Transferring Every Wall Street Motherfucker to Guantanamo Won't Be Enough

As satisfying as this is ....

It’s unquestionably true that there have been virtually no major prosecutions stemming from the financial crisis. But yesterday we found the exception that proves the rule.

The majority owner of what had been one of the nation’s largest mortgage companies was convicted Tuesday on all 14 counts in a $3 billion fraud case that officials have called one of the most significant prosecutions to arise from the nation’s financial crisis.

Prosecutors said the defendant, Lee Farkas, led a fraud scheme of staggering proportions as chairman of the Florida-based company, Taylor Bean & Whitaker. The fraud not only caused the company’s 2009 collapse and the loss of jobs for its 2,000 workers, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in United States history.

This was a nearly $3 billion scheme, and it perhaps puts the fraud at the heart of the financial crisis in even more perspective. Taylor Bean & Whitaker overdrew on its main account at Colonial Bank back in 2002. Colonial executives would fill the gap in the Taylor Bean account to avoid overdraft fees. When the cost of this became unbearable, Taylor Bean came up with an idea, with the full knowledge of some Colonial executives. They would cover the cost by selling Colonial mortgage pools – many of which had already been sold to other investors. Colonial put these worthless, fake mortgages on their balance sheet and Taylor Bean kept selling them.

But that was only one of the schemes.

SNIP

Two things are notable here. First, the series of fraudulent activities matches up with the notion that fraud was rampant throughout the financial industry during the bubble years. From the originators who sold the mortgages to the big banks who packaged them to the investors who bought them, everyone was in on the take. Second, the way in which Farkas was brought to justice is a model for how this could be done at practically every company on Wall Street. They went after the midlevel executives first, had them plea bargain to ensnare the bigger fish, and built their case. The notion that these cases are somehow impossible to perform is proven wrong by the Lee Farkas conviction.

Maybe the other cases aren’t so clear cut, critics would say. Without rigorous investigation, we won’t know that answer.

... locking up all of them, burning Wall Street to the ground and salting the earth will not begin to solve a problem that originates hundreds of miles to the south.

Because the real crime is not what's illegal; it's what's legal.

If you haven't read Matt Taibbi's Griftopia, let me recommend it with a warning: Taibbi minces no words in describing how and why the finance industry is destroying the nation.

He concludes:

... the country increasingly is forgetting that any of this took place. The ability of its citizens to lose focus so quickly and to be distracted by everything from Lebronomania to the immigration debate is part of what makes America so ripe for this particular type of corporate crime. We have voters who don't pay attention, a news media that either ignores key subjects or willfully misunderstands them, and a regulatory environment that bends easily to lobbying and campaign financing efforts. And we've got a superpower's worth of accumulated wealth that is still there for the taking. You put all that together, and what you get is a thieves' paradise - a Griftopia.