What have the Occupy protesters got to complain about? Why don’t they just go home and leave things to the properly elected politicians?
Well, it turns out that they have a point. As a new report shows, despite an epidemic of financial crime federal prosecutions in the US have fallen to under half their level of a decade ago. The downward trend became firmly established in the presidency of G W Bush and has continued under Obama. The chart shows federal prosecutions each year for the last two decades and four presidents.
The FBI warned as long ago as 2002 that an epidemic of financial fraud was building yet nothing was done in the face of willful blindness on the part of bank executives, regulators and politicians. Policing and regulation (which in this context are much the same thing) completely failed leading to the wave of subprime fraud which eventually broke in 2007 precipitating the world into Depression.
But the subprime meltdown would not have been nearly as serious as it was unless the system was already in a fragile state because so many banks and other institutions had long been exploiting the near absence of any regulation to make hay in ways that history shows inevitably lead to a meltdown. So subprime was only the trigger. Dozy regulators are one thing; remaining fast asleep after 2007 is quite another yet, as the chart shows, that’s exactly what has happened; prosecutions have fallen because, whatever the law say (and it says plenty) there had been a de facto decision to decriminalise … well, crime.
Obama came to power amid much hope that he would take control and sort things out. But nothing; he reappointed Bush’s economic team and did nothing to prosecute offenders despite abundant evidence. Which is to say that he, and his appointees like Attorney General Eric Holder have made being blind a matter of deliberate policy. Obama might have chosen to clean out the frauds saying of the inevitable reaction, “I welcome their hatred” as FDR, who understood the score, said when faced with epidemic levels of fraud in the Great Depression. Instead he chose to try to reconstruct the economy with the criminals in place – a policy that has failed.
Not surprisingly the country is seething and Occupy is the response.
Fortunately the situation is nowhere near as bad in the UK but there is no room for complacency either. Almost all the bailout has gone to the bankers and very little to the real economy – a point which last night’s Question Time audience clearly understood. With the bankers likely to need another bailout very soon, the politics of this are going to get interesting; any party on the wrong side of events is going to be history.