Satisfied With Bernie

by digby

Where do you suppose Democratic voters got the ridiculous idea that the new administration was going to take on the malefactors of great wealth if they got elected? And why do you suppose they aren’t enthusiastic about the Democratic majority right now?

James Lieber in the Village Voice has written a piece that I believe goes some way to explain it, called: “We’ve Bailed out the Banks. When Do We Go After the Crooks Behind our Financial Collapse?”

When Barack Obama donned the crusader’s mantle during the 2008 presidential campaign, his Web-savvy campaign team created KeatingEconomics.com and pushed it on millions of voters. The main video showed the Ichabod Crane–like Charles Keating—the wealthy, politically connected poster child of the ’80s savings-and-loan scandal—in handcuffs. The Obama video portrayed John McCain as Keating’s stooge and likened the S&L crash to the 2008 Wall Street meltdown, except that the current crisis is global and its bad guys bigger and badder. Today’s corporate villains were flashed on the screen, among them AIG, Bear Stearns, Lehman Brothers, Fannie Mae, and Freddie Mac. The opening narrator was Bill Black, a Ph.D. criminologist and lead lawyer at the Office of Thrift Supervision, who helped steer the brilliant federal effort that cleaned up the S&L industry and won more than 1,000 felony convictions of senior insiders while recovering millions of their ill-gotten dollars. Those watching the compelling attack ad (still online) had every reason to believe that Obama’s approach would be just as hard-edged, and that felon-busting G-men would rout the crooks and recover our money. This was not to be. As it stands now, there is only one federal prosecution related to the credit crash and bailout cycle, and it was begun by the Bush administration’s Justice Department in June 2008.

Financial reform was what the Obama campaign ran on during the later part of the campaign. Here’s the video, if you have forgotten what they said about McCain and the need for accountability and regulation:

Obama whipped for the TARP before he was elected, and that set off alarm bells. But I think a lot of people assumed that was an emergency measure and that upon his election, he would be listening to people like Bill Black and doing something serious about the reckless, illegal scamming that had gone on on Wall Street and the banks. Obviously, that hasn’t happened.

Lieber’s article needs to be read in full to understand just how heinous it is that these people aren’t even suffering social embarrassment for their crimes. But the political problem is made clear by his conclusion:

Washington’s soft-core approach to the epic financial fraud that caused the crash remains hard to understand. As Bill Black says: “When you don’t prosecute, things don’t get better.”

They’re not getting better or safer. Credit is tight as a tick—especially for consumers. The financial industry is expanding its use of new and exceedingly complex derivatives. The mortgage market, the source of the raw material for mayhem, remains unchecked. The FBI said this summer that mortgage fraud is “rampant” and growing. Suspicious-activity reports (known as SARS) rose from 47,000 in fiscal 2007 to 63,000 in fiscal 2008, which ended last September at the height of the crisis and its publicity, and now such reports are on schedule to exceed 70,000 for fiscal 2009. A growing source of exploitation involves reverse mortgages marketed to the elderly.

People want justice. They’ve lost savings, homes (or the value of homes), jobs, and retirements. Foreclosures continue to rise. People can’t believe that the mega-grifters who pulled off mortgage, securitization, and derivative frauds walk the streets with lined pockets. And the venal “experts” who issued bogus ratings that deodorized subprime cesspools should be in the dock. But it almost seems as if Bernie Madoff’s 150-year sentence for a scheme that had nothing to do with causing Wall Street’s meltdown is supposed to cover all the crooks, and that we’re supposed to be satisfied.

Having a “D” after your name no longer stands against the charge of working for the benefit of the financial elites. And one great way to change that would be for the administration to hold some of these people accountable. Instead, they and their spokespeople are all bending over backwards to portray most of these scofflaws as the most valuable people in society who can’t even be asked to take a cut in their gluttonous bonuses during the crisis.

Don’t be surprised to see the Republican presidential candidate of 2012 produce an attack video very much like the one that the Obama administration put together on McCain. And the way things are going, they’ll have plenty of material.

Update: A reader sent this along about David Plouffe’s new book:

Plouffe writes that he green-lighted a documentary about Senator McCain’s association with Charles Keating during the savings and loan scandal of the 1980s. Obama was angry when he learned from watching television that the campaign was releasing the film. Obama took Plouffe and Axelrod aside and asked, “Why wasn’t I consulted?” Plouffe tried to explain, but, as he writes, “Obama cut me off. “This is not a run-of-the-mill ad. This is a big bomb. And I should have made the final decision on whether to use it and when.” He was clearly frustrated”

My reader suggests that Plouffe probably knew that Obama wouldn’t give the go-ahead. I suspect that’s right.

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