Taibbi on Why No One on Wall Street Goes to Jail

There’s a fine new piece by Matt Taibbi on the utter lack of criminal prosecutions on Wall Street, particularly of the big perps. He goes through a series of well known instances of actual (to everyone save the prosecutors) cases of chicanery, ranging from Freddie Mac accounting fraud, the protection of Morgan Stanley CEO from insider trading charges, Lehman’s misleading reporting of restricted stock payments, and gives the sordid details of how whistleblowers were ignored and aggressive SEC staff like Gary Aguirre were fired.

To my mind, the juiciest and most depressing part of the story comes fairly late in the piece, when Aguirre attends a day long conference last November (with a $2200 price tag) on financial law enforcement. This is what “enforcement” looks like:

Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police….

The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White [now a partner at white shoe law firm Debevoise & Plympton] introduced [Preet} Bharara, her old pal from the U.S. attorney’s office [the Southern District of New York].

“I want to first say how pleased I am to be here,” Bharara responded. Then, addressing White, he added, “You’ve spawned all of us. It’s almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein.”

Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. “I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year,” he said. “They’ve done a real service to the country, to the financial community, and not to mention a lot of your law practices.”

Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC’s director of enforcement, talked about a new “cooperation initiative” the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.

“We are going to try to get those individuals answers,” Khuzami announced, as to “whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client.”

Aguirre, listening in the crowd, couldn’t believe Khuzami’s brazenness. The SEC’s enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. “First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC,” Aguirre says. “Then the Justice Department commits itself to pass, so that the player knows he’s ‘safe.’ Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department.”

It’s now so well understood that we have two systems of law in the US that not only does no one pretend otherwise, but we now institutionalize the process and have big ticket conferences to explain how it works. At least in the past, this sort of protection for the rich and powerful was kept under wraps and you had to be inside the tent to even know who the high level fixers were, much the less get to them.

I do recommend you read this piece in full. And remember, Taibbi is reporting on well known cases. The crisis happened for the most part in much less well visible area of the financial services industry, at least as far as the public at large is concerned. This site and other have tried to pull the veil back as far as the bad practices in the structured credit and CDO businesses are concerned. If things are this bad in cases that at least became somewhat visible, how much more examined crooked behavior is out their by virtue of dogs that didn’t bark?

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117 comments

    1. kievite

      OK. Let’s jail them. Let’s renovate Alcatraz and populate it with all the brass of TBTF. And for better effect let’s assume that each of them get life. There no question that the most of them are competitive with Enron crowd and probably are eligible for retirement in such a nice place, although only court can tell for sure.

      Question. Do you think anything will change ? In other words is this people or institutions? And what is the guarantee that the new bunch of psychopath who replace fallen comrades will be less criminal ? BTW they are more hungry as they do not yet managed to steal those magic one hundred million without which each and every TBTF executive feels like a pauper.

      1. Tao Jonesing

        Yes, and so do others (quote pulled from Taibbi’s piece):

        “You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street,” says a former congressional aide. “That’s all it would take. Just once.”

        1. kievite

          Question for you. Why Lloyd Blankfein should be jailed and, say, Dick Cheney enjoy freedom ? Is this logical ? And who BTW was enabler of all this racket? Not, by chance. Fed with esteemed Mr. Greenspan at the helm ? Not SEC ? Not Congress? BTW what about Senator Gramm? Are you suggesting sending senators to jail ? You get the idea.

          My point is that casino capitalism is a form of capitalism like Bolshevism was a form of socialism. As far as I understand social change is not equal (although can include as a part) a pretty narrow goal of jailing perpetrators.

        2. Doc Holiday

          Re: Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term..

          Get real, he’d love every minute of that and that’s a massive part of his routine on wall street… so why even bring that up like it’s some kind of punishment — just simply take away his (and his families) access to money and then deport them, piece by piece.

      2. Tao Jonesing

        Also, you seem to be advocating that all criminal law be thrown at the window.

        I mean, imprisoning murderers, rapists, and arsonists for life hasn’t stopped murder, rape and arson from happening, so what’s the point?

        Perhaps if we would just give the “free market” a chance to work its magic on humanity’s baser nature, that would spell an end to crime.

        1. kievite

          “I mean, imprisoning murderers, rapists, and arsonists for life hasn’t stopped murder, rape and arson from happening, so what’s the point? “

          That’s a good argument. I agree that imprisonment is a deterrent. But only imprisonment does not work. You need a broader set of measures including, for example, in case of murders control of gun and ammunition distribution, prohibition of violent movements and sects, that advocate violence as a political tool, especially racial, nationalistic or religious violence. Gender education and restricting propaganda of violence and probably pornography in case of rape also might help. I think rate of murders and rapes reflect the level of instability/social tensions in the society so, in a way, they are symptoms of broader problems. Not accidentally they are highest during civil wars.

          1. Wild Bill

            You missed the point. These guys only pretend to be bad asses. Put one of them — any one of them, plenty to choose from — in for six months and it scares the others shitless. They’re not gang memebers, they’re not steet toughs, they’re freakin’ Ivy Leaguers. If you don’t get that, how you going to understand CDO-squareds?

          2. run75441

            Suggest a 12 year sentence which means a level 4 prison, 20 hours lock down and 4 hours out. This is where the violent prisoners go and also the repeat non-violent prisoners. They need to break a nail and cuticle to learn a lesson amongst those non-so-privileged.

        2. wunsacon

          >> I mean, imprisoning murderers, rapists, and arsonists for life hasn’t stopped murder, rape and arson from happening, so what’s the point?

          Wait…. You think the murder rate would stay the same if we eliminated laws against it???

          1. Toby

            You think jail and punishment are deterrents?

            “In England, after three generations in which the attempt was made to stamp out vagrancy by police measures of hideous brutality, the momentous admission was made that its cause was economic distress, not merely personal idleness, and that the whip had no terrors for the man who must either tramp or starve.” Religion and the Rise of Capitalism, R. H. Tawney

            They are only a weak deterrents. I would guess, after the famous phrase, “property is nine tenths of the law” that 90-95% of all crime is property based. Property crime and fraud are generated by two things; need and greed. One is systemic, the other a ‘sickness,’ such as psychopathy or kleptomania. Neither is solved with prison sentences, although as a deterrent prison sentences have some mild efficacy I’m sure.

            We have then to deal with 5-10% violent crime. We have suffered from violent crime regardless of laws and punishments designed to deter it for centuries. That it is still with us suggests human nature, as it is shaped by the environment, is the problem. Punishment and prison aren’t working very well, obviously, so I would suggest other solutions need to be sought, but don’t have time to go into that here. James Gilligan has devoted most of his life to this question and is a respected source of wisdom on this subject.

            As for the jailing of a Lloyd Blankfein, sure, that would send shivers, but the system promotes and inspires corruption by (unintentional?) design. After a while the corruption would slip back again. That’s the deeper point kievite is making. This shit has been with us for centuries. We need a deep paradigm change to address the true causes, not a handful of prison sentences. Such would only bring short term relief.

          2. ComradeAnon

            I think the reference was to the type of penalty not being a deterrent. I agree. I think the murder rate would go up only a little. But the increase would be almost 100% from the Wall Streeters. They think they are above any law.

      3. James

        Question. Do you think anything will change ? In other words is this people or institutions?

        Answer. It’s both. But I do love and agree with TJ’s comment as well.

        “You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street,” says a former congressional aide. “That’s all it would take. Just once.”

        Indeed.

        And kievite, I think you entirely underestimate the deterrence factor of an honest prison term for one of the silver spoon persuasion. The fact that they scoff at such an outcome now is a political, not a practical concern. Just one or two of these metro-sexual MFs experiencing the realities of the modern criminal incarceration environment might just do wonders for EVERYONE’S concept of reality. And just THINK of the reality TV possibilities it would create, all the better for their idiot cousins to profit from.

      4. Parvaneh Ferhadi

        I guess the point is that in a society governed by the rule of law it works like this: you break the law and you bear the consequences, and that goes for all members of society.

        If some people are excempt from that rule while others aren’t and face the full brunt of the law just because they are not well connected, then your society will fall apart. You have lost the rule of law and democracy as well.

        Something is seriously wrong in the land of the (formerly) free and the home of the (once) brave.

  1. Jimbo

    Even Bush sent his buddy, Ken Lay, to jail. President Obama refused to have his Justice Department criminally prosecute Steven Rattner.

  2. KnotRP

    Worst part is, these folks are just the visible layer.
    Jailing them is like jailing the 10 year old drug runner,
    thinking the local drug lord cannot find another 10 year
    old to run drugs.

    It’s getting harder and harder to find anything that
    does NOT resemble a banana republic.

  3. KnotRP

    By that comment, I mean that the elites have been playing tackle football while everyone else is grabbing for flags…I wonder if they can take hits as good as they give?

  4. OutsideLookingIn

    I started the Taibbi piece but couldn’t go beyond the first page because it was making me too angry at what it was revealing –

    and I’m not even an American.

    1. Parvaneh Ferhadi

      Unfortunately, not being an American doesn’t help you much, because thanks to globalisation, this cancer is now worldwide. Take Egypt, Mexico, China, India, Switzerland, etc they all work the same way.
      So chances are, your country is affected by this global corruption as well.

  5. Obsvr-1

    you would think that with this much coverage, naming names and specific events and meetings, SEC colluding with Wall Street that DOJ or someone with balls in the Executive Branch or Congress would call for renewed investigation and prosecution.

    If this keeps festering there may be a triggering event that causes the people to raise up in mass to demand action (America’s Egypt moment ?).

    1. Disgusted

      Exactly what I was thinking. If this keeps up, we’re moving directly towards popular unrest, a la Egypt. There’s a lot to learn from what the Egyptians did.

      Since this depression began, I’ve remained convinced there will be no recovery until there’s been some actual reform, including criminal charges and prison terms for the perps.

      As jesse says…the banks must be restrained, the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

      1. Walter Westcot

        Tunesia and Egypt are instructive in that events there began with an act by someone with nothing left to lose.

        People say it can’t happen here because too many of us require business ‘as usual’ – daily receipts are what keep a duly elected Robespierre, from taking heads.

        He/she won’t be elected. When it happens here – spontaneous leadership won’t have to seize power – it will be a coronation.

        A new majority in America think capitalism was replaced by cronyism. There is no glory in success – looted from your neighbors and environment.

        1. Walter Westcot

          My point is that an American Robespierre is imminent. It can’t happen at the ballot box. And my money sez it might be a woman.

          Angry Alpha females are vicious and exacting in ways men fear and aspire to.

          Because we are in agreement on the identity and magnitude of the guilt – there will be no voices for minimum sentences.

          America is hankerin for a good hangin judge.

          And she’ll be our Maureen O’Hara showing John Wayne how its done.

    2. Francois T

      “If this keeps festering there may be a triggering event that causes the people to raise up in mass to demand action”

      We suck at mass action around here. Here’s another potential scenario, the kind that keep the feebies awake at night.

      He was the quiet type. He was just back home after multiple stints in Iraq, Afghanistan and others God forsaken places. He was good at it; Green Beret or Special Ops, Psy Ops, made it to LT. Came that close to make it as a full fledged sniper. Fluent in Spanish and Arabic. Specialty: Urban warfare and counter insurgency

      Yup! Just back home…only to witness his best friend take his own life. At first, they told him, PTSD, he was “depressed”, “had delays with his VA application”, and, you know, some troubles with his finances.

      Troubles? “Yeah! They been trying to foreclose him. Well…they succeeded. They played dirty if you ask me, but they got the dough and the Law on their side, you know wattam sayin’? You know how much he loved this house, the whole place.”

      Did he know! T’was the only place where he felt sanity was an option. But some blood sucking financial REMF had rob his comrade in arms of the refuge that mattered so much to him.

      He could not abide by this betrayal. Because it WAS a betrayal. Wasn’t the contract clear? We serve to protect, you help us. But they would only help themselves. The more he read about the whole thing, the more stunned and enraged he became. One thing was also becoming obvious: justice was and would be nowhere to be seen for his comrade and millions of his compatriots.

      In a war he just left he had used skills, training and patience to inflict great damage on the enemy.

      He was starting a new job Monday. That would provide the money. He’d need some. That would also give him time, shelter and opportunities to plan; all this he would put to good use.

      After all, there were new enemies to take care of right here at home.

  6. Jackrabbit

    Because he focused on the US (I guess), Taibbi neglected to mention the high-profile case of Rudolf Elmer who was a Private Banker/Wealth Mgmt Exec that turned whistle-blower (he just gave his files to Wikileaks). I think he was behind the US-Swiss spat that resulted in hundreds of IRS cases against wealthy individuals. IIRC, Elmer is also the only one to go to jail over what he has revealed.

    I believe he is now being held by Swiss authorities because he gave his files to Wikileaks. They are deciding if they will prosecute him.

    1. sgt_doom

      Jackrabbit’s comments are somewhat misleading.

      Elmer’s problems with the bankster on the Cayman Islands (if memory serves), Julius Baer, began around 2002, which was EXACTLY when the hedge funds increased dramatically in size and scope.

      Therefore, since this all took place some years back, I strongly suspect that Elmer’s story has some serious validity behind it.

      Especially since quite probably the number one money laundering expert in the Western Hemisphere (and attorney), Jack Blum took on Elmer’s case and is now representing Mr. Elmer.

      And I suspect Elmer’s case may very well open up everything regarding hedge funds and dark pools.

      1. readerOfTeaLeaves

        <And I suspect Elmer’s case may very well open up everything regarding hedge funds and dark pools.Be still, my beating heart.

      2. Jackrabbit

        Anything “misleading” was inadvertent. I didn’t mean to discredit Elmer in any way. Taibbi described how there are no prosecutions and people who have come forward with information have been igmored. Elmer came forward as a whistle-blower and my understanding is that he was prosecuted and jailed for his trouble (I think he got a light sentence b/c he was a whistle-blower – but no one else in the industry has been prosecuted). Talk about shooting the messenger!

        As you describe, this started years ago and he was at a very senior level (and kept records, apparently) so he could potentially reveal a great deal about how the industry works. It seems he gave his files to Wikileaks out of frustration at being persecuted for having blow the whistle.

        The info he gave to Wikileaks is suppose to have details of the secret accounts of some 40 politicians.

    2. alex

      “I believe he is now being held by Swiss authorities because he gave his files to Wikileaks.”

      So much for American exceptionalism. Apparently the Swiss powers-that-be are also more interested in jailing people for reporting crimes than for committing crimes.

      1. Yves Smith Post author

        Switzerland is at least explicit about its priorities. Crimes against banks will land you in prison. And their notion of “crimes” is much broader than just robbing a bank.

  7. Fifi

    When worthies really screw up, that is when they fail to hide their crimes, they settle without conceding guilt.

    But jail? Jail??? Are you kidding me? You expect them to go to jail? Come on!

    Jail? Don’t be vulgar. That’s for little people.

    1. alex

      In days of yore in Merry Olde England common people were hung, but the high and mighty were beheaded. It was a double standard that these days we can only hope for.

      1. Yves Smith Post author

        Actually the beheadings were often botched, sometimes by design as a form of torture (presumably plausible deniability torture for political executions, you had burning at the stake, drawing and quartering, and breaking someone on the rack among ways to kill people in a particularly gruesome and public manner). Families would often pay the executioner to assure a clean kill. That’s why the guillotine was a bona fide improvement.

        1. Wild Bill

          And the richest of those to be hung paid kids to hang onto their legs when the trap sprung, so they’d die of a broken neck rather than strangling. It’s how Jack Shaftoe, King of the Vagabonds, got his start.

  8. YankeeFrank

    Give me the mafia anyday. At least they don’t walk around acting like what they do is moral. And they kill way fewer people.

    Is there a historic precedent for this level of graft and criminality?

    1. decora

      The mafia is full of honor codes and rules that are continually broken all the time. plenty of books on the topic.

      historical precedent.. i dont know if you have ever seen ‘gangs of new york’, but back in the 1800s things were pretty crazy. there are plenty of books on the topic as well. “Devil take the hindmost” by edward chancellor is pretty funny.

      funniest part is that matt taibi got big thru rolling stone, which is in the music industry, were morality basically is viewed as an insult.

      1. YankeeFrank

        Oh I’m not saying the mafia is wonderful at all, just that they are more honest about what they are; and that they kill a lot fewer people.

        I know things have been corrupt and crazy in the past, but I don’t think there has ever been a society with as many institutions designed for one purpose that have been so completely perverted into their opposite. What I mean is that we have such utter lawlessness occurring within institutions that were designed to support and enforce the law. No one expected the police to actually protect the public back in the “Gang’s of New York” era. Nowadays we actually think that the law exists to protect all of us, not just the rich.

        From my limited readings of history I know Rome went through a similar decline where the bureaucracy was turned from its original purpose into a prop for corruption and status quo enforcement; Rome took hundreds of years to collapse. What that means is that no one generation was able to experience Roman society at its height and its state once brought low. We’re managing to go from peak to collapse in a matter of decades, and there is one generation that experienced both the heights and the collapse and is largely responsible for the collapse — or at least is responsible for the rapidity of the collapse. Unprecedented.

  9. psychohistorian

    I don’t see anyone talking about who all those bankers work for. Let me give you a clue, its not you nor I.

    Those bankers work for folks that don’t want the fog ceiling between them and the little folk cleared. It is in their best interest to insure that their bankster henchmen do not squeal so they give them lots of money, titular power and legal immunity. Whats not to like about that sort of deal?

    Those that read my comments know that I have been beating the drum of jail for these folks for years. I have watched American imperialism become more and more egregious for the past 40+ years and I don’t see any letting go anytime soon. While the world in changing in ways that seem not to their liking, I believe that most of what is happening is being orchestrated as will the outcomes. Tell me where the leadership is going to come from that the elite have not killed or compromised or can easily be done so with impunity.

    Remember, the elite rich sociopaths that hire all those banksters and put all those government employees in place, are in control of America’s nukes. Be very wary of sociopaths with nukes that have their ball taken away by more civilized members of the world (are there any beside NC readers?).

    1. gepay1

      I wonder who really does have the power to launch nukes. I can’t imagine the elites that really run things would have left it up to Bush the younger to decide. Unlike Anthropogenic Global Warming, ‘nuclear winter’ seemed very likely if several thousand thermonuclear bombs exploded over the large area that the Soviet Union was. Just like I wonder who decided that Bernanke would take over from Greenspan. I remember Bernanke’s 2002 speech outlining how to avoid a depression. So it seems the elites did know this Greater Financial crisis was coming. I don’t think it was any coincidence that Paulson moved from being the head of Goldman Sachs to being the Treasury Secretary (taking a hefty pay cut) at the right time to propose TARP.
      “Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.” – Mark Twain

  10. Bobbo

    The only justice will be vigilante justice. Institutions are too corrupt. Anyone with eyes to see has figured that out.

  11. fledermaus

    “From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.

    “We are going to try to get those individuals answers,” Khuzami announced, as to “whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client.”

    That is just stunning if he actually said this in the vicinity of a tape recorder. Just, wow. As an attorney I can’t even begin to explain how inappropriate this is for the SEC enforcement chief and government attorney.

    (ok I’m really not that surprised)

  12. 60sradical

    America is not Egypt and we cannot possibly know what this great peacful revolution wll morph into. I smell too many high level life-long military types.
    But, to address our pressing question regarding justice and revolutionizing our financial kleptocratic oligarchs, one must be ready to die-literally die–similar to the codes of Japanese samurai. One must die to one’s former life. All that one must commit to is correct action. Even if the action is peaceful, one can still be crushed like a bug hitting the windshild of a 747. Many Egyptians understood this. We are not hurting enough yet to revolutionize anything.

    1. 60sradicaltwo

      Neither are the demonstrators in the middle east, but they have PRIDE, which evidently we have not.

    2. monday1929

      I believe, and fear, that many Boomers, unable to afford life’s necessities, will decide that sacrificing themselves while killing those bankers which the justice system failed to address, would be an honorable way to die. They may see it as a way to emulate the Greatest Generations’ sacrifice for the following generation. This possibility should send chills down the back of Jamie Dimon’s neck.
      Note the growing number of people who, instead of just committing suicide, decide to take otjhers with them. Imagine if this became organized against the ones perceived to have caused this desperation. Lloyd, Jamie, et al should be strongly in favor of extended unemployment benefits and a strong social safety net- their very survival may depend on it.

      1. Walter Westcot

        You have described the honor of the Palestinian mother strapping the explosives to her first born.

  13. Lyle

    So what else is new. It has always been this way and always will be money can hire lawyers who make the investigations drag on. Consider that they could not get Samuel Insull nor Charles Mitchell during the 1930s, and Richard Whitney got caught with embezzlement, which is a crime everyone understands. Many of the financial crimes are far far to complex to hope to have a jury understand them. Or to go back further Colfax and Garfield were not prosecuted due to the UP scandals, and Garfield went on to be president. In every society there are two sets of rules, always have been and always will be. The problem with revolution (given the two major examples France and Russia) is that all you do is to change who is the elite the elite always exist and live differently.

  14. Hugh

    The savings and loan scandal involved losses of about $160 billion and generated about 1,000 criminal convictions. It is hard to say what the losses have been in the current string of financial crises, but it’s at least $5-$10 trillion. There are lots of unrealized losses still out there. Should we add in expected losses from when the current bubbles collapse. In any case, it is surprising how little effort there is to calculate what all of these losses might really amount to. But I throw these numbers out there to give some idea of the potential size of the felon pool. We are talking about a crisis that is 30 to 60 times bigger than the S&L scandal. So we could be talking about 30,000 to 60,000 felons if the two scandals correlated. And in any case, we are likely talking about tens of thousands of individuals.

    Yes, this would tie up the courts for years, but let’s face it, most cases in criminal courts get pled out. The other point I would make to those who say that imprisoning even this number of people would have little effect on the financial industry: there is always RICO. If you really want to put the fear of God into these people then add to the jail time the loss of all the profits and property associated with what was and is a massive criminal enterprise.

    1. monday1929

      I believe either the BIS or IMF have already concede 30 trillion (world wide). I do not know if they include the zero% interest rate and the trillions that will cost savers.
      The number due jail time may not be all that much larger than S&L, remember, each one who stole, stole 50 times more than the S&L thieves.

  15. Hugh

    I should add that in kleptocracies the looters don’t go to jail. So why should any of us be surprised at the lack of investigations or prosecutions?

  16. MIchaelC

    Man, this is almost unbearably bleak and dark. For a fleeting second I thought maybe it’s a signal, darkest, like before the dawn, for possible prosecutions, but probably not.

    Prosecutions were a long shot and priority #2 in my view unless they served to advance reg reforms (For Christ sake they won’t even attempt a slam dunk SOX test on Lehman. If nothing else it would send a chill up a few spines to enforce a ‘landmark’ piece of legislation). As long as the SEC needs to refer to Justice to initiate criminal proceedings that won’t happen till Bill Black is appointed head of enforcement, and certainly not while Mary Shapiro is in charge.

    So the thing to focus on is constraining the next generation of looters with onerous restrictions based on lessons learned from this mess. A generation on wall st is generally about 5 yrs in my experience so there is a still a chance to scare the current elite’s heirs.

    I like to remind your readers that you’ve kept your steely eyed gaze on the key element of the catastrophe, (willfully) unregulated insurance masquerading as derivatives packaged as AAA bonds used to finance the final pillaging phase resulting in outrageous externalities, borne by everyone except those that perpetuated the con.

    The un-prosecutable fraud at the heart of this crisis is that insurance product was peddled as unregulated “Derivative” product, just as the products at the heart of Enron’s fraud were transactions masquerading as derivatives.

    CDS is a ‘derivative’ in form only. It should be banned, full stop.

    I haven’t seen anything in Dodd Frank or elsewhere that does that. Instead we’ve got a two tiered regulatory solution, standard and non standard (clearable/non clearable), where both are still permitted, as long as they are structured to form. As long as non standard survives so does the systemic risk.

    So the ‘fraud’ that needs to be prosecuted is the govts willful refusal to step in and call bullshit when a ‘derivative’ is really something that already exists and is regulated elsewhere.

    The current govt doesn’t seem willing to do that and I don’t see an opposition gov’t willing to take that stand in the next election either. Neither does Wall St.

    Although I do note that most of the folks in Taibbi’s piece are getting long in the tooth and have cashed out at the top of this cycle. The question is, will it be so lucrative for their heirs?

  17. Birdy

    I am not as sofisticated as many of you, therefore, no pithy remarks nor historical perspective. I am disgusted and outraged by the facts in this fine, brave article.

    I do have in my heart, in my being, a deep desire to change things and am looking for a leader with whom I can work to change what seems unchangeable. I fear for our environment and for those who will suffer most. I am ready for the hard work of changing our country.

    1. Toby

      The change required to transition humanity globally out of this paradigm-generated mess will not be led by any one person, but by all of us becoming our own leaders. If we are to succeed as a species we have to grow up and take responsibility for our own actions, as well as reconstruct society and our socioeconomics so as to encourage or make this possible. It’s something of a chicken and egg problem, but your heartfelt desire for change is the necessary first step. Only, look to yourself, not others.

      If not you, then who?

      1. YellowRose

        Thank you. My thoughts exactly. If we wait for a leader we will be waiting for a very long time. Don’t hand your own authority to act for change over to someone else, an imagined “leader.”

    2. Walter Westcot

      Our Robespierre won’t be elected. It will be a spontaneous coronation for the man/woman who advocates the taking of heads without trial…. while we conduct business as usual.

  18. Doc Holiday

    GREAT, GREAT stuff there by Taibbi @ Rolling STONE!!

    Just too bad so few people can read, or care!

    ==> “Aguirre, listening in the crowd, couldn’t believe Khuzami’s brazenness. The SEC’s enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison.”

    ===> DOJ should be shut down along with all the other crooked organized crime casinos, like SEC, FTC, Treasury, all the GSE’s… and all the other agencies that profit from their corruption. Too bad Americans don’t have the balls (or brains) that the Egyptians have!

  19. greg

    I sent the President a letter. I said I’m not going to vote for him, or any of them. And I’m not. See my blog. I refuse to consent to continue to being robbed by these people. I’m advising others to do the same. And to tell their friends. As long as they have your vote, they have you, and you are getting taken.

  20. Justicia

    Other criminal classes should demand equal treatment. Try this one:

    When MAFIA lawyers want to know if their clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the FBI.

    “We are going to try to get those individuals answers,” Khuzami announced, as to “whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client.”

    1. monday1929

      The banksters can check in weekly- ” hey, umm, is there anything you caught me at last week?

      Well, sir, what exactly do you think you might have done?

      Oh, nothing specific. Is there anything I should know about?

      No sir, your file appears clear this week

      Oh, sure, I knew it was. well, speak to you next week”

  21. Paul Nkunda

    From the Taibbi article: “You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street,” says a former congressional aide. “That’s all it would take. Just once.”

    One six month prison term for one bankster and he thinks that would be the end of it and that’s all that should be done?

    Well, at least this is some improvement, but not much, over that William D Cohan Op-Ed, a few months ago in the NY Times where he called on us to start pardoning banksters.

    Pathetic.

    The problem with having one standard of justice for the wealthy and another for everyone else is that one day a
    charismatic leader might come along, and he might tell the truth about the banksters and the bailouts. The truth that everyone already knows, but we never hear it spoken by our leaders or the MSM. Even if he lies about everything else, being truthful about this one thing is all that will matter. And with real unemployment at 30 percent, he might call for hanging the Wall Street bastards from lamp posts. Huge crowds will cheer and rally behind him, and blindly support him, no matter what else is on the agenda. Even if he comes from Austria and has a funny looking mustache, as long as he tells the truth about the banksters and Wall Street, no one will care about the rest.

    After all, in the late 1920s the Weimar Republic was held up as a model of democracy for the entire world and the Nazis had virtually no support. But just a few years later the public was sick of being ignored by those in power, and the rest, as they say, is history….

  22. Hand Chopper

    Re: “Put one of them — any one of them, plenty to choose from — in for six months and it scares the others shitless.”

    ==> Ok, that’s enough of this talk — we need to cut the drama and just chop off hands and make a point that if you fuck with American taxpayers your gonna either die, or yah gets yur hands chopped off … then, all this bullshit fades away pretty damn fast and then all the smart financial engineer derelicts that wanna play patty cake — get real jobs, doing shit that is productive and unlikely to result in dismemberment. It’s that easy — either you have law and order, or you play games and destroy society. Screw these bastards as much as possible, or pay the price later.

  23. Expat

    Let’s remember the sage words of Billy Ray Valentine:
    “Yeah. You know, it occurs to me that the best way you hurt rich people is by turning them into poor people. ”

    We start arresting people…to be honest it will be easier to simply close off Manhattan like in Escape From New York and then release the eight or nine hundred workers who are innocent. Since the crisis was considered a matter of national security, we simply waterboard everyone until we get answers.

    Then we take away ALL their frickin’ money and bar them from working in ANY financial job or industry ever again. That includes any job where they count money, sign checks, manage bank accounts, etc. Of course, a few thousand of them get sent to maximum security prisons for ten years of anal rape and beatings.

    To be honest, you would need to send only a dozen CEO’s (past and present), a few hundred top managers and traders, and a smattering of accountants and CFO’s to jail to send the right message. Wall Streeters are pussies who are terrified of jail and poverty.

    Or, of course, we can continue doing what we do: letting them rape and pillage our country while we send minorities off to die in Irag and Afghanistan.

    I bet the ranch on the second option.

    1. Paul Nkunda

      I totally agree with your proposed solution, but this would require the US Justice system actually deliver justice, and that will never happen: the system is far too corrupted to ever be reformed. Unless a left wing party somehow arises in the USA (and there’s no sign of that), then we’re more likely to see a charismatic leader from the extreme far right, and/or lynch mobs and vigilante justice once real unemployment (as opposed to the official numbers) reaches the breaking point.

      1. Walter Westcot

        America is hankerin for a hanging judge. All of us are going to be surprised at the authority given to our Robespierre.

        It won’t be an election as I said before.

        It will be a coronation by a wink and nod.

        Thumbs up.

        Off with his head!!

  24. Conscience of a conservative

    Jonathon Weil at Bloomberg wrote an interesting piece discussing “scienter” as a possible explanation.

    Corporate Collectivism

    Another possible explanation: Perhaps the SEC reasoned that a bunch of individuals collectively had enough information to know GE’s accounting was wrong, but no one person knew everything. In legal circles, this theory sometimes is called collective scienter. In other words, in a civil claim against a corporation, the knowledge of one or more employees is combined with the misstatement of another employee to establish scienter, even if none of them acted with scienter individually.

    http://www.businessweek.com/news/2011-02-09/wall-street-justice-means-nobody-gets-pinched-jonathan-weil.html

    1. Walter Westcot

      Kind of like 9/11 – glad you gave it a name.

      only 1 or 2 people knew the ‘exercise’ would be the real thing – or the influence of our own agencies escorting would be amateurs to their place in history!

  25. richfam

    You know where I come from on plenty of stuff on this blog but on this we agree. Selling a security designed to fail is fraud and people should go to jail for it.

  26. Francois T

    If I was the head of investment of a foreign institution (meaning, I would not be obliged to have any US investment) I would just avoid the US completely.

    In case I would get questioned by the Board, I’d simply ask:

    “Would you invest in a country where, not only cops and bandits sleep together, but the Chiefs of police are paid by the bandits?”

    To those who would like to point out that it is worse anywhere else, I’d love to have some proof of that.

    1. Doc Holiday

      ==> BOYCOTT AMERICAN BUSINESS YA’LL

      Re: ““Would you invest in a country where, not only cops and bandits sleep together, but the Chiefs of police are paid by the bandits?””

      ==> That’s the ticket… BOYCOTT AMERICAN BUSINESS YA’LL (BABY)

  27. hermanas

    When the banker said he was doing God’s work, it brought to mind the motto on our family’s coat of arms; “Dread God”.

  28. EMichael

    Reminds me of the old Jimmy Cagney movie “Never Steal Anything Small”, whose title song in 1959 included the words:

    “Steal $100, they put you in stir steal a million they call you sir.”

    Only the million dollar amount has changed.

  29. Walter Westcot

    Nobody is talking about the sea change in American attitudes towards the rich. I’m in my 60’s. Classic boomer from a midwestern middle class upbringing.

    The reason I’m hopeful that these monsters will pay, or be taken out by vigilantes – and I do believe this – is that mainstream American no longer defends WEALTH, as the end product of HONEST WORK.

    Wealth today, is the end result of crimes against one’s neighbors and country.

    The revolts that prompt ordinary men to drag the wealthy from their beds – or burn them alive in them – are those where the “victims” are universally reviled as less than
    human.

    Read Town Hall or Huffington Post – they both sound like Prison Planet when describing ‘multi national corporations’ – lawyers, bankers, and Wall St players.

    Web conversations are virtually the same – left or right – condemning all of the above as VERMIN – EVIL – and deserving of what ever happens to them.

    This is a brand new kind of American thinking.

    I mean it — go to Fire Dog Lake, Huffpost, Townhall, Anti War.com, Prison Planet, Rense.com, or Salon – and they speak in one voice….. THE RICH DO NOT DESERVE WHAT THEY HAVE TAKEN… not earned.. TAKEN.

    That’s news.. and very very scary for the elites.

    The pitchfork brigades are always on the margins… those with nothing left to lose. The rest of us watch, and give a thumbs UP or down… on whether Robespierre begins taking heads.

    In this environment? – I would cheer the assassinations.

    And I’m not even afraid to say so…..

    that’s NEWS

    1. Paul Nkunda

      Totally agree with you. Everyone I know despises Wall Street, and the way people refer to banksters (in private) reminds me of how the majority of Hutus were referring to the minority of Tutsis, before things turned violent in April 1994.

      A few weeks ago, the topic of Goldman Sachs came up on Yahoo news and elicited hundreds of comments, 99.9 percent of which could not even be printed on this blog.

      And that’s just one minor example of an attitude that is becoming very widespread.

  30. Independent Accountant

    The SEC hopeless. It wastes its time on trivia. It is controlled by Wall Street,as is the SDNY US attorney’s office. I’ve complained about this for 21 years. Really. As long as we have the revolving door, nothing will change.

  31. steelhead23

    The primary problem is not capitalism the ideology, nor is it profit maximization, looting, or any of those motivations for criminal behavior. It is the revolving door. If we could somehow close that door, there WOULD be investigations, indictments, prosecutions, convictions and vacations at one of America’s penal (or is it penile?) institutions.

    Let me make the point in a relational way. You work hard. The work you do is complex, every bit as complex as the work being done by those you regulate. You see that they are crooks. They make ten times what you make, in part by being crooked. Are you inclined to be nice to them? Now, imagine that if you are nice to them, they might let you join the club, you could, IF you are REAL NICE, earn their salary. Its that second part that is the problem. Just as money is corrupting politics, it has also corrupted the bureaucracy. Close the damn revolving door. Congress: Are you listening?

  32. EmilianoZ

    The Revolving Door, the most advanced, most subtle form of corruption on earth. American capitalism’s gift to the world.

  33. MG

    The SEC essentially has just a little over $1B budget this year to effectively monitor and police just slightly over 12,000 publicly-traded firms. There just isn’t the available manpower to tackle the issue regardless of all of the other ‘agency’ problems that arise currently from the present structure of the SEC and its ties to the financial/insurance industry.

    Frankly I have pretty much given up on the federal gov’t in effectively tackling this issue given the current structures and processes. Something truly awful will have to happen for their to be true change at the federal level again.

    I have been much more disheartened by the response at the state level especially at the AG level. Even there, the response to mortgage-related fraud and other issues has been tepid at best and largely ineffective. Just further proof to me how rotten things have truly become.

    1. Eva Grub

      Don’t tell that to the Defense contractors at the SEC, they aren’t cheap, and finishing the “job” is completely nebulous. I don’t think the Egyptian people or the people on the streets in Wisconsin have any faith in broken agencies that seem to be attacking them in concert with Wall Street.

  34. leapfrog

    “You know, it occurs to me that the best way you hurt rich people is by turning them into poor people.”

    Billy Rae Valentine – Trading Places

  35. Peripheral Visionary

    If you are wondering why underlying problems never seem to get addressed, I would suggest that half the problem is people like Taibbi who frankly have no idea what they are talking about, who blunder in, jump immediately to the wrong conclusions, and then propose solutions that will never work. Taibbi’s clear lack of understanding is everywhere, but I will focus on the most glaring examples.

    “But the real fireworks came when Khuzami, the SEC’s director of enforcement, talked about a new ‘cooperation initiative’ the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed.”

    Interesting choice of words. In the real world, this is what we call a “whistleblower” program. Somebody who knows about something that is happening that is against the law goes to the authorities, and gets immunity and/or compensation for providing that information to law enforcement.

    The thing is, everybody knows what this is, it is entirely common, and is accepted law enforcement practice. Is Taibbi in the dark, or does he actually know that this is a legitimate law enforcement program, but describes it in such a way as to portray it as something other than what it is, in order to portray it in the most sinister light possible? Neither speaks well of him as a journalist.

    “From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.”

    Yes, that’s exactly how whistleblower programs work. It’s also how plea bargains work. Has Taibbi ever heard of a plea bargain? When someone is going to the government with incriminating information, the first thing their lawyers are going to do is negotiate over whether or not charges will be pressed against their client (again, the one who is bringing the information).

    “The SEC’s enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time.”

    This is either a gross misrepresentation or a profound lack of understanding. There is a profound difference between firms and the people who work for them. The whistleblower program provides protection for the latter so that charges can be brought against the former. These measure enable more charges to be brought against large firms, not less.

    Large firms can receive some measure of protection if they actively bring issues to the attention of the regulator, but have to meet a relatively high standard to do so; they have to demonstrate, in effect, that the action was against their policies, that they took action against it as soon as they became aware of it, and that they alerted the regulator as soon as practically possible. That is a much higher standard than as represented by Taibbi.

    “Unlike criminal trials, in which the facts of the crime are put on record for all to see, these Wall Street settlements almost never require the banks to make any factual disclosures, effectively burying the stories forever.”

    False. Firms in the process of negotiating a settlement may certainly be asked to produce additional information (e.g., who else may have been involved, etc.), and settlements, whether or not the accused admit to the charges, are a matter of permanent record and appear in official records.

    And Taibbi never asks one critical question: why is the regulator so quick to settle? The implied answer to the unasked question is because of a close relationship with Wall Street, but the reality is much more mundane: the regulator is badly understaffed, and simply does not have time for lengthy court cases. And it wouldn’t fit the anti-regulatory crusade (and make no mistake, pieces like Taibbi’s provide more ammunition for those who would like to get rid of the regulators than for those who would like to strengthen them).

    But to Taibbi’s central question:

    “Why Isn’t Wall Street in Jail?”

    Simple answer, because cases on securities crimes are very difficult to make. He cites the case of the two Bear Stearns execs who were let off, and why were they let off? Because the jury thought they did not commit a crime, that’s why. Securities cases are very difficult to prosecute, and routinely end up in no conviction.

    The simple fact is that working for Wall Street is not a crime, much as people like Taibbi seems to think it is. Making money is not a crime. Losing your client’s money is not a crime. Making money for yourself while losing your client’s money is not a crime. Accepting government bailouts is not a crime. Lying and misrepresentation can potentially be crimes, but well, have you seen the boilerplate disclosures on prospectuses? They may as well say, “and we are disclosing to you that we are going to do whatever we want, and we are telling you that right now so that you can’t drag us into court for misrepresentation, so don’t even think about it.”

    The fundamental problem is a severe disconnect between what the internet crusaders of the world think is a crime and what is actually in the legal code. The people who work in the industry know what the law is, and how to stay out of court. Why do you think they pay those lawyers so much? The few cases that do go to court are very often in “gray areas” where the legal (if not morally right) thing to do is in question–that’s why so many of those cases fail in court. If you want to prevent what you see as a problem–Wall Street people making money while Main Street people lose it–then you’re going to need to change the law.

    1. Walter Westcot

      an American Robespierre is imminent. It can’t happen at the ballot box. And my money sez it might be a woman.

      Angry Alpha females are vicious and exacting in ways men fear and aspire to.

      Because we are in agreement on the identity and magnitude of the guilt – there will be no voices for minimum sentences.

      America is hankerin for a good hangin judge.

      And she’ll be our Maureen O’Hara showing John Wayne how its done.

      1. Peripheral Visionary

        But Robespierre eventually led to Napoleon. You put the wrong reformer in charge, and meet the new boss, same as the old boss.

        That’s why what the U.S. needs is not a Robespierre, but a Justinian – someone who intimately understands the establishment and what needs to change, and makes deep changes but in a measured and deliberate way.

        Please do not misread my post above to imply that there are not changes needed – there are. There are serious problems, and reforms are needed. But it is a difficult and complex system, and we need the right reforms from people who know what they are doing. We need surgeons with scalpels, not lumberjacks with chainsaws.

        1. Walter Westcot

          I’m not advancing a choice. I’m making a spot on prediction.

          Surgeons are too busy, what with all the false positives necessary to pay for that place in Anguilla.

          Lumberjacks are out of work and, well, you get the picture.

        2. Brown-Color'd Doo

          We need surgeons with scalpels, not lumberjacks with chainsaws.

          I always hope and pray for the help that skilled surgeons can offer (for the right price) after a forest fire, tsunami and earthquake (whatever). Although lumberjacks are what’s needed most at this point during our systemic financial collapse, I’m sure that the current tinkering and fine-tuning being pondered will will produce a clever way to sweep some of the carnage under the rug — and then, at that point we can begin again as a society — finding new and clever ways to value those that have helped hide the wreckage. May God bless all the shitbag lawyers and bankers that will intermingle their species into something that smells more attractive; may their children be blessed with unlimited privileges … and go to school that are far better than those that are being for by taxpayers that have less and less to offer.

          Amen

        3. monday1929

          They have given up any right to a surgeon. Taiibi may get some facts wrong, but he can smell the stench. To address just one point in your mis-representation, the reason the “regulators” are understaffed and underfunded is because the Wall Street criminals payed their bought off politicians to make that so.

    2. Ms Xeno

      Peripheral Visionary: “If you want to prevent what you see as a problem–Wall Street people making money while Main Street people lose it–then you’re going to need to change the law.”

      But what law? The law is a joke because doesn’t apply to banksters, only to the non-rich.

      An important principle to keep in mind is that there are a lot more of us than there are of them. We’ve got the numbers. Will this ultimately come down to lynch mobs and vigilante justice? I don’t know but the more time that goes by without justice being done, the more likely it becomes that people will end up taking matters into their own hands.

      1. Peripheral Visionary

        The law applies to everyone, but the central problem is that in the financial sphere, the law is based on disclosure, where in virtually every other aspect of business law, it is based on good faith, etc. That means that those in the financial sector can basically get away with anything, as long as it is disclosed–and nearly all the time, it is (have you seen the boilerplate?) We do not have the same luxury.

        The central change that would radically reshape the financial sector would be to impose a clear burden of responsibility on financial counterparties, to not just disclose their interests, but to not act in a way that they know to be detrimental to others’ interests. That is a radical change, but it is possible (it is effectively the standard that investment advisors adhere to, but they are only a small sector within the financial industry).

        1. steelhead23

          PV, I think you make excellent points. However, being naive, I have a bit of a bone to pick – is there a difference between a customer, who pays a fee for services, and a counterparty? It is my view that regardless of the disclosures made in a prospective, if an entity charges a fee for services, that entity incurs a fiduciary responsibility to its customer. That is, the fee implies a specific form of relationship, vendor-customer, while the term counterparty conjurs up images of the poker table, a peer, willing to assume the risks that other players may disguise or otherwise hide their real interests. My own experience and the piles of blog entries I have read as regards this crisis suggest that my views on implied relationships are not supported by the law and established dicta. If that is so, our society is coarser than I wish to believe. Thank you for your comments, they are illuminating.

          1. Peripheral Visionary

            steelhead23, you make some good points, but the line between a counterparty and a customer (or client) is not well-defined. Somebody buying a security from his regular broker is both that broker’s counterparty (for that transaction) and client.

            However, the law is quite clear that fiduciary responsibility only applies in the narrow case of a registered investment advisor, which is defined as a financial manager who charges a fee based on assets under management, not a commission. Brokers are not held to a fiduciary responsibility, nor are underwriters. There is a proposal under Dodd-Frank to add the fiduciary standard to brokers, but that decision has not yet been made. And even if that passes, that still leaves problems related to underwriting, market making, etc.

        2. monday1929

          To state in 2011 that “the law applies to everyone” betrays you as a shill. I must have missed the jailing of Lehmans management. There were outright crimes committed. They are not being prosecuted.

          1. monday1929

            And has anyone noted the brokers desperate attempts to prevent them from being made fiduciaries? It would DESTROY their business models.
            Any thoughts on why Robert Rubin is not in jail for delaying bond downgrades until Citi could unload its ARS paper onto its retail customer base?

    3. Real Visionary

      Peripheral Visionary, you need to get off the crack pipe. How long did it take you to write that defense of your friends?

    4. Dirk77

      PV, given enough time and effort anything can be gamed, and since gaming the system is apparently the whole point of finance—as is clear from your post—then the only workable long term solution is to end all regulation and shutter the SEC. All it does now is provide cover for the lie that is “finance.” So, yes, you hit the nail on the head about what people should conclude from the Taibbi article.

    5. EMichael

      It would appear to me that your whistleblower thoughts are incorrect.

      The dialogue was on for whom the whistle was blown, not the whistleblower.

      1. monday1929

        Plus, it lets them first find out if their are any charges pending. When they find that out, THEN they can come forward and cut a deal. Which never includes admitting guilt.
        It does include a promise not to commit more crimes.
        So why are they allowed to repeatedly commit more crimes and simply settle?

  36. Schofield

    Corruption of the democratic political system gave seignorage to the financial industry to loot the country by bubble blowing and now the SEC completes the process by officially offering “Stay Out of Jail Passes.” Change You can Believe In!

  37. LeeAnne

    With no civilized legal system in charge, TPTB are reduced to gangsta rules. They can only rule by killing each other off. Like any other gang, trouble is when they kill each other off, they can take a lot of other people with them. Things like making public spaces unsafe. They obviously don’t care how much air travel they discourage, for instance.

    Madoff could do a great public service if he would leave us the real story unless his remaining child and grandchildren would be at risk. Probably so if what happened to his first son is any example.

    When you see the scope of illegality and despotism; Hillary morphing into Suleiman before our very eyes and a Google creep posing as Egypt’s youth hero while thousands of other political prisoners remain, you see the smallness of the people in charge; and cringe at the enormity of their destructive assets and willingness to use them against all people everywhere.

    1. skippy

      For you LeeAnne…

      ”Sanity is a cozy lie”…Susan Sontag

      http://www.susansontag.com/SusanSontag/books/regardingPain.shtml

      This is also a book about how war itself is waged (and understood) in our time, replete with vivid historical examples and a variety of arguments advanced from some unexpected literary sources. Plato, Leonardo da Vinci, Edmund Burke, Wordsworth, Baudelaire, and Virginia Woolf all figure in this passionate reflection on the modern understanding of violence and atrocity. It includes as well a stinging attack on the provincialism of media pundits who denigrate the reality of war, and a political understanding of conflict, with glib talk about a new, worldwide “society of spectacle:’ just as On Photography challenged how we understand the very condition of being modern, Regarding the Pain of Others will alter our thinking not only about the uses and meanings of images, but about the nature of war, the limits of sympathy, and the obligations of conscience.

      *Slo[[u*…dysfunctional to the end!

      1. LeeAnne

        Thank you Skippy. I will read it. I’ve read On Photography decades ago and Illness as Metaphor – a lasting impression of the waywardness of human thought. A reread of On Photography will be great also from such a different prospective – these last 30 years of American experience.

        I hadn’t realized Sontag was still writing and living through 9/11 where imagery has been everything to the people not directly affected. I was spared the TV version -arriving a few minutes before 9am after both buildings had been hit and on fire. I watched with a crowd near NYU from a horrified but safe distance and sat in Washington Square Park in the aftermath of the collapse as an army of people dressed for the office, some with attaches, evacuated, walking north in shocked silence -away -just away from that to anywhere. There was no transportation.

        I’ve always considered myself lucky to have seen it in real time in a real place, and the people, the firemen traveling on Fifth Avenue on their way to a horrible fate just minutes later. It was the first thing I thought about when the first building collapsed. That those fire trucks held up by construction at Fifth Avenue and 8th Street where I was waiting to cross, had perished in that instant when the first building collapsed. As a result I didn’t watch it – I had no stomach for the TV distortion after seeing and listening to just a few minutes of it. Never was the contrast between reality and the distortion wrought by TV so visceral.

        Watching the images repeated on TV caused mass insanity. A lot of people exposed to the TV version were inoculated with the belief that they had a real experience when they were actually being softened up for the sequel.

        I am so looking forward to Sontag’s version.

  38. Francois T

    The true measure of how little Obama and Congress care about this country (by that, I mean, the country as a whole, not just the country for elites only where they navigate daily) is very well captured at the end of Taibbi’s article.

    But these frauds are worse than common robberies. They’re crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let’s steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They’re attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone’s claims of ownership equally. When that definition becomes tenuous or conditional — [FT: That is, conditional to who you are, as opposed to the inherent merits of the claim] when the state simply gives up on the notion of justice [FT: This shall be Obama’s legacy; not bad for a Constitutional Law professor, no?] — this whole American Dream thing recedes even further from reality.

    Indeed Dr. Matt! Great diagnosis, as always.

  39. john

    Current top 5 most read on Rolling Stone:

    * Justin Bieber Talks Sex, Politics, Music and Puberty
    * Why Isn’t Wall Street in Jail?
    * Britney Spears: A Life in Photos
    * You Choose the Cover of Rolling Stone
    * Exclusive: New ‘Beavis and Butt-Head’ Will Tackle ‘Jersey Shore’ and More

  40. Larry Elasmo

    “…And the ‘Left’ is still worse, simply juxtaposing to this vacant violence a vague spirit of charity. To morbid competition, the pasteboard victories of daddy’s boys and girls, the ridiculous supermen of unleashed finance, the coked-up heroes of the planetary stock exchange, this Left can only oppose the same actors with a bit of social politeness, a little walnut oil in the wheels, crumbs of holy wafer for the disinherited – in other words, borrowing from Nietzsche, the bloodless figure of the ‘last man’.”
    – from “The Meaning of Sarkozy” Alain Badiou

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