Raids on Wall Street firms and a serious global investigation can't solve the deeper problem, but it sure would be a good start.

February 21, 2008

By Danny Schechter (View author info)

After dragging its G-Man heels for years, someone at the FBI has woken up and realized that laws have been broken by the financial industry. Those violations are part of what led to the economic abyss we are facing. The ever-vigilant bureau that blew its 911 probe has just announced an investigation of 14 unnamed mortgage companies involved in a variety of scams. Talk about going after small fish.

In this week of football mania, what we know and they have yet to learn, is that if you dig deeply, you will soon be playing in a Super Bowl of corporate criminal complicity.

We need a special prosecutor and some zealous investigators who know something about white-collar crime waves. One suggestion: bring back former veteran FBI agent turned whistleblower Coleen Rowley, a recent TIME Magazine "Person of the Year," to head the taskforce. Rowley told me she used to work cases like this with the former Rudolph Giuliani, who once made a name for himself as the scourge of Wall Street crime families. (Maybe it takes someone with a Mafia patrimony to know how to smell the scammers and then use RICO anti-conspiracy laws to put them behind bars.) That was before Rudy decided to join another mob - the Homeland Security fearmongers to cash in on 911.

Today's financial racketeers span the globe, and are not confined to a solo junior trader at a French bank who lost over $7 Billion on trades. He was driven, he says, to make a big bonus and with, he adds, the knowledge of all his overlords who now feign great shock--SHOCK!--about what he, and in their view, he alone, did. There are even news organizations in Europe who believe that the whole global financial crisis was the work of one bad man. This sounds like a replay of the "lone assassin" theory that always pops up after high profile killings.

To its shame, our media has once again not been in the lead on this vital story. It is still not framing it in criminal terms. It is not investigating the role of institutions working together--big banks, hedge funds, rating agencies, and the securities industry -- making super-profits with deceptive subprime transactions. That is, before their securitized schemes blew up in their faces causing super-losses and the writedowns of billions.

That, in turn, contributed to a larger economic meltdown that may go beyond being a mere "recession." The press seems to have no "institutional memory" about past crashes and Enronesque scandals, or the way greed and unlawful activity regularly makes for so much misery because it is the people who can least afford it who always suffer the most. Pundits are better at doing post-mortems than insuring accountability with hard-digging watchdog journalism.

So where's the editorial outrage? Where are the calls for the prosecutions of the fraudsters? As Pam Martens explains on Counterpunch, "Mainstream media has also been implanting the idea that it's all about homeowners and mortgage loans instead of banksters hiding bad debt." So there is a trust issue with media as well as the financial overlords. Forbes admits: "This predicament of trust ceased to be a subprime crisis long ago. We face a global credit crisis..."

Mike Whitney puts the problem in a nut shell: "The financial system has been handed over to scam-artists and fraudsters who've created a multi-trillion dollar inverted pyramid of shaky, hyper-inflated, subprime slop that they've sold around the world with the tacit support of the ratings agencies and the US political establishment."

Understand the relationship here. Policymakers addicted to right-wing ideology allowed this crisis. A lack of oversight and regulation enabled it. Full Stop! No wonder the bankers meeting in Davos at the World Economic Forum are blaming the Bush White House and its so-called "free market" economic policies for bringing down the "free market."

The decisions of the Federal Reserve Bank--which was warned about a predatory lending disaster and did nothing--was a big part of the problem and its latest round of rate cuts is likely to make matters worse as inflation rises and the people who need help the most don't get it.

This underscores the old truth that the "masters of the universe" recognize. As much as they protest restraints on their unscupulous endeavors, they know that regulations and rules in the marketplace are needed to keep them from killing each other off. Without oversight, in the words of the poet, "the centre does not hold" and "things fall apart."

Of course, finger-pointing bankers rarely blame themselves for anything, even now as they dissemble and downplay their losses while laying off thousands of employees adding to the unemployment lines. Almost every big brand name bank has been complicit in a subcrime scheme.

Many of the smartest minds in finance are worried that this train wreck can't be stopped. George Soros calls it the worst crisis in 60 years and fears worse to come. Writers are even invoking the worries of top conservative economists like Ludwig von Mises who said: "There is no means of avoiding the final collapse of a boom brought on by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

"Total Catastrophe?" Yikes.

And what about the politicians? Most have been silent while still taking donations from the FIRE combine. FIRE stands for the three industries funding much of our politics, Finance, Insurance and Real Estate. They are now trying to put out a financial wildfire with a pathetic bucket brigade in the name of economic "stimulus."

To do "something," the Democrats in the House have passed a measure that everyone knows is a joke, and what they are doing is going along once again with Bushevik policies to reward the greedy and those with the least pain.

What's left of the left, or "progressive" world, is also largely silent, as if economic justice has not always been at the center of the fight for a better world. There has been little direct action to stop massive foreclosures with blockades at home auctions or campaigns for debt relief?

Why can't the next big anti-war march in March, on the 5th anniversary of the Iraq attack, not broaden its focus to include the way war spending has contributed to the economic decline, and condemn the media for bolstering the occupation, and awaken a new fight for economic change to challenge all the candidates and Wall Street.

And to return to the Fee Bee Eye: You want to see real terror and homeland insecurity? Visit any town and most homes in this country as the economic sqeeeze made worse by high gas and food prices tightens its grip on the dreams and hopes of Americans of all ages, colors and classes. As the larger bill comes due, many of us can barely pay our endless loans and credit card bills.

Raids on Wall Street firms and a serious global investigation can't solve the deeper problem, but it sure would be a good start.

NOTES: Emmy Award winner Danny Schector, a journalist and a documentary filmmaker identified and began exposing and calling for investigation on the debt crisis and financial fraud in in America. His documentary film In Debt We Trust explores the relationship between the Congress and the Credit Complex and how it is having an enormously negative impact on America's financial health. In December 2007 Danny learnt about the work of American Homeowners Resource Center and formed a alliance with them to expose and bring about reform in the home foreclosure crises.

Danny is also the producer of the film "Weapons of Mass Deception" and author of the book Embedded: Weapons of Mass Deception : How the Media Failed to Cover the War on Iraq

Both film are educational public interest documentary films and are available of DVDs- AHRC News Services