Your Morning Briefing: WHAT'S REALLY BEHIND THE JPMORGAN LAWSUIT (Plus)… Carter Slams U.S. Supreme Court For Its Endorsement Of Corruption: Carter Expressed His Hope That “The Supreme Court Will Reverse That Stupid Ruling” (More)…
(MoneyWatch) This is what everybody wanted: Main Street's revenge on Wall Street. The 99 percent hitting the 1 percent where it hurts. Finally, somebody's going to bring those responsible for crashing our economy to justice. The first salvo's been fired and there's plenty more to come.
Hang on to your Occupy Wall Street banners, folks. This is going to be fun. Let's hear it for truth, justice and the American way. Let's hear it for the politicians and the regulators. The people have spoken and vengeance will be theirs.
With a joint task force of federal and state prosecutors standing united behind him, New York attorney general Eric Schneiderman sued JPMorgan Chase's (JPM) Bear Stearns unit, alleging massive fraud in the sale of mortgage-backed securities. And Schneiderman says, "there are more cases to come." Oh goodie.
Why the dripping sarcasm, you ask? Because we've been here before, folks. More times than I can count. And here's the thing. Nobody's bringing anyone to justice. Nobody's fighting for the little guy. Want to know what's really going on here? OK, then. Here's the truth about the JPMorgan lawsuit.
IN DEFENSE OF GOLDMAN SACHS
First of all, didn't JPMorgan actually rescue Bear Stearns at the behest of the federal government back in 2008? Wasn't there an eleventh-hour deal made to keep Bear Stearns from insolvency? Wasn't that part of the plan to prevent a wider collapse of the financial system? Yes, that is all, in fact, true.
So if JPMorgan leaders were the good guys back in 2008, if they helped save the integrity of the banking system by agreeing to acquire Bear Stearns and, most importantly, guaranteeing its trades, then why is everybody with a badge lining up for a good seat in the courtroom? Timing. Timing and politics.
You see, at a news conference yesterday, Tony West of the U.S. Attorney General's office "credited a coalition of law enforcement agencies created by President Barack Obama in 2009 with assembling evidence in the lawsuit brought by the New York attorney general's office." Get the connection? Timing and politics.
Ironically, the only people who ever win in these things are the lawyers and the politicians. As a remarkably similar example, let's go back to 2003 when then New York attorney general Eliot Spitzer negotiated a landmark $1.4 billion settlement with 10 of the nation's top investment banks for corruption during the dot-com bubble.
Sounds like everybody won, right? Wrong. No criminal charges were ever filed. None of the banks, executives or analysts in question ever admitted their guilt or anything else, for that matter. As for all the settlement money, I'm pretty sure it didn't do much good for investors who lost trillions when the tech bubble burst.
On the other hand, it did go a long way to putting Spitzer on a fast track to the governor's mansion. And who do you think gets paid to pore over the millions of pages of documents produced during discovery for these types of lawsuits? That's right, lots and lots of high-priced lawyers. And who pays for them? That's right, taxpayers, meaning you.
Lastly, as Bloomberg columnist Mark Gilbert explained so eloquently in his book Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable, there's plenty of blame to go around when it comes to the subprime mortgage meltdown and the subsequent financial crisis.
Sure, the banks played a role, but so did just about everyone.
First, Congressional lawmakers pushed through 25 years of amendments, revisions and other legislation, related to the Community Reinvestment Act of 1977, that systematically broke down every check and balance intended to ensure that lenders didn't write bad loans.
Then the Department of Housing and Urban Development forced Fannie Mae to dedicate 50 percent of its funds to back affordable housing for low-income families. We're talking hundreds of billions of dollars to back bad loans.
And in 1990s former Senate Banking Committee Chairman Phil Gramm pioneered the exemption of over-the-counter derivatives, such as credit default swaps, from regulation, a move supported by then Federal Reserve Chairman Alan Greenspan and U.S. Treasury Secretary Robert Rubin.
Not to mention former chairman of Countrywide Financial Angelo Mozilo, a number of CEOs of Fannie Mae and Freddie Mac, and a long, long list of other culprits that either wittingly or unwittingly conspired to get us to where we are today. Ironically, I'm not aware of anyone at JPMorgan having anything to do with it at the time.
I thought we were supposed to stand together and united in times when our country is attacked. When our country was attacked in 2001on September 11, the right-wing extremists tried to make anyone who criticized George W. Bush out to be a traitor to America. The Democrats for the most part united behind President George W. Bush in a time of crisis as they should have.
Fast forward to Sept. 11, 2012. Our embassy in Egypt and an American consulate in Libya were attacked. In Libya our ambassador and three other brave Americans, including two decorated members of our armed forces lost their lives. The response by the right-wing wackos? Blame President Obama and try to use the attacks for political advantage. Rush Limbaugh, Laura Ingraham, Glenn Beck, and our own Sue Henry from WILK news radio are undermining our troops in a time of war. They are emboldening our enemies, and undermining President Obama as he tries to lead the free world as the United States of America should. Mitt Romney also jumped on the bandwagon attempting to use the deaths of these patriots to gain a political edge in his campaign for President. God forbid this man ever gets elected.
I guess I shouldn't be surprised that these extremist right-wingers would stoop so low. After all, the Republicans in Congress have been trying to sabotage the economic recovery from the Bush great recession for years now. Two years ago President Obama proposed a jobs bill. The Republicans wouldn't even consider voting on it. President Obama proposed taking some of the corporate welfare received in billions of dollars paid in subsidies to Big Oil and giving those subsidies to companies that create family-sustaining jobs in manufacturing. The Republicans said "no."
President Obama also proposed ending tax breaks for companies who ship jobs out of the country. Again the Republicans wouldn't even vote on the proposal, I guess that's why Romney, the father of overseas outsourcing, is the Republican nominee.
And worst of all. Last month Republicans in the Senate of the United States of America blocked passage of President Obama's proposed law to help veterans of the Iraq and Afghanistan wars get jobs. These hypocrites would rather throw our country, our veterans, and the whole middle class under the proverbial bus than lift one finger to create one job. And for what? To gain a political advantage for a guy who says he loves firing people? A guy who would take us back to the policies that caused the recession in the first place? A guy who would cut taxes yet again for millionaires and billionaires and raise taxes on the middle class? A guy who would protect the interests of oil companies over the interests of working families? A guy who would use the death of American citizens for political advantage?
God forbid. On Nov. 6, tell Romney and the Republicans "no," just like they have been telling the American people.