And there has been no greater sense of frustration for me than to see the banks, time and time again, not be held to the same standards as you or me.
It has become standard practice for banks to wiggle and maneuver and do everything possible to escape accountability.
But perhaps even more maddening is when those in power refuse to dig their heels and go after these banks. The latest example: the Justice Department’s refusal to prosecute Goldman Sachs.
They hedged their bets and sought to make money on the backs of their clients. This is nothing new to any of my readers, nor is the Justice Department’s lack of reprisal.
No one is suggesting that prosecuting Goldman Sachs would have been a walk in the park. But prosecuting them was necessary, if the climate of Wall Street is ever going to change.
What is absolutely maddening about all this is that by allowing Goldman Sachs to skate, the DOJ is all but announcing that the banks can continue to engage in other unconscionable and illegal activities without the fear of retribution This is called a moral hazard — encouraging certain negative behavior by allowing it to continue.
“Ironically” — we only hear about moral hazard in the media, it’s FROM the banks, or government officials like Edward DeMarco, who are alarmed at the notion that homeowners might participate in moral hazard. They will use that alarmist notion, despite the fact that it has yet to be substantiated, as a reason not to do principal write-downs or provide homeowners the meaningful assistance they need.
You will hear time and time again that banks are concerned other homeowners might not be entitled or deserving of their help and might take advantage of the programs.
Yet cases like Goldman Sachs prove it is Wall Street that has no qualms about engaging in moral hazard or other acts of malfeasance.
Banks will continue to act in their self-interest, and engage in acts that are either illegal or immoral because they know they are not going to get caught, and even if they do, they have little fear of prosecution.
Bankers admitted that unethical activity is part of their repertoire, so I really don’t understand what more it will take before Capitol Hill and the regulators take notice.
There really are only two ways we will get out of this mess, when Congress either decides to enact meaningful regulation or breaks up the banks.
Until then, Wall Street will have free reign to do as it pleases.
From The Trenches,
Tags: department of justice, economy of new york city, eric holder, financial economics, Goldman Sachs, hazards, illegal activities, investment, Main Street, moral hazard, prosecute, refusal, rockefeller center, sachs, street, subprime mortgage crisis, wall street