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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

August 12, 2011 at 10:15 AM

WaMu: No justice, no peace (of mind)

Lest we forget amid the market turmoil, earlier this month U.S. Attorney Jenny Durkan announced that the top executives who presided over the nation’s largest bank failure won’t face criminal charges. The “evidence does not meet the exacting standards for criminal charges in connection with the bank’s failure.” This despite the feds doing “hundreds” of interviews and examining “millions” of documents. Even $105 million to settle a civil suit will be paid by Washington Mutual’s insurers, not the executives and directors.

So this pretty much means that Kerry Killinger and his boyz got away with it.

Not one major figure behind the greatest financial collapse since 1929 has faced prosecution. The Obama Justice Department, led by a former white-shoe corporate lawyer, has shown a singular lack of curiosity about CountryWide, Goldman Sachs, Lehman Brothers, Bear Stearns, AIG, the holy credit rating agencies and all the other banksters and their enablers. But this event was not an act of God. It was brought on by the kind of reckless but highly profitable activities exemplified by WaMu. And this was not just an elephantine thrift peddling shoddy subprime loans to be securitized into swindles. Like all the big banks, it had a trading desk that, among other things, gambled in the capital markets with WaMu’s taxpayer-insured money.

It would be interesting to know how many thousands of WaMu employees are still out of work, or have been forced to take new jobs at lower wages. Meanwhile, no effort has been made to force Killinger or any of the other big banksters to return even a portion of the immense compensation they received while pumping up the debacle that has made America poorer. Instead, the big banks are more dangerous than ever; all the bad incentives to gamble with taxpayer backing not only remain, but have been enhanced. Finance, after all, swings a big stick of money in campaign contributions.

Wonder if the Justice Department and Congress are crafting new laws that might deter such behavior in the future? Wonder why none of the thousands of federal laws that can put average Americans in prison had enough “exacting standards” to be applied to these wealthy ruiners? Any curiosity at all, Mr. Holder? Or are you planning for your next job at Goldman after the 2012 elections.

Equal justice under law? No, some get away with it.

Links of the week:

  • We don’t have a long-term deficit problem || The New Republic
  • Are the credit raters accurate? || Reuters MuniLand
  • Low interest rates: The backlash begins || Marketplace
  • Examining the Fed dissenters || Rortybmb
  • We need a jobs bill, Mr. President || Washington Post
  • A plan to save U.S. infrastructure that might actually work || Infrastructurist
  • 23 polls say people support higher taxes to reduce the deficit || Capital Gains & Games
  • Can the middle class be saved? || The Atlantic
  • Income inequality is bad for rich people, too || Salon
  • Credit ratings for every country || BoingBoing
  • Domino effect may impact market outlook || Seeking Alpha
  • Would a balanced budget amendment make sense? || Baseline Scenario
  • Today’s Econ Haiku:

    The next president

    Can blame Bush and Obama

    Dips come in doubles

    Comments | More in Banking, Washington Mutual

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