So let me get this straight. Eric Holder, the chief law-enforcement officer of the United States, is unwilling to say that the president won’t use a drone to kill an American citizen on American soil, provoking a heroic (real) filibuster by Sen. Rand Paul. But the Attorney General is very clear about what happens when big banks break the law. He told the Senate Judiciary Committee:
I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy, and I think that is a function of the fact that some of these institutions have become too large.
So this is why the Obama administration has refused to apply the rule of law to the frauds and hustles that brought on the Great Recession. The criminal syndicates, aka large financial institutions, are too big to jail.
This is a travesty. Contrary to Holder’s statement, allowing these banks to get bigger, control the political system and regulation through their big money and hold the economy hostage is the “negative impact” on the economy. The situation Holder describes is actually a threat to national security. We didn’t worry about the “negative impact” on the economy — and there continues to be one — when the government launched a “preventive” war against Iraq. Prosecuting law-breaking banks, putting some CEOs in a Supermax with Big Nate as cell mate, would protect the national and world economy. As it is, the big banks are making a killing by being allowed to borrow at super-low rates from the Federal Reserve — a benefit not available to smaller institutions. Instead of lending the money to job-creating businesses, they focus most of their energies on using the funds for “trading,” i.e. gambling in the $600 trillion derivatives market and largely unregulated shadow banking system.
Too big to fail, too big to jail, is too big to exist. Congress must break up the big banks and spread their headquarters to cities across the nation. It must pass a 21st century Glass-Steagall Act that not only separates risky investment banking from federally insured commercial banking, but also reins i derivatives and regulates the shadow banking system. In addition, it should enact a transaction tax, which would diminish the casino behavior and bring in some needed revenues. It must regulate and heavily tax bank executive compensation — let’s subject this looting to the same outrage leveled at the pensions of public employees. The grifters behind the collapse must be prosecuted and brought to justice. While we’re at it, we need a new Attorney General.
Until the rule of law is applied to big finance, the next blowup will happen sooner than we think.
This Week’s Links:
Arctic drilling hits a roadblock | The Oil Drum
50 disruptive companies 2013 (including Amazon and Microsoft) | MIT Technology Review
No, the United States will never, ever turn into Greece | The Atlantic
Global temperatures highest in 4,000 years | NY Times
It’s the aggregate demand, stupid | Washington Post
What does a rising Dow mean? | Mark Thoma
The next stage for China’s economy | Conversable Economist
Today’s Econ Haiku:
So what’s in a name?
To be port commissioner
It can only help