FacebookTwitterGoogle+RedditEmail

Wall Street’s Code of Silence

by RUSSELL MOKHIBER

Gretchen Morgenson and Joshua Rosner were at the Wilson Center in Washington, D.C. this week for a discussion about their book – Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon.

During the question period, Blair Ruble, who heads the Kennan Institute at the Wilson Center, stood up to speak.

He told a story about when he was at a conference in Elagua, Tartarstan.

“I was pulled out of the conference, and was told the Minister of Economics was coming from the capital of Kazan to see me,” Ruble said.

The country had apparently invested some of its oil wealth with the U.S. government and the Minister was concerned about the lack of accountability after the collapse of the housing bubble.

“They had this oil revenue and they didn’t trust the Russian government,” Ruble said. “I was the first American he could find. We had lunch. After realizing I couldn’t help him he said to me – ‘When did you Americans become Russians?”

“I’m going to prove to you that you really are nothing but Russians,” the Minister of Economics told Ruble.

“Five years from now, mark my words – none of the people responsible for this – not only not be held accountable – they will be in more important positions – that is what would happen in Russia.”

Rosner pretty much agreed.

“My father was a federal prosecutor and my mother was a criminologist, and her speciality was Soviet criminology,” Rosner said. “As she read our book – she kept saying – Jesus, this sounds like the way it is done there. Every piece of it. You have an entrenched bureaucracy without accountability.”

Rosner said a “code of silence” protects those complicit in the recent collapse.

“All of the parties central to this crisis are unwilling to point fingers, recognizing that their power base comes from the silence,” Rosner said. “As long as everyone keeps silent, each one will recognize that they rise to the next level. You see that throughout our government at this point.”

Case in point: former Office of Management and Budget Director Peter Orszag.

Rosner said that the Orszag case is “one that I find most offensive.”

“It’s not on the level of Timothy Geithner or Hank Paulson, but it’s troubling,” Rosner said.

“Peter Orszag was co-author of a study paid for by Fannie Mae back in 2000 or 2001,” Rosner said. “It argued that Fannie and Freddie are incredibly safe and sound, that the stress test that was going to be employed by the regulator insured their safety and soundness. And that there was something like a one in 500,000 chance that they would end up imperiled. And even if that happened, the cost to the taxpayers would be a few million dollars. That’s pretty much what the paper said.”

“Orszag ends up as the head of OMB. And when the government takes Fannie and Freddie into conservatorship, he says – there is about a five percent chance that the government could be on the hook for more than $100 billion. Wrong again. No one calls him out.”

“Orszag is now the vice chairman at Citibank. I noticed the other day he put out an op-ed on Bloomberg which was clearly positioned to support his current institution. And nowhere does it say that he had anything to do with the government, the GSEs. And that’s just the way Washington works.”

“He obviously was in that position to add three zeros to his income on the other side,” Rosner said. “It’s not about public service. It’s about self service.”

Morgenson lamented the lack of criminal prosecution.

“I know proving criminal intent is exceedingly hard,” Morgenson said. “But if we don’t get some scalps, you will have left most people with the idea that you can get away with murder as long as it’s involving not a gun but a pen and a financial institution. That’s the wrong message we should send. It’s pernicious and damaging.”

“In the savings and loan crisis there were 839 criminal prosecutions that resulted in jail time,” Morgenson said. “And these were not just low level people. These were CEOs in some cases, CFOs – very high level people. We have had very few this time around. And the people who were on the scene (during the S&L crisis) tell me that because of the regulatory failure during the mania, we are now seeing very few prosecutions. ”

“It’s bad enough that the regulators allowed the bad behavior and practices to proliferate. But now it’s going to result in very few prosecutions.”

“This feeds into the idea that there are two sets of rules in America. There is one set of rules for people like you and me. And there is another set of rules for people who are powerful, who are politically connected, who have very high level jobs, who know the right people.”

Russell Mokhiber edits the Corporate Crime Reporter.

Russell Mokhiber edits the Corporate Crime Reporter.

More articles by:
Weekend Edition
May 27, 2016
Friday - Sunday
John Pilger
Silencing America as It Prepares for War
Rob Urie
By the Numbers: Hillary Clinton and Donald Trump are Fringe Candidates
Paul Street
Feel the Hate
Daniel Raventós - Julie Wark
Basic Income Gathers Steam Across Europe
Andrew Levine
Hillary’s Gun Gambit
Jeffrey St. Clair
Hand Jobs: Heidegger, Hitler and Trump
S. Brian Willson
Remembering All the Deaths From All of Our Wars
Dave Lindorff
With Clinton’s Nixonian Email Scandal Deepening, Sanders Must Demand Answers
Pete Dolack
Millions for the Boss, Cuts for You!
Peter Lee
To Hell and Back: Hiroshima and Nagasaki
Gunnar Westberg
Close Calls: We Were Much Closer to Nuclear Annihilation Than We Ever Knew
Karl Grossman
Long Island as a Nuclear Park
Binoy Kampmark
Sweden’s Assange Problem: The District Court Ruling
Robert Fisk
Why the US Dropped Its Demand That Assad Must Go
Martha Rosenberg – Ronnie Cummins
Bayer and Monsanto: a Marriage Made in Hell
Brian Cloughley
Pivoting to War
Stavros Mavroudeas
Blatant Hypocrisy: the Latest Late-Night Bailout of Greece
Arun Gupta
A War of All Against All
Dan Kovalik
NPR, Yemen & the Downplaying of U.S. War Crimes
Randy Blazak
Thugs, Bullies, and Donald J. Trump: The Perils of Wounded Masculinity
Murray Dobbin
Are We Witnessing the Beginning of the End of Globalization?
Daniel Falcone
Urban Injustice: How Ghettos Happen, an Interview with David Hilfiker
Gloria Jimenez
In Honduras, USAID Was in Bed with Berta Cáceres’ Accused Killers
Kent Paterson
The Old Braceros Fight On
Lawrence Reichard
The Seemingly Endless Indignities of Air Travel: Report from the Losing Side of Class Warfare
Peter Berllios
Bernie and Utopia
Stan Cox – Paul Cox
Indonesia’s Unnatural Mud Disaster Turns Ten
Linda Pentz Gunter
Obama in Hiroshima: Time to Say “Sorry” and “Ban the Bomb”
George Souvlis
How the West Came to Rule: an Interview with Alexander Anievas
Julian Vigo
The Government and Your i-Phone: the Latest Threat to Privacy
Stratos Ramoglou
Why the Greek Economic Crisis Won’t be Ending Anytime Soon
David Price
The 2016 Tour of California: Notes on a Big Pharma Bike Race
Dmitry Mickiewicz
Barbarous Deforestation in Western Ukraine
Rev. William Alberts
The United Methodist Church Up to Its Old Trick: Kicking the Can of Real Inclusion Down the Road
Patrick Bond
Imperialism’s Junior Partners
Mark Hand
The Trouble with Fracking Fiction
Priti Gulati Cox
Broken Green: Two Years of Modi
Marc Levy
Sitrep: Hometown Unwelcomes Vietnam Vets
Lorenzo Raymond
Why Nonviolent Civil Resistance Doesn’t Work (Unless You Have Lots of Bombs)
Ed Kemmick
New Book Full of Amazing Montana Women
Michael Dickinson
Bye Bye Legal High in Backwards Britain
Missy Comley Beattie
Wanted: Daddy or Mommy in Chief
Ed Meek
The Republic of Fear
Charles R. Larson
Russian Women, Then and Now
David Yearsley
Elgar’s Hegemony: the Pomp of Empire
FacebookTwitterGoogle+RedditEmail