The last 30 years have seen a massive redistribution of wealth from the 99% to the 1%. This redistribution has been relentless and ongoing and is growing exponentially.
In 2007, a bunch of Wall Street bankers pulled off one of the largest criminal frauds in human history. We form governments to protect us from thieves, but in this case the fraud was perpetrated with the full cooperation of the United States government.
The bankers offered and approved home loans to anyone with a pulse. They required no proof that an applicant could afford to pay a mortgage. The bankers assured the buyer they didn’t need to worry because they could sell the house for substantial profit in a couple of years. These were called “Liar’s Loans.”
What the bankers did next was bundle these sub-prime mortgages and aggressively market them as AAA rated investments. This rating was determined by independent agencies and meant this was the the safest form of investment there was.
How was this possible? Rating agencies are tasked with determining the investment’s rating. Since Wall Street also influenced the government that makes the rules about such things, the rules were crafted so that corrupting these agencies turned out to be incredibly easy thing. This was especially because the rating agencies were being paid by the bankers which allowed them to comparison shop for the best ratings.
Obama’s top contributors (2008) | |
University of California | $1,799,460 |
Goldman Sachs | $1,034,615 |
Harvard University | $900,909 |
Microsoft Corp | $854,717 |
JP Morgan Chase | $847,895 |
Google Inc | $817,855 |
Citigroup Inc | $755,057 |
Source: opensecrets.org
The result was that Wall Street sold trillions of dollars of worthless investments to a multitude of other countries, domestic pension funds, state governments and retirees. When these sub-prime mortgages went into foreclosure, there was then a rippling effect that resulted in the Great Repression.
Tens of thousands of honest working people lost their homes, pensions and/or their life savings while the banks faced no repercussions whatsoever. In fact, they experienced ever-increasing record profits, while their executives enjoyed ever increasing compensation packages, as well as astronomically sized bonuses.
A few banks paid token fines that represented a small fraction of the money that they made off of the crisis and not a single executive received jail time. The cover-up of this fraud is bi-partisan: Republicans and the Democrats were on board with Wall Street’s immunity to prosecution.
Legal proceedings against JP Morgan Chase are a case in point: Recently Attorney General Eric Holder touted JP Morgan Chase’s payment of a $9 billion settlement. This was the largest regulatory fine in American history.
Readers should note that these fines are paid by the stockholders not by the executives who actually perpetrated the crimes. A few weeks after that settlement, Chase CEO Jamie Dimon announced the market capitalization of JP Morgan Chase had increased by 6%, which equals $12 billion, $3 billion more than the fine. In addition, Mr. Dimon got a 74% raise.
It is impossible for Mr. Dimon to not have known what was going on unless he was a highly ineffective administrator, in which case, he certainly does not deserve such a large raise. It is, however, quite possible that Mr. Dimon was the kingpin of a monstrous criminal fraud that devastated the economy and destroyed the financial lives of millions. Yet he did not go to jail and he did not personally pay a penny in fines.
Attorney General Holder said the following when asked about the Chase settlement, “I certainly think that the way in which this case has been settled is a template of what we can expect [in the future]…”
Dana Walker is an Olympia activist and publishes The Thunderbolt, a community digital newsletter.
For addition information on this topic, the author reccommends “The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare” by By Matt Taibbi in the Nov. 6, 2014 issue of Rolling Stone.