In “The Untouchables,” PBS’s Frontline takes a look at the aftermath of the financial crisis and tries to answer the question that should haunt us all: Why are no Wall Street executives in jail for their role in the financial crisis that cost this country eight million jobs?
The answers the program presents are infuriating. From mortgage providers who consciously engaged in a strategy of funding everyone, to the banks that disregarded their own credit policies to purchase those mortgages, to a Justice Department humbled by the legal power of Wall Street and too afraid of shocking the financial system to prosecute any top executives, the real culprit is a political system that’s still too broken to confront the unfettered power of the big banks, which are bigger now than they were before the financial crisis.
If there is a hero in the story, it’s former senator Ted Kaufman (D-DE), Joe Biden’s former aide, who took the new vice president’s seat from 2009-2010. Kaufman fought for increased funding to fight financial fraud and used his oversight to follow up on the surprising lack of prosecutions. But unlike Kaufman, who knew he’d never run for office, most politicians in Washington D.C. had careers to protect.
Private law firms have picked up where the DOJ left off prosecuting the banks for defrauding their customers and the institutions that backed their mortgages. The state of New York recently joined a number of other parties to file a civil case against Bear Stearns’ current owner, JPMorgan Chase, using testimony and evidence from the private firms to form much of their case.
So why couldn’t the government make that case? As good as this Frontline documentary is, it misses a few key aspects of the story.
First, the big banks’ lobbying power wasn’t diminished by the financial crisis, as TARP placed no restrictions on their activity. The millions that the financial service lobby had to throw around in 2009 and 2010 to limit Congress’ interest in investigating the crisis and prevent further reforms led Senator Dick Durbin (D-IL) to look at the Senate and realize that the banks “…own the place.”
Second, the frustration the public felt during the worst of the disaster was successfully diverted from Wall Street to the president via an amazingly coordinated effort by the right wing, aided by Fox News and billionaire-funded dark money “social welfare” nonprofits like FreedomWorks and Americans For Prosperity. These groups successful framed any attack on Wall Street as an attack on capitalism itself.
One of the great “what if”s of recent history is “What if Occupy Wall Street came before the Tea Party?” The pressure to prosecute would likely had been too powerful to ignore.
Finally, it gives Senator Chuck Grassley (R-IA) a chance to lament the lack of prosecutions, even though he’s a perfect example of the lack of oversight and dysfunction that let the crisis happen then tried to prevent any reforms.
When you factor these political realities in with the the answers presented in “The Untouchables,” we should all be aware that not only could another financial crisis happen now, but the complete lack of criminal accountability for such mass fraud could easily follow once again.