Its real name is Racketeer Influenced and Corrupt Organizations Act passed by Congress in 1970 to keep organized crime from profiting from their ill-gotten enterprises, thus negatively impacting our economy. The law has since been interpreted to apply to criminal or wrongful civil acts of persons acting in concert to engage in unlawful acts, and while many have attempted to misuse the statute for other forms of civil wrongs, like a mere breach of contract, the law provides a very useful tool for the clever plaintiffs’ attorney or a prosecutor in search of justice for major wrongdoers.
In civil law terms, the winner gets triple their damages; in criminal law, they pay huge fines, have to make restitution and go to prison, often for a long time. So what happens when a run-of-the-mill financial institution encourages its managers and employees to create false numbers, or numbers they know are unsustainable, to sell securities that they really know are bogus? To convince mortgage applicants to lie on their loan forms? And what happens if financial institutions act in concert to hoard money that is vital to the nation’s survival, money that was in fact borrowed at very favorable rates from the government (that set lower rates seeking to create payroll-saving liquidity), waiting for a financial collapse so that they can bottom feed on the wasteland they helped create? Is this the “conscious parallelism” of the seldom-enforced antitrust laws or just a down-and-dirty RICO violation? Perhaps we may also find violations of stock manipulation and other laws.
The stock market opened this morning, plunging by more than 600 points. The automatic “buy stock if it is cheap enough” triggers set at 8,000 triggered a small recovery, but the overall impression of the U.S. economy, in particular, and the global economy, in general, is still strongly negative. We need some major risk-takers to begin to lead with confidence. No major investors, no confidence, no recovery. But there are some potential investors out there – using cheap money from the Fed – who aren't playing by the rules.
If this debacle unfurls so the we do in fact step into a depression or even a deep recession, and if the banks and other financial institutions who benefited by the lower Fed rates and the bailout potential – and their profit-sharing managers – wind up getting rich and fat on the carcasses of the unemployed and those whose homes are stacked in the rubble of real estate hell… if they profit from our misery from money they borrowed from us (the Fed) and hoarded… might I suggest that in lieu of riot and revolution, we strongly consider naming a lot of defendants in a lot of civil and criminal RICO actions and get that money back (times three!) to the taxpayers?
The President spoke this morning, and besides verbal palliatives and a small allusion to prosecuting people planting false rumors to impact stock prices, I didn't hear anything other than a summary of the recent policies. He even suggested that the same banks who just refilled their coffers with massive cheap loans from the Fed didn't “have the capital” to create the lending environment the government intended.
The Dow dropped well over 100 points immediately after that speech, so we can see how the market feels about his words. Today, the Administration needs to send a less-than-subtle message to those institutions – that federal civil and criminal prosecutions are hanging in the air – to shake some money down to the grassroots who need that credit and foreclosure relief now. If they don't, I guess it’s pretty clear whose side they're on… This is about our jobs and our homes!
A word of caution to the number crunchers and opportunity seekers, the young analysts trying to make an impression… there’s a lot more to take into calculation than the projected profits! Your office hours could be replaced with visiting hours! There is a political election taking place with angry voters sending you a clear signal, no matter who wins. Somewhere out there, a Grand Jury might just be holding a chair for just for you. We don't need any more economic villains out there; we need new heroes.
I’m Peter Dekom, and I approve this message.
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