Our Government in (In)Action

To be sure, I never link to the LA Times, but here I make an exception. This is an article written in response to a NY Federal judge who wants to know why the perpetrators of the 2008 recession - the CEO's and CFO's of large American financial institutions - have not been prosecuted.

As the five-year statute of limitations approaches for the wrongdoing that bequeathed us the Great Recession, the question of why no high-level executives have been prosecuted becomes more urgent.

You won't find a better, more incisive discussion of the question than the one by U.S. District Judge Jed Rakoff of New York in the current issue of the New York Review of Books.

Rakoff, 70, is the right person to raise the issue. He's a former federal prosecutor in Manhattan, where he handled business and securities fraud. A Clinton appointee, he's been on the bench for more than 17 years.

Judge Rakoff has tossed out SEC settlements that he thought were too lenient and did not address the problems of corrupt management.

"Companies do not commit crimes," Rakoff observes; "only their agents do...So why not prosecute the agent who actually committed the crime?" He's witheringly skeptical of prosecutions of corporations, which usually yield some nominal fines and an agreement that the company set up an internal "compliance" department. "The future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing."

But Rakoff's most severe criticism is not directed at greedy corporations,he is incensed at the lack of government action to punish the movers and shakers that make profit from the destruction of millions of savings accounts belonging to people who cannot afford these losses.

He dismisses the Department of Justice rationale that proving "intent" to defraud in the financial crisis cases is difficult: There's plenty of evidence in the public record that banking executives knew the mortgage securities they were hawking as AAA were junk.

He doesn't buy the excuse that criminal prosecutions involving major financial firms might have damaged the economy -- no one has ever contended that a big firm would collapse just because its high-level executives were prosecuted. And he notes that the government doesn't dispute that some of these executives may be guilty -- it just comes up with excuses for not prosecuting.

Why? Rakoff posits that there are several reasons for the lack of prosecutions. One is that the FBI and SEC are both understaffed because of budget cuts, and in the FBI's case with the diversion of much of its workforce to anti-terrorism efforts after 9/11. And he speculates that the government may feel abashed at its own complicity in the crisis, arising from the easing of financial and mortgage regulations over the years.

I've been saying this for years to people who are all about corporate greed but leave the government out of the equation; they ignore half the problem:

1. All corporations exist and operate within a well-defined regulatory environment that allows them to steal and manipulate their competitors and customers. This environment was created and is constantly modified by our so called representatives at the state and federal level as well as a Byzantine structure of quasi-legal regulatory agencies.

2. The financial activity of these corporations is monitored by the government who, for the most part, makes only a token effort to enforce the regulations created to control them.

Under the Obama administration, even minimal enforcement of the biggest offenders has ceased. Instead, the enforcement efforts of our government has been focused at political opponents.

And let's not stop there. After the abject failure of our federal law enforcement agencies and the intelligence community to identify and interdict the 9/11 attack:
No one was arrested.
No one was demoted.
No one lost their job.
No one was disciplined.

The 9/11 Commission Executive Summary states:

The 9/11 attacks were a shock, but they should not have come as a surprise. Islamist extremists had given plenty of warning that they meant to kill Americans indiscriminately and in large numbers. Although Usama Bin Ladin himself would not emerge as a signal threat until the late 1990s, the threat of Islamist terrorism grew over the decade. [page 2 ~ sig94]

[...]Moussaoui aroused suspicion for seeking fast-track training on how to pilot large jet airliners. He was arrested on August 16, 2001, for violations of immigration regulations. In late August, officials in the intelligence community realized that the terrorists spotted in Southeast Asia in January 2000 had arrived in the United States. [page 7 ~ sig94]

[...]Operational failures — opportunities that were not or could not be exploited by the organizations and systems of that time—included:
•not watchlisting future hijackers Hazmi and Mihdhar, not trailing them after they traveled to Bangkok, and not informing the FBI about one future hijacker’s U.S. visa or his companion’s travel to the United States;
• not sharing information linking individuals in the Cole attack to Mihdhar;
• not taking adequate steps in time to find Mihdhar or Hazmi in the United States;
• not linking the arrest of Zacarias Moussaoui, described as interested in flight training for the purpose of using an airplane in a terrorist act, to the heightened indications of attack;
• not discovering false statements on visa applications;
• not recognizing passports manipulated in a fraudulent manner;
• not expanding no-fly lists to include names from terrorist watchlists;
• not searching airline passengers identified by the computer-based CAPPS screening system; and
• not hardening aircraft cockpit doors or taking other measures to pre-pare for the possibility of suicide hijackings [page 8 ~ sig94]

As late as September 4, 2001, Richard Clarke, the White House staffer long responsible for counter-terrorism policy coordination, asserted that the government had not yet made up its mind how to answer the question: “Is al Qida a big deal?”

A week later came the answer.[page 9 ~ sig94]

When and where it really mattered, no one did their job. The system failed to protect us at various levels, at operations and analytic functions but, I believe primarily at the political level. As far as assigning responsibility, the 9/11 Commission was nothing but a white wash intended to deflect blame by identifying system faults which were imposed by politician in the first place - ie., the "intelligence sharing wall" imposed between the CIA and FBI under the Carter administration in 1978 and greatly strengthened by Clinton appointee Jaime Gorelick-

In 1995, while America’s intelligence agencies were still investigating al Qaeda's 1993 terrorist bombing of the World Trade Center, the Clinton administration strengthened FISA to a degree that was unprecedented. Specifically, Deputy Attorney General Jamie Gorelick called for increased restrictions on information-sharing between intelligence (CIA) and law-enforcement (FBI) agencies. In a 1995 memo to then-FBI Director Louis Freeh and U.S. Attorney Mary Jo White, titled “Instructions on Separation of Certain Foreign Counterintelligence and Criminal Investigations,” Gorelick wrote the following:

“We believe that it is prudent to establish a set of instructions that will more clearly separate the counterintelligence investigation from the more limited, but continued, criminal investigations. These procedures, which go beyond what is legally required, will prevent any risk of creating an unwarranted appearance that FISA is being used to avoid procedural safeguards which would apply in a criminal investigation.”

Wonder of wonders, Gorelick is appointed as a member of the 9/11 Commission to investigate the carnage created by her devices. Her name is on the page following the cover of the report.

So ultimately, what action was taken by the government?

To take our freedoms.
Effectively suspend habeus corpus almost whenever the government feels like it. This was last done during the Civil War by President Lincoln.

To declare the Fourth Amendment of the US Constitution invalid within a hundred miles of the US border. According to Google Maps, I live 99.2 miles from the Canadian border. What other Amendments will bite the dust under the guise of security?