In 2008, the bubble popped. The financial crisis sent our economy swirling into chaos and pushed us into this Great Recession. Many Americans lost faith in our private institutions that caused this mess and in our public institutions that should have seen it coming. The fallout shined a light on the double-dealing shell game being played by our financial giants. Unfortunately, they weren’t playing with Monopoly money. The high stakes had high costs: a devastating spike in unemployment, a national foreclosure crisis based on mortgage fraud and depleted pensions and retirement accounts for working Americans.
At least those whose reckless — and potentially criminal — gambles drove us into this ditch got what they had coming…bonuses, a light reprimand and carte blanche to do it all again.
It’s enough to make you so angry you’d consider dumping tea in Boston Harbor.
The Financial Crisis Inquiry Committee — a Congressionally-appointed, bipartisan commission, charged with examining the cause of these crises — releases report this morning. The early buzz is that the report lays heavy, direct blame on Wall Street and a secondary helping of responsibility on federal regulators: “The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public.”
The report accused Alan Greenspan of “harmful” actions. It also reveals previously undisclosed profits that Goldman Sachs reaped from the fallout, a revelation a little but like telling us Darth Vader is Luke’s father. By now, we already know.
For most Americans, these findings aren’t surprising. Unfortunately, the four Americans who seem most surprised are the Commission’s Republican members who wrote two dissenting views. This split ensures that the FCIC won’t be able to follow in the footsteps of the 9/11 Commission and become a chorus of bipartisan advocates for sensible reforms. Instead, the causes of the financial crisis will be subject to right-wing attacks and misinformation in the model of the assault on climate change science. Before long, a good portion of Fox viewers will believe it was government regulation that caused the crisis, rather than lack of oversight that failed to prevent it, and the Obama administration engineered it all to give money to his Wall Street friends.
For his part, President Obama isn’t helping. His administration’s commitment never to look back and hold people accountable — from the lies that led us into the Iraq War to the crimes committed eavesdropping on the American people — extend to all of those that caused this mess. In his State of the Union, the President didn’t discuss the millions of Americans facing potential foreclosure as a result of criminal mortgage practices. He didn’t harness any of the passion that once led him to lash out against the “fat cats” of Wall Street. He only spoke of the need to get out of the way of businesses so they can create jobs — a worthy goal, but with no acknowledgement that “business” doesn’t always do what’s right for the country.
Without Presidential leadership, we rely on Congress to take the report seriously. Unfortunately, the new Congressional Oversight Chairman has already stated that he’s more interested in investigating how the report was created than in the substance of the report itself. (The classic conservative move of shifting focus from a substantive concern to a debate about the messenger brought to mind a short video created for MoveOn’s “Bush in 30 Seconds” competition 7 years ago. Some things never change.)
Given how many of the players in this financial crisis are based in New York, there is hope that our the state’s new Attorney General could act. Under the Martin Act, AG Eric Schneiderman has broad powers to pursue fraud in the financial sector. And while this crisis was national — even global — like so much else, it started right here in New York City. Schneiderman could follow the lead of New York’s two previous Attorneys General in holding Wall Street accountable when DC fails at the task. Liberal activist groups are already calling on the AG to take a bolder lead in the related foreclosure crisis, collecting signatures asking him to pursue criminal penalties against fraudulent mortgage servicers.
The AG has just announced that he’ll be going after fraud in private contracts with the state and city as his first major initiative. Maybe he’ll next revisit the fraud perpetrated by private banks against our public coffers.
Americans were enraged when bonuses rose quickly so soon after banks had to be bailed out. Americans were confounded by how transactions that seemed like nothing more than casino gambling were allowed to create such havoc with our national wealth. Yet Americans haven’t demanded accountability. In part, it’s because powerful forces have been tussling over the narrative behind this crash. Who was to blame? Who do we hold accountable?
The FCIC was an attempt to craft that narrative. If we listen to this report, maybe we’ll take steps to hold people accountable and change the behavior of Wall Street. Otherwise, it will be a fun historical anecdote when the next crash comes around.
Justin Krebs is a political organizer and writer based in New York City. He is the founder of Living Liberally, a nationwide network of 250 local clubs that create social events around progressive politics, and author of "538 Ways to Live, Work and Play Like a Liberal."