For balance sake I'll put this up, it's a little out of date but if you have not seen it then do, if you ever wondered why your children will be in debt for years to come . . .

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Four years ago on September 15, the New York investment bank Lehman
Brothers declared bankruptcy and the financial collapse of 2008 began.
The economic meltdown wiped out more than $11bn of personal wealth in
the US, threw millions out of work, and has already resulted in the
foreclosure of more than 10 million homes.Americans
across the political spectrum believe that financial executives should
have gone to jail for the practices that led to the collapse, but there
have been no significant prosecutions. People & Power investigates
why Wall Street has not been held accountable for crimes connected to
the deepest recession since the Great Depression.Two government
bodies looked into the causes of the meltdown, the Financial Crisis
Inquiry Commission and the US Senate’s Permanent Subcommittee on
Investigations. Both made criminal referrals to the Department of
Justice.But the Department did not prosecute executives from
mortgage lenders and banks like Washington Mutual, Countrywide, Deutsch
Bank and Goldman Sachs for mortgage origination and securitisation
practices that were a focus of the panels’ work.Byron Georgiou,
who served on the Financial Crisis Inquiry Commission, says it is “a
demonstration of a lack of accountability that is really quite unique in
American history”.Chris Swecker, a former assistant FBI director
in charge of the Criminal Investigative Division, thinks that the
Justice Department has been “timid in approaching prosecutions,” and
finds it “puzzling”.In order to hold Wall Street accountable, he
says: “You have to resource the agencies appropriately, and that really
and truly has not been done.”As an assistant FBI director back in
2004, Swecker took the unusual step of issuing a public warning about
an epidemic of mortgage fraud in the US his agents had uncovered that he
feared could lead to economic calamity. The FBI warning went unheeded
by bankers who were bundling up high-risk loans and selling them on Wall
Street.Swecker says: “That’s where we start to talk about
criminal intent and fraud is knowing full well that there was fraud
going on and just turning your back on it and saying, alright, we’re
going to package this stuff up anyway and we’re going to sell it
anyway.”Swecker believes that the Justice Department is reluctant
to pursue a criminal prosecution unless it is a “slam-dunk” after
losing a case in 2009 in which two Bear Stearns hedge fund managers were
acquitted of charges that they misled investors about the health of a
hedge fund that invested in mortgage-backed securities.He says
the Justice Department has not allocated the resources necessary to
prosecuting financial crimes, and that prosecutors are reluctant to go
up “against $1,000-an-hour defence attorneys”. Swecker also thinks the
fact that US Attorney General Eric Holder and Criminal Division Chief
Lanny Bruer were white-collar defence attorneys has also had an impact,
creating more of a “defence mindset” at the top of the Department that
discourages prosecution.In the late 1980s and 1990s, the US went
through a Savings and Loan scandal that cost taxpayers $150bn. The
deregulation of the industry enabled bank executives to play fast and
loose with federally insured deposits, and led to widespread fraud.William
Black, who played a central role as a senior financial regulator in
prosecuting bank executives for fraud during the Savings and Loan
crisis, says the impact of the 2008 meltdown “is roughly 70 times
larger”.According to Black, we should be seeing an effort to hold
financial executives accountable “that is absolutely unparalleled in US
history. Instead you are seeing an effort that is considerably smaller
than the effort made in the Savings and Loan crisis”.Black, an
expert in white collar crime, argues that prosecutors do not understand
the connection between the 2008 meltdown and a crime called “accounting
control fraud” in which executives who control a company loot it and
become rich. Black says “mortgage fraud hyperinflated the housing
bubble” that was a main cause of the economic crisis.So-called
liars loans, home mortgages banks made without requiring borrowers to
provide income verification, grew by 500 per cent between 2003 and 2006,
becoming almost the most common form of home loan in the US.Liars
loans were the perfect ammunition for accounting control fraud,
enabling lenders to make up whatever income was needed for a loan to
appear safe so that it can be sold into the secondary market for
packaging in mortgage-backed securities. The banks grew like crazy by
making terrible loans, and executives walked away with millions because
of modern compensation structures.“That’s why we say the best way
to rob a bank is to own one or control one,” Black says. There was
fraud all along the chain, from their origination so banks could grow,
to sales on Wall Street, Black argues, because once you have got liars
loans, “all the sales after that have to hide their terrible quality or
nobody is going to buy them”.The Senate Subcommittee on
Investigations paid particular attention to transactions by Wall Street
banks in the late 2006 and early 2007 period. That is when mortgage
defaults spiked and financial executives realised that they faced huge
losses if they did not unload their inventories of mortgage-backed
securities.In 2010 public hearings, Senator Carl Levin, the
chairman of the Senate Subcommittee, took Goldman Sachs CEO Lloyd
Blankfein to task for selling mortgage-backed securities to investors
that traders inside the firm called crap, and for betting that they
would fail at the same time by taking a short position against the
mortgage-backed securities investors.In August, the Justice
Department dropped its criminal investigation of Goldman Sachs, Barack
Obama’s top corporate donor in 2008.Sheila Krumholz of the Center
for Responsive Politics, which tracks campaign expenditures and
lobbying expenditures, says it is hard not to associate “the incredible
clout that Goldman Sachs wields in Washington with decisions that favour
their interests”.Krumholz says it is both the money and the
connections – the financial industry has spent more than $5bn on
lobbying and campaign contributions to both Democrats and Republicans in
the last decade. And the revolving door means that government officials
find it difficult to view the leaders of companies where they have
worked or have friends “as being capable of criminal acts”.Former
Securities and Exchange Commission investigator Gary Aguirre argues
that the main reason there have been no prosecutions is because of the
revolving door.Regulators are reluctant to pursue cases that
could cost them a private sector job with a starting salary of $2m – 10
times their salary with the government.“If you are a team player
and these cases don’t get brought,” he says, “then maybe there’ll be
room for you at one of the big law firms or Goldman, or one of the big
banks.”Steve Bartlett, the CEO of the Financial Services
Roundtable, a trade association that represents 100 top financial
companies in the US, thinks the Securities and Exchange Commission has
done a good job to “identify what went wrong and correct it”. The reason
there have been no prosecutions, he says, is because there was no
criminal wrong-doing, “it’s as simple as that”.Occupy Wall Street
activists have been strategising about how to force the issue of
prosecuting financial executives onto the 2012 electoral agenda.“It’s
so clearly something the American public wants to know about,” says
Alexis Goldstein, who used to work in finance in New York.Akshat
Tewary of the working group, Occupy the SEC, says the failure to
prosecute executives in connection with the meltdown “undermines the
legitimacy of our government”.Both are concerned that the statute
of limitations for prosecution of federal securities laws, which is six
years, could run out without Wall Street being held accountable for the
meltdown.So is Chris Swecker, who believes a major initiative needs to be launched quickly for crimes connected to the 2008 collapse.

“We’re in a tough spot,” he says, “where essentially some very bad actors are going to skate if we don’t put that effort out.”

Black
sees no chance that a Mitt Romney administration would be more
aggressive than that of Obama in prosecuting financial executives.
Romney has already raised more than twice as much from Wall Street as
Obama.Both candidates are avoiding the prosecution issue, but
Black thinks it needs to be high on the electoral agenda of both
parties.“If elite financial bankers can continue to get away with
these kinds of frauds that lead to catastrophic losses and make you
wealthy as the CEO simultaneously,” he says, “then they’ll keep doing
it, and they’ll do it bigger.”By Bob Abeshouse

ORIGINAL