News & Analysis
Senators Demand that Banks Be Punished – but Not the Fed
Senators Call Out Attorney General For Treating Banks Like They Are "Too Big To Jail" Like many Americans, Senators Charles Grassley (Iowa) and Sherrod Brown (Ohio) think federal investigators have given banks a mere slap on the wrists for their part in the economic collapse and other misdeeds. So in a letter to U.S. Attorney General Eric Holder, the pair wonder if banks are being viewed by the DOJ as "too big to jail." In the letter, the senators say that even though banks have already paid out billions in civil and regulatory penalties, these settlements are nothing compared to the scope of the damage done, the money banks made before the economy went kaplooey, and the taxpayer investment in the TARP bail-outs. "Unfortunately, many of the settlements between large financial institutions and the federal government involve penalties that are disproportionately low, both in relation to the profits which resulted from those wrongful actions as well as in relation to the costs imposed upon consumers, investors, and the market," reads the letter. – Consumerist
Dominant Social Theme: Bring these banksters to justice.
Free-Market Analysis: But not the good, gray men of central banking.
We are not surprised. The power elites are deathly frightened, in our view, that their control over central banks is in jeopardy. They will sacrifice the entire financial infrastructure to make sure central banks are not attacked.
They are trying to do this any way they can.
They are trying to set up neo-Pecora hearings to focus on Wall Street and the securities industry in general. There will be similar attacks in Europe and Britain. Maybe in China and Japan too, who knows? Search the 'Net for "Neo-Pecora" and "Daily Bell" for more.
Back in the 1930s, Franklin Delano Roosevelt brought in the cigar-chomping Ferdinand Pecora to regulate Wall Street and make it safe for the consumer.
Eighty years later, consumers are right back where they started – or ended.
In the 1930s, after the Great Crash of 1929, savings were wrecked, retirements ruined and people decided they didn't trust the stock market.
The Pecora hearings were seemingly an elite psy-op intended to further establish the legitimacy of regulation generally and the idea that specific regulations could substitute for "market failure."
Of course, the failure of the markets was evidently and obviously because of their artificially induced centralization. In fact, it was only after a precipitating event – and at least seven decades after the Civil War – that the power elites could assert their control over the blossoming securities industry.
The US securities industry, specifically, was never meant to be – or not in its current size and shape. It is like an elephant standing in the intersection of major capital flows. The entirety of US industrial securitization has been shaped to travel past the behemoth which needs merely to extend its trunk to feed.
Every law and regulation passed merely contributes to further centralization and additional control. A very few people at the top of the pyramid can see the entire picture and pull the levers as necessary. The levers actually are pulled at the behest of the Federal Reserve, which is the main vehicle of control for the power elite itself.
What ought to be clear to people who want to understand more fully what is taking place is that the top elites are perfectly willing to sacrifice the mechanical device that distributes the Fed super money. What they are NOT willing to do is sacrifice the source of that money – the Fed itself.
The system has been built to fail and thus further centralize money power in the hands of the few. In order to confuse an increasingly maddened public, the powers-that-be created the dominant social theme of government regulatory competence.
The idea was that central banks and governments – being responsible parties – would rule over the private sector, which was inherently disorganized and not to be trusted as it was prone to "market failure."
This is the meme that has been operative for the past century or so. But it is failing now because it has been seen (over and over with increasing emphasis) that regulation doesn't work. Thus the powers-that-be are reduced to the argument that regulations on the books were not adequately enforced and that more and different regulation is called for.
In other words, a tougher and better cop on the beat is necessary – and he or she must be equipped with more powerful weapons as necessary. Sound familiar? Here's some more from the article above:
Grassley and Brown voice their concerns that prosecutors' treatment of the bank has left the impression with Americans that "Wall Street banks enjoy a favored status, in statute and in enforcement policy." [They] then proceed to ask AG Holder the following:
1. Has the Justice Department designated certain institutions whose failure could jeopardize the stability of the financial markets and are thus, "too big to jail"? If so, please name them.
2. Has the Justice Dept. ever failed to bring a prosecution against an institution due to concern that their failure could jeopardize financial markets?
3. Are there entities the Justice Dept. has entered into settlements with, in which the amount of the settlement reflected a concern that markets could be impacted by such a settlement? If so, for which entities?
The letter also asks Holder to identify all outside experts consulted by the DOJ with regard to any prosecutorial decisions involving a financial institution with more than $1 billion in assets.
... "Our markets will only function efficiently if participants believe that all laws will be enforced consistently, and that violators will be punished to the full extent of the law," write the senators. "There should not be one set of rules that apply to Wall Street and another set for the rest of us."
This last paragraph is most notable because of the number of assumptions involved. First of all, it assumes that laws CAN be enforced consistently. Second, it demands that violators be punished to the "full extent" of the law – which seems to be an attempt to seize control of the process from the judiciary. Finally, it argues that there should not be two different "sets of rules."
We have long argued that the meme of Western "justice" will be the last elite meme to fall in this era of the Internet Reformation. But it WILL fall, and it is actually happening, in our view. We see signs.
Kim Dotcom, under attack for copyright violations, has found a sympathetic public hearing; most recently gun confiscation has aroused such a furor in the US that elites who want to see citizens disarmed in that great country have backed away.
Yes, this is an Internet related phenomenon, in our view. Of course, it is one that will occur on a macro scale and will not, ultimately, be available for scrutiny on an individual basis.
Laws, people will decide, cannot be enforced consistently because they are inherently unjust. Demanding that violators be punished to the full extent of the law is also likely useless because it is merely enforcing the meme that modern Western law is enforceable to begin with. It is not. At this point, given the number of laws and often their ludicrousness, the "law" is entirely discretionary and is used as a weapon to silence certain individuals and groups.
The Senators' letter also gets the "rules" wrong. There are not "different rules for rich and poor." There are different rules for those who support the government (and the controlling elites by extension) and those who do not.
Many people in the West are involved with various kinds of crimes today. A law, at this point, is whatever "officials" say it is. Because there are so many laws, enforcement has the luxury of enforcing what it wishes to enforce.
As a result, law enforcement in the West tends to focus on harassment style enforcement – arrests for drunk driving or drug use – and also on various kinds of crime, including white-collar crime that poses a challenge to the state itself.
This is surely why little government crime is prosecuted. This is, in fact, why Congress itself can break laws with impunity and excuse itself from laws aimed at the general populace. Only certain kinds of white-collar crime are prosecuted. "Criminals" often escape punishment.
The current zeal to catch and jail Wall Streeters performs three functions, however. It shows the general populace that a certain "criminal" element is being prosecuted. It removes central banking from the line of fire. Finally, it WEAKENS the market itself – and financial transactions – by bringing yet more of them under the watchful eye of government control. As the elites control government, this last point is especially beneficial.
Conclusion: If it seems too good to be true that the US Congress is insisting that the "public" receive deserved justice, that's because it probably is.
Posted by timoore on 01/31/13 07:41 AM
Bravo DB for kicking billfalberg's butt. Not sure, but the time "5:55pm, on 1/31/13, must place this person somewhere in Australia. Correct?
Reply from The Daily Bell
Thanks, but not sure. Hopefully he won't come back.
Posted by Abu Aardvark on 01/31/13 05:32 AM
billfalberg on 01/30/13 05:55 PM wrote: "libertarianism doesn't even recognize the distinction between corporations and sole proprietors, does it? So they wouldn't recognize the difference between the corrupt use of force by banks and the corrupt use of force by government"
Dude, no matter what kind of mendacious nonsense you post, you will not stop this:
Click to view link
In fact, given the exponential advancement of truth-telling and free-market/AnCap thinking during the recent decade, and the multitude of gatekeepers fighting this tooth and nail, it would seem that your efforts even amplified the process.
Hard times are to be expected, then - for you and your friends, that is.
Posted by Justin on 01/31/13 05:22 AM
Why would the government attack its own bank? It's an absurd notion. It is the central bank that makes the market in government bonds, that is, making the unpayable debt of government 'money good', or trade as 'money'.
Government has had an iron grip over money for nearly a century. It's junk is 'money'. Money is the most precious, people will do ANYTHING for money. The government will NEVER volutarily give up this power it has usurped.
Rather, it will lose it, like every other period in histoty, in a catastrophic hyperinflationary fiasco. The eternal question is when? Money is the most precious, people will do ANYTHING for money, this leads to all sorte of irrational, so unpredictable, behaviour.
Posted by Danny B on 01/30/13 11:46 PM
Off topic but, interesting;
Click to view link
Posted by taxesbyanyothername on 01/30/13 09:55 PM
DB and readers
I apologize for my comment on Falberg. Apparently I was wrong.
Posted by jimmy on 01/30/13 09:50 PM
An aside from the article, but you seem to be convinced of Kim Dotcom's authenticity. The Corbett Report recently stated he thinks he's a "snake in the grass." I'm torn.
Posted by Danny B on 01/30/13 09:21 PM
Dear Bell, this is an interesting doc on currency wars. Originally, the FED did big loans and currency swaps. I believe that currency wars have erased the veneer of cooperation.
Click to view link
We know that GS "set up" Greece to fail. We know that the BOJ is trying to survive no matter what the FED, ECB and BOE want or do. QE may have been done in unison but, that was done to eliminate safe-havens. The Swiss learned all about that in a big hurry.
I do believe that currency wars will negate much of the efforts of globalization.
This essentially pits the various CBs against each other. LIBOR was exposed by somebody who wanted to attack somebody else. Let's hope that this internecine warfare continues. May all the CBs rot in hell together.
Posted by oldman67 on 01/30/13 06:24 PM
Who said we have spent more money than we have ever before and it doesn't work? It was Henry Morgenthau,Secretary of the Treasury under FDR who said after eight years of this admonistration we have just as much unemployment as when we started... and an enormous debt to boot. Soundslike Obama and his administration to me but in only four years.Just like Obama,FDR knew little about economics but plenty about politics.
Posted by tribo on 01/30/13 05:57 PM
Read the anti federalist papers, if they had been listened to back before the constitution was ratified, we would not have anything going on like is now the case. The Constitution as adopted was flawed from the very start. They knew and saw this and fought hard to not let it come into being as written, We don't need some brand new Constitution, we only need to negate some things and strengthen others. If the concerns of those back then had been heeded, there would never have been a FED to begin with. Much more to say, to little time to do so, but the Anti-federalist papers is the real starting point for America.
Posted by nithsdale on 01/30/13 05:55 PM
The Congress is the culprit since it spent far more funds in foolish pursuits than any banker ever did.
Who has the greatest deficit in the world? The US Government which has become a givernment, thanks to the same senators and congressmen who love to shift the blame to someone else.
They used every dollar that came to Washington to buy votes and support for their delusions. The bankers didn't. Congress set up "retirement funds". health funds, child and welfare giveaways, even insurance plans and then pension plans for themselves and all government workers far beyond what business and banking wanted. The Congress is full of hypocrits who have used all givernment funds to safeguard their "takng" jobs. Further, they raided every trust fund they ever established to continue with their folly and they have transferred most of that stupidity to the Fed when they could not cope with the mess they had made.
Wake up young men and some older ones who should know better. Stop flagellating the elite whom you won't even name, and discover where the real bad smell is eminating from... .Capitol Hill and every state capital in the country!
Posted by billfalberg on 01/30/13 05:55 PM
That's really breathtaking. You credit the government with sovereignty it doesn't have while ignoring the financial and monopoly power corporations use to exert force on the government. It's OK for big business to force regulatory legislation in their favor, but wrong for government to regulate any business.
Don't you realize that financial force distorts and corrupts government as well as government regulatory force corrupts free markets. Jefferson's complaint against the mix of church and state should apply even more so to *corporation and state* ("... ... for the one will surely corrupt the other")
But libertarianism doesn't even recognize the distinction between corporations and sole proprietors, does it? So they wouldn't recognize the difference between the corrupt use of force by banks and the corrupt use of force by government.
In a world where there are only two kinds of people, corporatists and constitutionists; DB, and libertarians in general, are corporatists. You could have have just said that and I wouldn't have had to pester the supremely erudite staff of DB with questions you clearly couldn't understand.
You'll never find or conquer any "power elite" because it doesn't exist. You will, however, find a bunch of crude and not-so-bright yahoos enjoying the benefits of "position" in a system that has no ulterior motive other than to improve their golf score and avoid taxes. They have no idea you even exist; much less care what you think.
Like you, I "want to believe" ; but logic won't let me. Try accepting personal responsibility. Take the red pill.
Reply from The Daily Bell
It is fairly certain by now that you are yet another "troll." We suggested you go to Mises .org and read the many articles that would actually educate you about what libertarianism is - and isn't - but instead you have returned here immediatrely to vomit on DB threads.
We won't entertain much more of your ignorance. You are not interested in a real dialogue - or you would not continue to act in this way.
You write ...
"You credit the government with sovereignty it doesn't have while ignoring the financial and monopoly power corporations use to exert force on the government."
DB: A main tenet of our observations has to do with MERCANTILISM, which is the conflation of the private with the public. This is further evidence that you have never even bothered to read DB. Your presence here – and your assumed questing for information – is obviously a fraud.
"It's OK for big business to force regulatory legislation in their favor, but wrong for government to regulate any business."
DB: We have written thousands of staff reports. Find ONE that suggests we believe it is “OK for big business to force regulatory legislation.” You won’t. You’re just a paid shill casting aspersions.
"Don't you realize that financial force distorts and corrupts government as well as government regulatory force corrupts free markets. Jefferson's complaint against the mix of church and state should apply even more so to *corporation and state* ("... ... for the one will surely corrupt the other")"
DB: Of course financial force distorts and corrupts governments. This is one of our main points of analysis. We focus on it every day. But since you don’t come here to read DB but only to write nonsensical comments, we’re not surprised by this sort of observation.
"Libertarianism doesn't even recognize the distinction between corporations and sole proprietors, does it? So they wouldn't recognize the difference between the corrupt use of force by banks and the corrupt use of force by government."
DB: More gibberish.
"In a world where there are only two kinds of people, corporatists and constitutionists; DB, and libertarians in general, are corporatists. You could have have just said that and I wouldn't have had to pester the supremely erudite staff of DB with questions you clearly couldn't understand."
DB: Libertarians in general are corporatists! We’ve written a number of articles explaining why corporations are illegitimate excrescences of judicial over-reach. Too bad you have never read the publication you are so intent on criticizing.
"You'll never find or conquer any "power elite" because it doesn't exist. You will, however, find a bunch of crude and not-so-bright yahoos enjoying the benefits of "position" in a system that has no ulterior motive other than to improve their golf score and avoid taxes. They have no idea you even exist; much less care what you think."
DB: Your conclusion is no more comprehensible than the rest of your post. It’s like you’re just stringing together words and the resulting gibberish doesn’t matter to you because you’re being paid by the syllable.
"Like you, I "want to believe" ; but logic won't let me. Try accepting personal responsibility. Take the red pill."
DB: You don’t want to believe. You just want to disrupt. Go away.
Posted by 1776 on 01/30/13 04:57 PM
Published on Jan 30, 2013 Casey Research chairman Doug Casey interviews financial pundit and author Peter Schiff. Their conversation covers a range of issues: gold, the validity of the US dollar, the Federal Reserve system and the Schiff family's fight with the IRS.
Click to view link
Posted by Abu Aardvark on 01/30/13 04:18 PM
DB: "Many people in the West are involved with various kinds of crimes today. A law, at this point, is whatever "officials" say it is."
Case in point:
"The Most Ridiculous Law of 2013 (So Far): It Is Now a Crime to Unlock Your Smartphone"
Click to view link
"John Stossel's Illegal Everything"
Click to view link
Posted by 1776 on 01/30/13 04:17 PM
How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter
Click to view link
Posted by taxesbyanyothername on 01/30/13 02:51 PM
There are plenty of other "good grey men" these legislators should be pointing out as deserving prosecution. They could find some of them in the mirror.