Jail the Bankers Or This Economy Will Never Fully Recover

Echoing Danny Schechter’s call for a “Jailout Not A Bailout,” Joshua Holland makes it clear in his essay for Alternet that without criminal prosecution of the banksters who landed us in this never-ending recession, we’ll never emerge from it:

The Great Recession showed the world that the crimes that create the most victims are not committed by terrorists, gangbangers or drug traffickers, but by well-heeled crooks in Wall Street’s executive suites. Tens of millions of people have seen their jobs disappear and their pension funds fleeced, and had their homes taken out from under their feet as a result of the crash of Wall Street’s Great Casino. Yet so far, the culprits have been given little more than a slap on the wrist.

Bankster

Failing to prosecute Wall Street’s high-flying crooks doesn’t only represent a great miscarriage of justice. Powerful voices within the economic establishment are now making the case that holding the bankers criminally culpable is necessary if we ever hope to stop our national economy from moving from one speculation-driven bubble to the next.

Nobel-prize winner Joe Stiglitz recently told AOL’s Daily Finance that major damage resulting from the financial disaster “has not really been taken on board, and that is confidence in our legal system, in our rule of law, in our system of justice.” His prescription? “I think we ought to go do what we did” in the wake of similar financial crises in the past, and “actually put many of these guys in prison.”

His argument is based not on the visceral satisfaction of seeing the high and mighty brought down a peg, but on cold economic grounds. At heart, economics is the study of incentives, and by refusing to hold the corporate criminals at the heart of the housing crisis accountable in any meaningful way, we’re creating powerful incentives for more malfeasance in the future.

As Stiglitz explained, “People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.” With those penalties amounting to a small 5 percent or 10 percent tax on illegal profits, what’s to stop the crooks? “You’re still sitting home pretty with your several hundred million dollars that you have left over after paying fines,” Stiglitz said.

Economist James Galbraith of the University of Texas agrees. He told Bill Moyers that at the heart of the crisis was “a huge amount of” criminal fraud, which the Bush administration and the FBI knew was occurring but didn’t prosecute. “There will have to be full-scale investigation and cleaning up of the residue of” those crimes, said Galbraith, “before you can have… a return of confidence in the financial sector. And that’s a process which needs to get underway.”…

[continues at Alternet]

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  • Ironaddict06

    Exactly. So Goldman Sachs had to pay a huge fine, big deal Goldman Sachs still came out ahead, way ahead. John Paulson made $1 billion alone for Goldman Sachs. John Paulson, Hank Paulson, George Soros, Barney Frank, just to name a few, should all be doing life in prison. People see America as a huge piggy bank. That is what is wrong with the system. There is no more “ask what you can do for your country.” It’s how much can I take from this country.

  • Ironaddict06

    Exactly. So Goldman Sachs had to pay a huge fine, big deal Goldman Sachs still came out ahead, way ahead. John Paulson made $1 billion alone for Goldman Sachs. John Paulson, Hank Paulson, George Soros, Barney Frank, just to name a few, should all be doing life in prison. People see America as a huge piggy bank. That is what is wrong with the system. There is no more “ask what you can do for your country.” It’s how much can I take from this country.

  • http://drewt333.tumblr.com/ drewt333

    The banksters are a symptom, treat the disease. Jail the bankers and every elected or appointed federal official who aided and abetted their theft and fraud.

    • Hadrian999

      I agree, without treating the disease there will be plenty more banksters to take the place of the jailed ones

  • http://unhub.com/drewt333 drewt333

    The banksters are a symptom, treat the disease. Jail the bankers and every elected or appointed federal official who aided and abetted their theft and fraud.

  • Hadrian999

    I agree, without treating the disease there will be plenty more banksters to take the place of the jailed ones

  • Andrew

    I’m waiting for CerebralCaustic to inform us how these guys had the right to commit their frauds, and that such frauds are in fact the foundation of all human freedom.

    Or to just point fingers at “socialists.”

  • Andrew

    I’m waiting for CerebralCaustic to inform us how these guys had the right to commit their frauds, and that such frauds are in fact the foundation of all human freedom.

    Or to just point fingers at “socialists.”

  • Liam_McGonagle

    Awesome! Thanks for posting this, Majestic!

    This is like another recapitulation of themes we all played earlier at http;//www.disinfo.com/2010/11/would-henry-i-have-castrated-goldman-sachs/

    Under-regulated financial companies sell shitty products, and when they inevitably fail they get a federal bailout, driving real M2 money out of the working economy.

    And Stiglitz is spot on about the perverse structure of incentives in the system. I’m working on an articulation of a specific targeted legistlative agenda to tackle this. Here’s the rough skeleton to date:

    1. Prosecute and really punish violations of existing law. FIERCELY.

    2. Require ratings agencies to be accredited by the federal government.

    3. Require ratings agencies and financial auditors by hired by the SEC rather than the issuing company’s board of directors in order to put an end to the sick conflicts of interest haunting this scene. Costs to be paid for by charging all public registrants a fee to be administered by the SEC.

    4. Provide ratings agencies and financial auditors actual cash incentives to detect violations rather than sweep them under the rug or smear a coat of whitewash over them. Say an additional fee of X% of the financial impact of the violation, as determined by a government arbitration body.

    5. Put an end to the bullshit “self-regulatory” status of financial accountancy of the FASB. The financial statements of public companies, like it or not, form a lynch-pin of the U.S. monetary system. The central government needs to maintain a monopoly over the right to print money in order to ensure its integrity.

    Of course, to make this ambitious agenda a reality, there will have to be a parallel, tandem cultural movement to destroy the bullshit memes that support the banksters’ crimes: the Laffer Curve in particular.

  • Liam_McGonagle

    Awesome! Thanks for posting this, Majestic!

    This is like another recapitulation of themes we all played earlier at http;//disinfo.com/2010/11/would-henry-i-have-castrated-goldman-sachs/

    Under-regulated financial companies sell shitty products, and when they inevitably fail they get a federal bailout, driving real M2 money out of the working economy.

    And Stiglitz is spot on about the perverse structure of incentives in the system. I’m working on an articulation of a specific targeted legistlative agenda to tackle this. Here’s the rough skeleton to date:

    1. Prosecute and really punish violations of existing law. FIERCELY.

    2. Require ratings agencies to be accredited by the federal government.

    3. Require ratings agencies and financial auditors by hired by the SEC rather than the issuing company’s board of directors in order to put an end to the sick conflicts of interest haunting this scene. Costs to be paid for by charging all public registrants a fee to be administered by the SEC.

    4. Provide ratings agencies and financial auditors actual cash incentives to detect violations rather than sweep them under the rug or smear a coat of whitewash over them. Say an additional fee of X% of the financial impact of the violation, as determined by a government arbitration body.

    5. Put an end to the bullshit “self-regulatory” status of financial accountancy of the FASB. The financial statements of public companies, like it or not, form a lynch-pin of the U.S. monetary system. The central government needs to maintain a monopoly over the right to print money in order to ensure its integrity.

    Of course, to make this ambitious agenda a reality, there will have to be a parallel, tandem cultural movement to destroy the bullshit memes that support the banksters’ crimes: the Laffer Curve in particular.

  • emperorreagan

    These men are captains of industry and are the only ones working hard to keep our world afloat. They deserve extra bonuses, not jail time.

    In the words of Ayn Rand, “I trained my German Shepherd to eat peanut butter out of my vagina and it feels delightful.”

  • emperorreagan

    These men are captains of industry and are the only ones working hard to keep our world afloat. They deserve extra bonuses, not jail time.

    In the words of Ayn Rand, “I trained my German Shepherd to eat peanut butter out of my vagina and it feels delightful.”

  • Dan Mac

    Yes, but at the heart of the cabal in America is The Federal Reserve System. This cartel of international bankers wormed it’s way into partnership with the U.S. government in 1913. Now it is far more powerful than the three legitimate branches combined. Congress is not even allowed to look at “the Fed’s” books! They have the legal charter to print (counterfeit) money–as much as the government is willing to borrow. Yes, the government borrows this fiat money printed out of thin air which then creates our debt and inflation. Inflation is a hidden tax resulting from this scam. Interest on the debt annually equals about the sum total of everything the IRS collects. The IRS, private collection agency of the privately owned “Fed,” terrorizes American slaves–and not a dime of what they collect builds a road, houses poor, or defends the nation. It’s all interest collected from money printed from nothing–and none of it is spent for any benefit to “we the people.” Billions and trillions of dollars are spent, however, to experiment on, terrorize, confuse, and control us.

    The time has come again to throw the money changers out of the temple. Congress has the power to slay the beast. The parties are corrupt beyond measure, but individuals in both are good.

  • Dan Mac

    Yes, but at the heart of the cabal in America is The Federal Reserve System. This cartel of international bankers wormed it’s way into partnership with the U.S. government in 1913. Now it is far more powerful than the three legitimate branches combined. Congress is not even allowed to look at “the Fed’s” books! They have the legal charter to print (counterfeit) money–as much as the government is willing to borrow. Yes, the government borrows this fiat money printed out of thin air which then creates our debt and inflation. Inflation is a hidden tax resulting from this scam. Interest on the debt annually equals about the sum total of everything the IRS collects. The IRS, private collection agency of the privately owned “Fed,” terrorizes American slaves–and not a dime of what they collect builds a road, houses poor, or defends the nation. It’s all interest collected from money printed from nothing–and none of it is spent for any benefit to “we the people.” Billions and trillions of dollars are spent, however, to experiment on, terrorize, confuse, and control us.

    The time has come again to throw the money changers out of the temple. Congress has the power to slay the beast. The parties are corrupt beyond measure, but individuals in both are good.

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