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The Era of No Accountability

We are living in the Era of No Accountability.  We read or hear about it every day in the newspapers or internet.  It is rampant in politics (lies regarding Iraq War)  but it is particularly troubling in the financial sector.  So, while people are suffering from high unemployment and losing their homes, those who created this crisis escape from accountability.

The financial sector ignited the global financial crisis with their excessive risk taking, poor lending standards and general disregard for responsible business/investment practices.  Of course, being “too big to fail” did contribute this crisis and that was a result of decades of de-regulation.  But those who are responsible for the global financial crisis have not been held to account for their actions in any shape or form.  If anything, they were ‘rewarded’ with trillions of dollars of taxpayer money. 

1)  “Too Big to Fail” Financial Conglomerates still exist and are some cases getting even bigger through purchases of other struggling banks.  There are no plans by the Obama Administration or serious legislative proposals to break them up.

2)  Huge bonuses continue.  Ken Lewis, former of CEO of Bank of America, retired with $83 million.  This after: 1) receiving $45 billion bailout and 2) possibly lying about Bank of America’s purchase of Merrill Lynch.  But Lewis is not alone, bonuses were still flowing across Wall Street despite $12 trillion taxpayer bailout.  The bonuses never stopped - Dick Fuld, CEO of now bankrupt Lehman Brothers, crashes his company and gets $22 million bonus in the process. 

3)  Credit Rating Agencies.  This is a big one.  Companies, like Moody’s Investment Services, were paid by securities issuers to issue credit ratings on the securities.  A very lucrative business for Credit Rating Agencies and an inherent conflict of interest - would you pay for a service if they are going to rip on your product?  Moody’s and S&P were glorified investment promoters.  Their credit ratings on many occasions were inflated and possibly misleading.  Unfortunately, too many investors (even experienced ones) relied heavily on these credit ratings. 

McClatchy News did a story back in October 2009 about Moody’s: How Moody’s sold its ratings.  This story didn’t get enough attention.  In it were some serious allegations made by former employees. Two of the same former employees quoted in the above story testified in a Congressional Hearing on the credit rating agencies: “Credit Rating Agencies and the Next Financial Crisis”, where they reiterated their allegations on the record and under oath. 

We are now hearing about pension funds and various state attorney generals suing the Credit Rating Agencies but these are civil lawsuits and are very difficult because the Credit Rating Agencies are using the “Freedom of Speech” as a defense.  But where are the criminal investigations particularly by the U.S. Attorney General’s Office?  Certainly these allegation raise the specter of mail/wire fraud under RICO Act or some other criminal fraud statute. 

Again, NO ACCOUNTABILITY.

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