupt NYC financial industry titans.  That was before he went on to a prostitute scandal and a stint as a CNN host.  In her coverage this week she focused on two Attorneys General, Eric Schneiderman from New York and Beau Biden from Delaware.   One take-away from this is that Change can happen when bright people pursue a course of correcting wrongs, and use their position of power to enable change in the world.

Of course there is positive change and negative change.  Someone in a position of power can create a corrupt system, or work to remove corruption.  It depends on how they apply the power their position gives them.

These people who are in public service - ideally their job is serving the better interests of all.  Consider the Attorney General job.  It's about seeing justice is served, lawbreakers are found and punished, the law is applied in a just manner, etc.

But history is replete with people who used positions of power to instead feather their own nests, or work with cronies to feather each others nests, or create a regime of dictatorial control, or .. etc .. on and on ..  There have been plenty of Attorneys General who used their positions of power to hide corruption, to stonewall investigations, etc.  Again, it's a matter of how each individual uses their time in the position of power.

During the interviews below, Maddow asked Beau Biden (son of Vice President Biden) why these investigations are happening at the state level rather than the federal level.  Interesting question, and he answered that while there is a lot of state-level investigation, that it seems the state level investigators are cooperating, there is also federal level investigations.

 

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This starts a little slow with analysis of Republican advertisements, the poor pitiful state of Democratic advertisements .. etc ..  The segue point is a Democratic ad that really hits hard on the mortgage crisis corruption.   Almost half of Arizona home-owners are "under water" with foreclosures "everywhere" but Romney's message to Arizona is that he wants the mortgage crisis to "hit bottom" and that home-owners are on their own.

In other words - the banks (e.g. the rich 1%) got bailed out, while we the 99% get foreclosed.

Would it work to brush the corruption under the rug and ignore it?  The business-friendly Republicans want to brush this aside, but does this mean they think "business-friendly" means "corruption-friendly"?

A lot of the base raw feelings driving the Occupy protests is this exact issue.  Rampant financial corruption and corrupt practices.  Who is going to step up to the plate to correct this?  A minute ago I suggested that people in positions of political power have a choice, to use their power for the good of all, or to use their power to protect corrupt practices keeping the game going.

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Later in the show they had Glenn Greenwald on to shill for his latest book, but this weaves into the same narrative.  This book, With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful, "lays bare the mechanisms that have come to shield the elite from accountability" and "shows how the media, both political parties, and the courts have abetted a process that has produced torture, war crimes, domestic spying, and financial fraud".

The book has a chapter titled - Too Big To Jail - great meme.

Basically, he was there to talk about officially sanctioned corruption and the general pattern that the rich get away with things we little people would be in jail over.

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In this segment Maddow shows, with numbers charted on a graph, the effect of the system.  Note that Greenwald identified a tipping point 40 years ago when Richard Nixon got pardoned, and by being pardoned started this "Too Big To Jail" precedent that's been used to let others get off with little or no punishment for misdeeds.

Here the graph shows how, upon the election of Ronald Reagan, the economic well-being of the 99% and 1% began to diverge.  The Rich got Richer far faster than the rest of us, creating an enormous gap in financial well-being.  Reagan did a lot to remove the regulatory system that had kept the financial system in check, keeping corruption out of finance.  One thing that enabled was for the rich to get richer, and it enabled the rampant corruption.

Oh, and this more-or-less proves how bogus were the "Trickle Down Economics" of the Reagan era.  We see right here that there's no trickle-down.

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This is the segment where she talks about Elliot Spitzer in the period he was the crusading New York Attorney General, the role now held by Eric Schneiderman above.  The segment starts with a quote from the Chamber of Commerce complaining about Spitzers effectiveness.  From the Chamber of Commerce perspective we can imagine they saw Spitzer as a threat, but that just fits the meme where "business-friendly" really means "corruption-friendly" doesn't it?

Thanks to Spitzer, Wall Street was being "perp walked" for stuff they used to routinely get away with.

Sure, investments are not a sure thing and investors should certainly know this.  THe one thing investors deserve is honest advice.  Instead what they got was crap self serving advice that actively misled investors to investing in crap.

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Immediately after the prior segment, we have Beau Biden (VP Biden's son) on to talk about what Delaware is doing.  Where Delaware enters the picture is jurisdiction.  Where Delaware is the preferred state to register corporations, those corporations are subject to accountability by Delaware's judicial system.

Beau Biden as the Delaware Attorney General has just launched a lawsuit against the entire mortgage industry.

The allegation is that in the mid 90's the banks privatized regulation of mortgage notes, so that mortgages could be securitized so that they can be traded on the open market.  A result of the securitization was that it's now nigh-on-impossible to determine who actually owns a given house, because the mortgage originator securitizes the mortgage to sell the mortgage securities on the market.