The notion of putting the Bush years on trial has never held allure for President Obama; even less so that of putting Wall Street in the dock. From his lips has always dropped the catechism of uplift and forgiveness, of “moving forward”. He and his advisors had supposed that closing down Guantanamo and issuing a stern denunciation of torture would be sufficient advertisement of the new era; that a few terse reprimands for excessive bonuses for executives would slake the public appetite for retribution on the bankers and tycoons.
On torture, as he approaches the 100-day benchmark, Obama has been forced to change step, in response to public outrage at the chilling stream of memoranda documenting the savageries, and legal justifications for same, ordered and subsequently monitored in minute detail by the Bush high command. Obama’s continuing aversion to any serious calling to account of the sponsors of torture has been evident in his almost daily shifts in position. At the start of this last week he indicated that yes, those okaying the tortures might be legally answerable, that a “Truth Commission” might be the way forward. By Thursday he was backing into that, saying that a commission would “open the door to a protracted, backward-looking discussion” and in the language of his press secretary, “the president determined the concept didn’t seem altogether workable in this case” because of the intense partisan atmosphere built around the issue.
So it’s still not clear whether Bush, Cheney, Rumsfeld and their subordinates will have to endure the soft option of a bipartisan commission of enquiry, or face a special prosecutor, or sit back and watch political momentum flag as the issue devolves into lengthy and possibly closed hearings by the Senate Intelligence Committee. As Republicans have not been slow in pointing out, senior Democrats in Congress were certainly complicit in sanctioning torture as early as 2002. They say House Speaker Nancy Pelosi endorsed waterboarding. She says she did not.
As always, former vice president Cheney has usefully raised the stakes. Did the various tortures, the hundreds of waterboarding sessions, the exposure of naked captives to weeks of intense cold in small concrete boxes, actually make America safer? Cheney snarls on television that they did, thus inviting documented ripostes that this is far from clear, and indeed they contributed nothing of advantage to the national interest.
A serious probe into the way Wall Street did business before the crash and during the bailout is even more politically fraught. Bipartisanship has always been the order of the day when it comes to enthusiastic receipt of campaign donations from the financial services industry, by far the most diligent supplier of funds to Democrats and Republicans alike, not omitting Obama himself, whose campaign accounts overflowed with money from Goldman Sachs and the big Wall Street forms.
But with each fresh billion dollar outlay of bailout money there’s been an uptick in public resentment which is why Speaker of the Nancy Pelosi let it be known last week that she proposes to launch Congressional hearings into Wall Street’s malpractices, along the lines of the famous hearings of the Roosevelt era, conducted by the Senate Banking Committee and led by the committee’s chief counsel, Ferdinand Pecora.
The diligent Pecora, formerly an assistant District Attorney from New York, used his committee’s subpoena power to expose the double dealing and chicanery of Wall Street’s most prominent denizens, among them Richard Whitney, Thomas Lamont and J.P. Morgan himself. His hearings set the stage for the regulatory apparatus set up by Roosevelt and the Democrats, ultimately dismembered in the late 1990s in a bipartisan spirit by Bill Clinton and his Treasury Secretary Robert Rubin, working in consort with Republican senator Phil Gramm.
At this point let me toot CounterPunch’s horn. On January 11, 2003, CounterPuncher Jackie Corr channeled the ghost of Ferdinand Pecora on this site. Corr wrote:
To the lords and ladies of America’s state religion, upholders of the dogmas of the hard righteousness of the Marketplace, even the threat of a public forum on the causes of the Depression was considered an outrage. And now, the hearings have become a reality bringing fear and paranoia to the Wall Street temples and mansions…As Wall Street was to discover, Ferdinand Pecora was a man who did his homework and the first days of the hearings sent the country into an uproar as Charles Mitchell admitted to: Dodging his 1929 income tax with the ruse of a fictitious loan of $2,800,000 from the National City Company [the precursor to today’s Citigroup].
Wall Street veteran, Pam Martens, a regular here at CounterPunch, channeled Pecora again on March 17, 2008. Martens quotes testimony supplied to the SEC in August 2001, when there was still time to avert a collapse of the financial system:
The body of evidence that should dictate how the SEC must now proceed since Congress saw fit to eliminate the critical protections afforded the investing public in the Glass-Steagall Act, resides in the tens of thousands of pages of transcripts of the Pujo Committee hearings held in 1913 and the Pecora Committee hearings of 1933 and 1934. Fancy promises from regulators that banks functioning in the dual role as brokerage firms can and will be self-policing is not what the SEC or Congress should rely on. The well-developed history of egregious abuses bestowed on the investing public prior to the enactment of Glass-Steagall, and since its recent repeal, is what the SEC and Congress must look to. To believe that the dynamics of power and greed have been materially altered in nine decades is to engage in naiveté at the public’s peril.
Did CounterPunch channel Pecora all the way to House Speaker Nancy Pelosi’s office? Martens tells me there’s only one man in the country with the depth of experience and public trust to become the new Pecora: Massachusetts Secretary of State William Galvin, who has been at the forefront of bringing enforcement actions against securities firms to protect investors.
Martens says Galvin should take a leave of absence from Massachusetts to step into the role for the good of the country. He has a crackerjack team already in place to hit the ground running. Where would the modern day Pecora begin in unraveling the corruption? Start with the key issues we’ve been raising here at CounterPunch for the past two years: the clubby and opaque world of credit default swap trading at Markit Group Ltd.; the still unanswered question as to why the largest names on Wall Street formed a trading company called Primex with Bernard Madoff; what was really going on in Citigroup’s secretive oil trading operation, Phibro; what was the role of Merrill Lynch and Citigroup in loading up Fannie Mae and Freddie Mac with a crippling burden of derivatives; who preempted the regulators from stopping this debt train before it drove the whole economic system in the ditch?
To be anything other than a pro forma whitewash, Pelosi’s Pecora-style committee would certainly have to have a relentless chief counsel and power of subpoena. How diligent and merciless the congressional inquisitors will be is open to surmise. As a story on Bloomberg News – citing the Center for Responsive Politics, pointed out last week, Wall Street’s individual and political action committee donations in 2007 and 2008 totaled $463.5 million, compared with $163.8 million from the health-care industry and $75.6 million from energy companies. Individual and PAC donations from Goldman Sachs Group Inc. which totaled $30.9 million, and Citigroup Inc., at $25.8 million, were higher than those from any other company except AT&T Inc.’s $40.9 million over the last 20 years.
Every decade or so, we get Congressional hearings that dramatically symbolize a significant change of step. The original Pecora hearings did that. The McCarthy hearings of the early fifties served as buttress for the Cold War and domestic red-baiting. The Fulbright committee hearings into the Vietnam war in Sixties were important. In the 1970s it was the Watergate hearings chaired by Senator Sam Ervin that set the stage for Nixon’s ejection from the White House. In the 1980s when Republicans controlled Congress, the “Contragate” hearings discomfitted Reagan and gave Ollie North his launch-pad as the hero of the right. The 90s gave us the glorious diversions of Bill Clinton’s impeachment. Is it possible that well-staged hearings into the way Wall Street really did business across the past 15 years will be as momentous? The odds are against, since too many big players in the White House, the Congress and on Wall Street, have too much to lose.
But as with settling accounts with the Bush years on torture, it’s a matter of political pressure and political circumstance. Obama has sensitive antennae to opinion, hence his wavering across the last week. Pelosi knows the level of popular fury at the bankers and Wall Street. Hence her signal about a Pecora-style probe. If the economic crisis depends and the bankers howl for more bailout money, the Democrats could see advantage in a set of tough hearings, just as FDR did in 1933.
Another Journalism Prize: Shame Brought on Family Name
Last week I congratulated CounterPuncher P. Sainath for being named Journalist of the Year at the third Ramnath Goenka Excellence in Journalism Awards in New Delhi last Monday. He’s passing on the roughly $5,000 in prize money to the widows of farmers who committed suicide in the district of Vidharba, whose awful toll of farmer suicides Sainath has described in great detail on this site.
I did remark that as a rule CounterPunch disapproves of the endless prizes the journalism industry awards itself. Many years ago, the great editor of Le Monde, Hubert Beuve-Mery let it be known that anyone at his newspaper accepting an award would be fired. These farcical rituals peak in the annual absurdities of the Pulitzers. As Eamonn Fingleton detailed in damning detail on this site on Thursday, a more appropriate ceremony would have been anti-Pulitzers tendered to the Wall Street Journal and New York Times for sitting on the Bernie Madoff story for at least four years.
Now I see that another CounterPuncher has been given a major journalism prize. His newspaper reports that “Patrick Cockburn The Independent’s foreign correspondent has won the 2009 Orwell Prize, the most prestigious award for political writing in British journalism.” The judges hail his work as “an exemplary untangling of the political and social complexity that lies behind one of the world’s great crises”. They praised the manner in which Cockburn’s work “enriches our understanding”. This is well merited praise, but… the Orwell Prize? I have not yet had an opportunity to remonstrate with Patrick about accepting a trophy etched with the name of a police informer. I can only hope that some very substantial financial dispensation accompanied the award – the sole argument for accepting this or any such prize. At least our parents are not alive to witness this shame.
The Free State Project
It so happens that Pam Martens has the lead story in our latest newsletter, on a subject linked at the level of economic and philosophical barbarism with the shenanigans on Wall Street she has been exposing for us so diligently. She describes in compelling detail the plans of the Free State Project:
It’s like a bad B movie plot playing out in real life in New Hampshire: a twenty-something political science grad student has an idea for a new economic order. He posts it on the Internet. Over a few years, as disenchantment with Big Brother government grows, the idea takes off. A call goes out from the grad student and his eclectic gang of libertarians and anarchists for 20,000 people from around the country to move into New Hampshire and prove his thesis: (1) that small numbers of hyperactive political agitators can control the political process in a thinly populated state; (2) that free market capitalism will work just fine alongside a system where citizen volunteers, not government, provide all social welfare programs.
Fast forward to today: quiet rural countrysides spotted with maple sugar houses and wild flower meadows are sprouting pockets of political extremism and YouTube videos of defiance against state and local laws.
The grad student is Jason Sorens, at Yale at the time of his epiphany, now a thirty-something assistant professor of Political Science at the State University of New York in Buffalo. Dr. Sorens’ grand experiment, the Free State Project, was spawned in 2001 and is now playing out in 17 towns across New Hampshire, taking on a life of its own, and, frequently, using heavy handed intimidation tactics to assert its will.
Arm yourself with this brilliant expose, so that you will be adequately prepared for astounding fresh disclosures about the Free State project from Martens which we will be printing on this site this coming Monday.
Also in this dynamite issue of our newsletter: the Curse of Nelson Rockefeller. In 1973, he got the New York legislature to pass what immediately became known as “the Rockefeller Drug Laws,” These laws imposed very long sentences, many with mandatory minimums, for what were often minor offenses everywhere else. Sale of two ounces of heroin, morphine, opium, cocaine or cannabis in any form, or possession of four ounces of those same drugs brought the same sentence as second-degree murder: 15 or 25 to life, with no parole before the minimum was served and no judicial discretion.
Thousands of drug dealers, drug users and “mules” went to prison for decades under the Rockefeller laws, but few big time dealers did any more time under them than they would have under the laws that had been in place before 1973, primarily because many of them – like Nicky Barnes and Frank Lucas – were not only willing to turn informer, but had enough people to snitch on to make massive sentence reductions worthwhile to the prosecutors.
Now by agreement between Gov. Paterson and the New York state assembly, these laws are about to be repealed. Read Bruce Jackson in CounterPunch newsletter on the true reasons for repeal and the awful legacy of a truly appalling human.
Also in this terrific new issue: Half a million new jobless every month and the salesmen of “free trade” still hawk their credo. Paul Craig Roberts describes what offshoring has done to America.
The first item appears in The First Post.
ALEXANDER COCKBURN can be reached at email@example.com