Why No Wall Street Prosecutions? The Villains Are All In Washington

The New Jersey Star-Ledger wondered recently why, in regard to the "crime" of the 2008 financial meltdown, there have been "no punishment for Wall Street CEOs" by the Holder Justice Department. 

The editors are perplexed. They speculate on numerous possible reasons why there have been no prosecutions of "the barons who destroyed the housing market, cost millions of U.S. jobs and vaporized $11 billion in personal wealth [they probably mean trillion]." Of course, as long as the editors believe the silly conspiracy theory that some dark cabal of bankers did, or even could, bring down the world economy, they'll never find an answer.

Of course, the editors probably don't want to know the truth, being the statist apologists for big government that they are. 

I left these comments:

Of course there haven't been any Wall Street "punishments." The criminals are all in Washington.

No world-wide financial crisis could ever be caused by isolated bank mistakes or failures. Such a system-wide calamity could only be orchestrated under a command and control banking system. That's exactly what we had—and even more so now—with Washington pulling the strings. Any investigation—or, more precisely, witch hunt—against the banks will inevitably lead right back to Washington; i.e., Dodd, Frank, Clinton, Bush, Greenspan, Bernanke, the FDIC, GSEs Fannie and Freddie, et al.

When the politicians "affordable housing crusade," aided and abetted by the easy money-fueled home price bubble, and enforced by the government's regulators, destroyed the decades-old sound mortgage standards, the entire banking system was dragged into the cauldron of bad lending, to one extent or another.

True, a few banks jumped whole hog onto the sub-prime bandwagon. Angelo Mozilo of Countrywide is one. Remember him? And he was a hero among the Leftist Washington elite. He was putting poor people in homes, just what the political masters wanted. But the Mozilos were just an effect, not a cause.

But most banks went along with the sub-prime parade reluctantly, because they had to for various reasons related to government policy. Remember that banks are thoroughly under the thumb of bank regulators (contrary to the myth of "deregulation"); and the regulators are under the thumb of politicians, whom they dare not upset. Who was going to tamper with the housing boom, which was fueling the artificial economic strength that politicians could run on?

It's time to stop the scapegoating of "Wall Street," and the childish blaming of "greed," as if greed suddenly popped into existence in the mid-1990s. After 5 years, the causes of the financial crisis have been well documented. The best book that I have read is by John A. Allison, former CEO of BB&T—a courageous whistle-blower who risked political retribution to bring the truth to the public from an insider's expert perspective: The Financial Crisis and the Free Market Cure.

Government interference into the housing and financial sectors is the primary cause. That is why Washington won't go after "Wall Street." It's not "complicated." They're covering their own asses.

Related Reading:

Potter's Revenge

"It's a Wonderful Life" – in Real Life

End "Too Big to Fail," not "Too Big" Banks

The "Big Lie" That Powers Big Government

The Financial Crisis and the Free Market Cure—by John A. Allison