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The Progressive Platform Project

A Righteous Anger: Demanding Wall Street Accountability

by: Michael Conrad

Tue Dec 06, 2011 at 02:36:48 AM EST

On Sunday night 60 Minutes went there. Prosecuting Wall Street asks why over three years after the Great Crash of 2008, no one on Wall Street has been prosecuted. Specifically, why haven't the Department of Justice or the SEC prosecuted Wall Street for violations of the Sarbanes-Oxley Act? CBS' Steve Kroft interviewed two high-level whistleblowers and Obama Administration Assistant Attorney General Lanny Breuer.
Michael Conrad :: A Righteous Anger: Demanding Wall Street Accountability
Part 1 - Countrywide, fraud, the perverse incentive of exorbitant bonuses, and the infamous tale of Angelo Mozilo. The whistleblower is Eileen Foster, a former senior executive at Countrywide Financial and then Bank of America after it acquired Countrywide.

Part 2 - Citigroup. The all too familiar name of Robert Rubin makes a cameo. Whistleblower Richard Bowen, a former senior vice president at CitiMortgage details what Citigroup knew and when they knew it.

The lead-in to Kroft's exchange with Lanny Breuer starts at the 8:26 mark. Breuer's answer does not inspire confidence as the "trust us" rubicon was crossed some time ago.

60 Minutes Overtime features an interview with Tom Borgers, senior investigator for the Financial Crisis Inquiry Commission, also known as the Angelides Commission. (Named after prominent California Democrat, former state treasurer and 2006 candidate for Governor Phil Angelides.)

At the end of the segment 60 Minutes producer James Jocoby sums it up:

I think that what Tom Borgers is talking about is that the more you learn about how things actually went down inside of our largest financial institutions and who knew what and when and what laws are really applicable, the more pissed off people will become.

Right after the show aired, Elizabeth Warren tweeted:

Watched #60Minutes (link to show) Another example why it's past time we start demanding accountability for those who broke the economy

So What does accountability look like?

Wall Street Accountability: Recovery and Reform

Here are five ideas populists and progressives are advocating for. All of them are good ideas in isolation but I see no good reason why people shouldn't push for all of them.

1. A financial transactions tax (FTT). A modest fee will raise significant revenue while deterring speculation.

2. The substance from the Brown-Kaufman amendment from the financial regulation fight of 2010.

In short, this was the gutsy attempt of Sen. Sherrod Brown (D-Ohio) and then-Sen. Ted Kaufman (D-Delaware) to breaks up the "Too Big To Fail" banks. It was defeated by Team Wall Street. While something like Brown-Kaufman faces a steep uphill climb in DC, the central ideal is wildly popular with a broad range of voters. Brown-Kaufman is a good example of how money and lobbying, not public opinion, is the primary roadblock to progressive legislation. Only in the Beltway Bubble and on Wall Street itself is "Too Big To Fail" less than an outrage. Don't write Brown-Kaufman off; organize around it.

3. Action to deal with the foreclosure crisis that the banks are going to freak out over.

4. Get the money from Wall Street and other corporate interests out of our elections.

If Wall Street really believes in the legislative meritocracy they claim to believe in, it's time for them to put their money where there mouth is. Let's move to a system where they'll have to rely on the power of their ideas. The Financial Services Roundtable, which used to be called the Bankers' Roundtable (remember when "toxic assets" became "legacy loans" and AIG became AIU Holdings?) could still get time to make their case to elected officials. But so would Americans for Financial Reform. Campaign cash and the lure of cushy jobs in the future for electeds and staffers would be limited as much as they possibly can be.

5. Protect the Consumer Financial Protection Bureau

President Obama is pressuring Republicans to stop blocking the confirmation of his nominee, former Ohio Attorney General Richard Cordray (D), to head the CFPB. See Jonathan Bernstein at The Plum Line for more on this. From this point on, the CFPB should be part of the Democratic economic security agenda, next to Social Security and Medicare.

Remember that getting the CFPB up and running in the first place was a huge win. The takeaway from this isn't just that Elizabeth Warren is awesome, though that's true and definitely a big part of the story, it's that passionate, scrappy underdogs can win.

Wall Street Accountability: Responsibility

First off, let's stop the cruel joke of a foreclosure fraud settlement. Contact your Attorney General and let them know just how much the very concept of a weak settlement offends you.

Refresher: Democratic Attorneys General, led by Eric Schneiderman (New York) and Beau Biden (Delaware), along with Catherine Cortez Masto (Nevada), Martha Coakley (Massachusetts), Lori Swanson (Minnesota), and Jack Conway (Kentucky) are resisting the bank-friendly settlement being negotiated by AG Tom Miller (D-Iowa) with support from Obama White House.

This could all come down to Kamala Harris (D-California). After pressure from activists, Harris broke away from the settlement talks, though she has yet to join the Schneiderman/Biden/Cortez Masto group. The Obama Administration is reportedly putting a lot of pressure on Harris to go along with the deal. Harris was a stalwart supporter of the Obama campaign in '08 and Obama appeared at a Harris fundraiser in the final weeks of the 2010 campaign, a very rare event for a down-ticket candidate. There's friendship and mutual support here. Judging by their past pronouncements, I wouldn't be surprised to learn that Obama's team is trying to sell Harris on the idea that this deal will get the president re-elected. It's not a defensible claim for a number of reasons, but it could probably be dressed up to resemble one by the right person.

Set aside for a moment that one of the most memorable OWS signs, "sh*t is all f**cked up and bullsh*t, could have been talking about this deal. Harris should have a very bright future ahead of her. I doubt there are many honest "First... " lists that she's not on. Going along with this deal could stop all that. To progressives and the Democratic base, a bad settlement is the domestic policy equivalent of the push to invade Iraq circa 2002. If you were for a weak settlement, let alone instrumental in it, you've given another candidate the opening they need to beat you. Speak out against the raw deal, or better yet stop it, and you make a compelling point in your favor while doing the right thing. Either way, this is not going away.

Note: You can add "pressuring rising star Kamala Harris to forever link herself to Wall Street immunity" to the die-hard Democrats' growing list of "What are they doing? They're blowing it!" moments in Obama Administration political strategy.

As far as prosecutions go, keep asking the question: Why hasn't Wall Street been prosecuted? Is Wall Street above the law? Ask politicians and media outlets and opinion leaders. Publicly and loudly ask your dog if you think the people overhearing your conversation will remember what you said rather than the fact that you were talking to your dog. Don't let this go.


Real accountability for Wall Street, like any other high-stakes political fight, requires issue advocacy, electoral politics, and a movement. They don't work without each other.

Yes, Wall Street "Democrats" (see: Chief of Staff-ish Bill Daley) or "limousine neoliberals"(see: Third Way) exist and they are relentlessly lame. They're part of the problem. Still, there are no shortage of allies who Democrats and progressive independents can and should work with.  

Sen. Jeff Merkley (D-Oregon) has been all over the foreclosure crisis from the start. He got to the heart of the real scandal of recent revelations when he urged the president to "take on the housing market struggles with same vigor and determination as the government helped major financial institutions." At the beginning of the year, Merkley released his own plan, which included a "lifeline bankruptcy option" AKA a cramdown. In the tale of the two streets, this works for Main Street and the economy as a whole, which means it triggers a Wall Street freakout. When the Jeff Merkleys in Congress stand up, back them up.

Sen. Tom Harkin (D-Iowa) is advocating for an FTT. Senators Sheldon Whitehouse (Rhode Island), Bernie Sanders (I-Vermont) and former Senator Kaufman have stood on the Senate floor and given eloquent and at times scathing speeches on what Wall Street's recklessness has wrought. If well-timed and backed up by social media and the numerous progressive-leaning news/opinion shows, they can have an impact. Look for "big speech moments."

Tired of tepid Democrats cowering in front of Wall Street? Reinforce the Non-Cowering Caucus in 2012. There are four highly competitive or potentially competitive Senate races that Wall Street will be asserting itself in, seeking to stop or get rid of those who stand up to them: Elizabeth Warren in Massachusetts, Sherrod Brown in Ohio, Tammy Baldwin in Wisconsin, and Maria Cantwell here in Washington state.

There are also Democratic primaries in House races to get involved in. Rep. Brad Miller in North Carolina's 4th, Rep. Donna Edwards in Maryland's 4th, and outspoken progressive Darcy Burner, running in Washington's newly redrawn 1st district. Burner is calling on Attorney General Eric Holder to prosecute bankers who illegally foreclosed on military members.

Contacting your electeds, boosting strong elected Democrats and electing more of them; it's all essential. The same is true of the kind of protests that have broken out over the last couple of months. It's simple: without energetic movements big change doesn't happen.

Today marks the beginning of Occupy Our Homes. The 99% movement gravitating toward protesting and preventing foreclosures is very exciting news.  This is an incredibly powerful tool that drives home (no pun intended) the "Which side on you on?" nature of foreclosure fraud and the foreclosure crisis.

Don't underestimate the righteous fury that is coming to the surface. The Occupy Wall Street protests are an instructive example. They have many things going against them. Initial media coverage seemed to show a determination to not "get it." Messaging gurus would argue that the first word in their name repels or confuses or people. Before OWS, if a political operative would have predicted that a movement would grow despite having to resort to the "human microphone," the operative would have been laughed at and/or had their sanity questioned. The flagship protest at Zuccotti Park had to deal with the presence of the cranks and bizarre characters that show up at any inviting protest. Constant drummers alienated neighbors, allies, and protesters alike with their intransigence and their "I'm just here to drum all the time and hang out" attitude. Building a strategy around long-term encampments was always highly questionable.

A few months ago, Occupy Wall Street would have looked on paper like a movement capable of accomplishing little if anything. But OWS has changed the conversation in a dramatic way. In this respect, they've already succeeded. This is in large part due to their target: Wall Street. The resilience of the protesters and their timing matters too, but their declared opponent is why so many people respond to the protesters message, if not all of their tactics and idiosyncrasies.

The widespread righteous anger over the deliberate destruction of the American working middle class hasn't been fully tapped into yet. So let's keep at it.

Don't throw working families out of their homes. Prosecute the responsible parties on Wall Street, convict them, and throw them in prison.  


Seth Michaels retweets California reporter Steve Hunt:

CA AG Harris and NV AG Cortez Masto will make joint mortgage-related announcement tomorrow at 11:30

Mike Lux has a really good post up - "2012 and the Big Banks"

On the banks "give us what we want, we're fragile" argument against a good settlement.

A broad settlement that would resolve the widening array of lawsuits that investors and homeowners are bringing against these banks, and stabilize the housing market by reducing negative equity and the need for millions of foreclosures, would settle down the run-on-the-banks rumblings going through the markets right now about the two biggest holders of bad mortgages, Bank of America and Wells Fargo. Remember this key point as well: writing down mortgages is not like cutting a check; it has to do with the long term money coming in, not shortterm cash flow. Writing down mortgages would do nothing to endanger banks' ability to survive in the short run. The reasons those banks' executives don't want to do this has to do with short-term profit, bonuses, and ego: these banks have a far bigger "book value" given the way they are allowed to do their accounting. They can have their accountants value all those homes at their peak value during the height of the bubble, even though everyone knows those homes will not get back to that value anytime in the foreseeable future, and even though more foreclosures mean less money for the banks over the next 20 years along with housing values continuing to decline. If the settlement boosts the housing market, means fewer foreclosures, and resolves thousands of present and future lawsuits, it will help these banks survive over the long haul even if it means the book value, profits, and bonuses over the short term are lower.

The other reason the big bank execs are resisting a bigger settlement is that they are used to getting whatever they want whenever they want it from government officials. They thought they could get a blanket immunity deal for a relatively tiny amount of money given the legal hot water they put themselves in, and now they are having to come to grips that AGs in several of the most important states, along with other key political players, aren't willing to go along for the ride. If they get a narrow settlement that doesn't include the AGs of the two states where all the securitization corporate papers were filed (California and Delaware), and those AGs go forward with investigations and lawsuits, their banks will be the ones who suffer.

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Great diary, MC (3.00 / 3)
The Obama administration wants Kamala Harris to sign off on the dirty deal because they helped defeat Brown Kaufman in the first place and now want to play Teddy Roosevelt trust busting dressup. Give me a break.

I was just thinking of writing a diary like this, but you beat me to it. I'm glad you have all your computer issues settled.

Thanks! (3.00 / 2)
Hoping the 60 Minutes story gains traction. Read Steve Kroft just interviewed the president so I'm waiting to see his response to this. TR talk is nice and all. But TR action is what really counts.

Glad to have computer back. Bizarre things happening to my Mac. They were fixing something minor at the Apple store and then the hard drive crashed while they were fixing it (computer talk, still not well-versed in it)and next thing you know I'm iphone only guy for much longer time than work load could handle. Clearly, this is a consipraceh that proves the Illoomunnatay knows that I'm onto them. I get all my information from Politico and That Guy From Korn.


Ok, so here's what happened. The Illuminati knew I was on to them. So they sent the Geico lizard and a bunch of his pals to create a minor problem with my mac while I slept.
Then they morphed into humans, which takes them maybe 5 seconds tops, and got a job at the Apple store an hour away knowing that living out in the boonies land that is only frequented by people who live here and those damn Twilight tourists (1 or 2 more of these damn movies and then we're done with them, FOREVAH!) means I have to go there... or the other Apple store that is an hour away in the other direction. Once my laptop was in their position they used their lizard mind rays to just smoke my hard drive. Then they called me and snickered to their lizard selves when informing me that they had delayed my quest for truth.

It makes sense if you don't think about it.  

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A stirring tale of how progressives built America and lessons on creating the next Big Change Moment, from OpenLeft's Mike Lux.

"As inspiring as it is informative." -Arianna Huffington

"Mike is that rarest breed: a populist insider." -Wes Boyd

"Better than an OpenLeft flame war." -Chris Bowers


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