As regular readers know, I have argued consistently and forcefully over the past three years that the "Great Recession" was, fundamentally, caused by white-collar crime on Wall Street (thus giving new meaning to the phrase "Street crime"). The only serious writer arguing on a national scale who agrees, and who has laid out the evidence in a series of award-winning articles, is Matt Taibbi.
Two months ago I mentioned an article he wrote back in June regarding the so-called Wall Street Regulation bill. This bill ended up passing in late July and fulfilled Taibbi's prediction: a toothless, gutted piece of Washington chicanery, sold by both major parties, the Congress and the Obama administration as "the toughest financial reform since the ones we created in the aftermath of the Great Depression."
As Taibbi, writing in this week's Rolling Stone, cryptically notes, "that would maybe be more impressive if Congress had passed any financial reforms since the Great Depression, or at least any that didn't specifically involve radically undoing the Depression-era laws."
He also goes on to vividly recount how the last, great chance to regulate Wall Street and make those who wrecked the economy through their crimes pay for what they did, was gutted in a series of last-minute "whorebotchery" (a great word). Read the entire article, but here are a few highlights (emphasis mine):
Taken together, these reforms fail to address even a tenth of the real problem. Worse: They fail to even define what the real problem is. Over a long year of feverish lobbying and brutally intense backroom negotiations, a group of D.C. insiders fought over a single question: Just how much of the truth about the financial crisis should we share with the public? Do we admit that control over the economy in the past decade was ceded to a small group of rapacious criminals who to this day are engaged in a mind-numbing campaign of theft on a global scale? Or do we pretend that, minus a few bumps in the road that have mostly been smoothed out, the clean-hands capitalism of Adam Smith still rules the day in America? In other words, do people need to know the real version, in all its majestic whorebotchery, or can we get away with some bullshit cover story?Sad. The chance to end the decade plus orgy of criminal activity on the Street, and to finally treat these criminals as we do those other "street" criminals, sinks ignominiously in the swamps of D.C.
The final version of finance reform is like treating the opportunistic symptoms of AIDS without taking on the virus itself. In a sense, the failure of Congress to treat the disease is a tacit admission that it has no strategy for our economy going forward that doesn't involve continually inflating and reinflating speculative bubbles. Which sucks, because what happened to our economy over the past three years, and is still happening to it now, was not an accident or an oversight, but a sweeping crime wave unleashed by a financial industry gone completely over to the dark side. The bill Congress just passed doesn't go after the criminals where they live, or even make what they're doing a crime; all it does is put a baseball bat under the bed and add an extra lock or two on the doors. It's a hack job, a C-minus effort. See you at the next financial crisis.
I'm beginning to think Jeffrey Reiman's over-the-top analogy, comparing white collar criminals to pedophiles, is true. Look at the similarities: it's never a one-time crime; the incident for which they are caught is usually the last in a string of years of abuse; the lengths to which they try and pass themselves off as upstanding citizens, great; the deception of the victim, total. And the recidivism rate, the rate at which they will repeat the molesting (in this case, of the economy) if given the chance, staggering.
See you at the next financial crisis, indeed.