Wednesday, August 10, 2016
Irish Sweep Snakes
In the financial capitals of England and the United States, the message from governments to the leaders of the financial institutions that misled the public, made huge financial bets against their own recommendations to their own clients, dealt in securities they knew were toxic, worked hard to hide deep flaws on their own balance sheets and effectively precipitated the Great Recession with their unbridled greed was simple: you not only will never face any criminal liability but we will bail out your companies because they are so damned important to our economy.
In the United States, an exceptionally watered-down Dodd-Frank statute squeezed by a momentary Democratic-inclined Congress, but faced paralyzing unfunding or defunding as soon as Republicans dominated both houses of Congress. While some really junior operatives took falls from a couple of UK/US-based financial institutions, not one solitary single senior manager at any of the major financial institutions that perpetrated the Great Recession through the above-enumerated activities faced any governmental fine or criminal prosecution, even though so many of these executives clearly violated rather obvious criminal statutes. They had the best lawyers. Their ability to kill transparency worked. They got a “get out of jail free” card that would never, never be accorded to ordinary citizens. In fact, a number of these perps are still well-installed at the helms of their respective companies.
In the United States, we refer to the financial community with the New York City shorthand, “Wall Street.” London’s equivalent is called the “City” or the “Square Mile.” But no one senior from the City or Wall Street was convicted of any of the many crimes they actually committed. They still roam free, able to continue to try and fix interest rates, side-step governmental restrictions against providing financial access to our enemies, issue miscreant derivatives and generally deploy their capital to manipulate the marketplace to their own benefit without doing anything good for the rest of us or even supporting making anything of value. They have been able to continue their “funny money” operations with minimal new regulatory limitations.
Wall Street and the City are fully able to continue their pillaging of their own economies, to self-deal and to claim, and despite tsunamis of evidence to the contrary, insist that they are fully capable of regulating themselves. Their companies continue to pay massive fines for clearly illegal activities, but expected fines are now just built into their financial models and have little or no deterrent impact on future misconduct. These moral lapses that enriched their coffers have led inextricably to the kinds of income inequality that have led to Brexit and Bernie… and have pitted Trump against Clinton for a solution.
Putting the senior executives who enable, condone and often even direct such malevolent activities in jail just isn’t even on the table in the U.S. or the U.K., even as current politics tells you that voters find this behavior intolerable. It just isn’t good form in a plutocracy to jail your top plutocrats, apparently.
Enter Ireland, now vying to become the replacement center of EU finances with London’s departure. “In the aftermath of the Great Recession of 2008, amid the destruction of businesses, lives and trust, many clamored for accountability. People wanted trials, convictions, the closing of tax loopholes and a broad repudiation of bankers’ being above the law. Nearly a decade after Lehman Brothers declared bankruptcy and the financial crisis unraveled, those calls have largely gone unanswered, including in the United States.
“But on [July 28th], a court in Dublin convicted three top-level bankers of crimes related to their roles in the global market meltdown. The punishments, which range from two to about four years, may seem light but represent a rare instance of prison sentences for actual individuals, rather than fines levied against companies at large. The trio were part of just a handful of banking executives charged over their roles in the crisis. One was the finance director at Anglo Irish Bank, which failed in 2011.
“All three bankers were convicted of conspiring to dupe clients through what the judge called ‘sham transactions’ and a ‘very serious crime.’ In short, their scheme went like this: They would deposit money in one another’s banks but label those deposits as having been made by customers. Because customer deposits are viewed as more secure than those made by other banks, this was a way to defraud investors and creditors. In doing so, they essentially inflated Anglo Irish Bank’s deposit levels by about $8 billion.
“That inflation was meant to obfuscate the funding crisis at Anglo Irish Bank, which had invested heavily in a property bubble in Ireland that popped almost as soon as the financial crisis began in the United States. As the crisis spread from the United States to the European Union, of which Ireland is a part, Irish banks were frantically asked to pay back loans and debts to U.S. banks, but they couldn’t. That, in turn, led to Ireland asking the European Union for the most expensive bailout in its history.
“‘By means that could be termed dishonest, deceitful and corrupt they manufactured 7.2 billion euros in deposits by obvious sham transactions,’ Judge Martin Nolan said in his ruling. ‘The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all hope or trust in institutions.’…
“Nolan was unsparing in his critique of the men’s business practices and called Anglo Irish ‘probably the most reviled institution in the state.’ After he read their sentences, the former bankers were led away from the court to be transported to Mountjoy Prison, Ireland's largest.” Washington Post, July 31st. They should have moved to the United States where they would have been given raises.
In the United States and England, some of those miscreants are in the same companies making more money than ever before. A few got better offers. Others, who were dismissed, got severance packages representing many lifetimes of total earnings for ordinary mortals. For the rest who may have “moved on,” they already made so much money that they will never want and will live excessive lives as before. What is it about “outrageous” that our Republican Congress just doesn’t understand? Why does Ireland get it… for essentially the same acts?
I’m Peter Dekom, and unless and until the consequences to the most senior managers of these mega-financial institutions for their companies’ outrageous behavior involve hard jail time, nothing is going to change.