Book 'Em - Too Big To Fail But Not Too Big to Go to Jail

Too Big To Fail But Not Too Big To Go To Jail!

More than a year into the economic crisis caused by Banksters running amok on Wall Street, NO EMPLOYEE OF ANY MAJOR AMERICAN BANK OR FINANCIAL INSTITUTION IS BEHIND BARS.

Yes, it's true that the ponzi-twins Bernie Madoff and Robert Allen Stanford are in jail. And, yes its true that the Securities and Exchange Commission (SEC) has a civil-fraud case against Countrywide's Angelo Mozilo and is attempting to fine Bank of America/Merrill Lynch $33 million for a $3.6 billion dollar heist. But a year out from the meltdown that has cost taxpayers $3 trillion (so far) and untold pain in the form of foreclosures, unemployment, collapsed retirement accounts and more – not one Wall Street Bankster has traded pin stripes for jail stripes.

Compare this to the Savings and Loan (S&L) heist of the early 1990s. Regulations governing S&Ls were loosened allowing the thrifts to make riskier investments and to capitalize on the real estate boom of the 1980’s. Weak supervision, outright fraud and political corruption (most famously represented by the Keating Five scandal) also contributed to the crisis. When the real estate boom went bust, 747 S&Ls holding assets of $400 billion were closed or reorganized by the government. The extent of the disaster turned it into a major threat to the U.S. financial system and contributed to the economic slump of the early 1990s. The ultimate cost of the fiasco for the American taxpayer? $124 billion – at the time the largest government bailout of a corrupt industry in history.

But here is the interesting part. According to U.S. Department of Justice statistics, between 1990 and 1995 no less than 1,852 S&L officials were prosecuted and 1,072 placed behind bars. An additional 2,558 bankers were also jailed, many for offenses which were S&L-linked.

William Black, the professor of economics and law at the University of Missouri who was deputy director of the Federal Savings and Loan Insurance Corporation with oversight authority during the the S&L crisis, tells us that our current banking crisis is very similar. It is the result of massive, pervasive fraud and a deregulatory culture that has nurtured criminal behavior by very highly paid bank executives. He is scathing in his critique of federal authorities and outlines a compelling case for criminal prosecution.

Black told Barrons: "This whole bank scandal makes Teapot Dome look like some kind of kids' doll set...we have a situation where Treasury Secretary Tim Geithner can speak of a $2 trillion hole in the banking system, at the same time all the major banks report they are well capitalized. And you have seen no regulatory action against what amounts to a $2 trillion accounting fraud. The reason we don't see it – aren't told about it – is that if they were honest, prompt corrective action would kick in, and then they would have to deal with the problem banks."

The stats – 1,072 convictions after the S&L crisis and 0 today – are a little shocking. Are the feds only capable of going after 1920s-style ponzi schemes after the people involved fess up? While it is true that the FBI had its financial fraud team gutted after 9/11 and tasked to terrorism investigations, the FBI and the U.S. Department of Justice were given new resources by Congress to beef up the white collar crime division.

Yet, AIG’s Joe Cassano – dubbed the “the man who crashed the world” by Vanity Fair and “patient zero of the global economic meltdown” by Rolling Stone – has apparently not even been deposed. Cassano’s team sold $500 billion in credit default swaps (a type of insurance policy on a derivative) – only a fraction of which the insurer could ever hope to pay back. The fallout from the AIG catastrophe alone is greater than the entirety of the S&L crisis. So far U.S. taxpayer are on the hook for Cassano’s mistakes to the tune of $182 billion and AIG counterparties are on the hook for billions more.

Why aren’t more Wall Street types mopping floors in the big house? McClatchy Newspapers gives us two perspectives on this. "The investigations are very complex; it's not something that's going to turn overnight," says Bill Carter, a spokesman at FBI headquarters. "They are labor intensive. They involve a review of records." Consumer advocates offer a different explanation. "A lot of people who are responsible (for the crisis) seem to have gotten awfully rich in the process," said Barbara Roper, the director of investor protection for the Consumer Federation of America.

Super-rich Banksters have lawyers up the yingyang. They can bedazzle and bamboozle. Check out this tape of Bernie Madoff coaching his staff on how easy it is to fool the SEC which ignored at least 6 warnings over 16 years that the firm was a fraud. In the end, Bernie was only caught when his sons turned him in to federal authorities.

But more importantly, it is clear that the Banksters have been coddled since day one of the crisis. While auto execs were taken to task for flying private jets to D.C. to testify about their failures, no one said "boo" about Bank of America's $50 million Gulfstream jet when Ken Lewis arrived in Washington, D.C. Congress soft peddled, the White House scheduled meeting to ask the CEOs of the largest banks for advice on how to handle the crisis, and the Treasury Department and the Federal Reserve went to unprecedented lengths to throw our money at the problem and bailout the financial sector.

In November 2009, the Justice Department announced the creation of a new "Financial Fraud Enforcement Task Force." While 20 federal agencies will participate in the task force, it is unclear just how many new agents are being put on this beat. Rep. Marcy Kaptur (D-Ohio) has introduced a bill in Congress, HR 3995, to fund 1,000 new agents to investigate corporate crime.  Experts estimate that this is the type of infusion of funds needed to tackle the complex issues posed by the financial fraud issues.

Enough is enough. Don't let the Banksters get away with their crimes. They need to learn their lesson now or they will simply to do it again. Tell U.S. Attorney General Eric Holder, FBI chief Robert Mueller and leaders in Congress to bust the Banksters now!