Guest Post by David Dayen
Former Federal Reserve Chair Ben Bernanke joined practically everyone in America by saying in his new memoir, The Courage to Act, that more Wall Street executives should have gone to jail for criminal misconduct that led to the financial crisis.
“It would have been my preference to have more investigation of individual action, since obviously everything what went wrong or was illegal was done by some individual, not by an abstract firm,” he wrote.
Unlike practically everyone else in America, however, Bernanke was in a pretty good position to actually facilitate criminal misconduct proceedings, if he wanted to see them so badly — as head of the nation’s most powerful bank supervisory agency from 2006 to 2014.
The Fed, like all banking regulators, can initiate criminal referrals to the Justice Department for individuals they find to have broken the law. This acts as the first line of defense to discipline criminal misconduct on Wall Street.
But such activities were absent during the period when Bernanke was chair, according to criminologist and law professor Bill Black. “The Federal Reserve appears to have made zero criminal referrals; it made three about discrimination,” Black told Bill Moyers in 2013.
And when Bernanke took action, his stumbling attempts at accountability weren’t just inadequate; they were absurd. The one major action his Federal Reserve took regarding specific conduct regarding the financial crisis wound up as the most embarrassing display of fake accountability in the history of the Obama Administration.
The mortgage securitization process that fed the housing bubble and generated the financial crisis also led to widespread foreclosure fraud, and in April 2011, the Fed, along with the Office of the Comptroller of the Currency, issued enforcement orders against ten major banks over “misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing.”
Explicitly alleging violations of state and federal law, the two agencies decided to institute the “Independent Foreclosure Review” process, where third-party consultants would examine all 4.2 million foreclosure cases from 2009 and 2010, to check for errors and determine an appropriate level of compensation.
At the time, state and federal law enforcement were investigating the same practices of illegally foreclosing on homeowners in courts, using multitudes of false documents because, after securitization, banks lacked actual standing.
The Fed’s split from that investigation reduced the leverage of the larger inquiry.
The Fed designed a confusing review process that took as many as 50 hours to complete a full file, racking up $2 billion in billing for third-party reviewers in 18 months. And the Independent Foreclosure Reviews turned out to be neither independent nor reviews. Banks hand-picked their own reviewers and were responsible for their payment. And predictably, whistleblowers alleged that the reviewers, at the behest of their employers, deliberately minimized evidence of borrower harm.
In the end, the Fed decided to cancel the reviews, ordering the ten banks to instead pay $3.6 billion in cash to the 4.2 million foreclosed families, an average of less than $1,000 per foreclosure. These sums were split into broad and seemingly random categories. According to the payment agreement, 234,000 borrowers had their loan modification approved, were thrown into foreclosure anyway, and received for their trouble – for having banks try to steal their home – a whopping $300.
The checks initially bounced. Some were so insulted by the piddling amounts they never cashed them or mailed them back. There was another $5.7 billion in alleged “homeowner assistance” in the agreement, where if the bank reduced payment by $1,000 on a $500,000 house, they got credit for $500,000 in relief.
This is what Ben Bernanke considered proper application of justice when he was in power at the Federal Reserve. Only after he relinquished that power did he decide that the country should have punished bankers more severely.
I’m sitting here watching National Geographic show called Drugs Inc.Drugs dealers making 250,000 thousand dollar a year selling drugs to porn stars .Tax free.Damn sometimes I just wonder what if ?
WEALTH
Wealth is the product of man’s capacity to think. Every man is the owner of his mind, and his effort. Money is your source for survival. So long as men live together on this earth and need means to deal with one another, their only substitute, if they abandon money is the muzzle of a gun.
That money demands of you the highest virtues if you wish to make it or keep it. Men who have no courage, pride or self esteem, men who have no moral sense of their right to their money, and are not willing to defend it as they defend their life, men who apologize for being rich will not remain rich for long. They are the natural bait for the swarms of looters that stay under rocks for centuries, but come crawling out at the first smell of the man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of this guilt, and of his life as he deserves. Then you will see the rise of the men of the double standards.
The men who live by force, yet count on those who live by trade to create the value of their looted money – the men who are the ‘hitchhikers’ of virtue.
In a moral society, these are the criminals and the statutes are written to protect you against them. But when a society establishes criminals by right and looters by law, men who use force to seize the wealth of the disarmed victims, then money becomes it’s creator’s avenger. Such looters believe it’s safe to rob defenseless men once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. And then the race goes, not to the ablest of production but to the most ruthless and brutality. When force is the standard, the murderer wins oftener than the pickpocket, and then society vanishes in a spread or ruins and shard.
If you wish to know whether that day is coming watch money. Money is a barometer of a societies virtue. When you see that trade is done not by consent but by compulsion, when you see that in order to produce you need to obtain permission from men who produce nothing, when you see that money is flowing to those who deal not in goods but in favors, when you see that men get richer by graft and by pull then by work and your laws do not protect you against them but protect them against you, when you see corruption being rewarded and honesty becoming a self sacrifice, you may know that your society is doomed.
Whenever destroyers appear among men they start by destroying money. For money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values.
Yes, Ben, there are many who should be in prison. Where were you in 2006 when such statements might have done some good. Oh yeah, you were in their pocket.
I went through that “Independent Mortage Review” process. What a fucking joke, Bernanke should be drawn and quartered.