Friday, July 8, 2011

The Two Americas: Justice for the Rich vs for the Poor

The top 0.01% have bought the government and the courts and get a different "justice" delivered to them than what the bottom 99.99% of the country get. Here is a bit from a post by Matt Taibbi in his Rolling Stone blog:
Courtesy of my good friend Eric Salzman comes this latest outrage – SEC Enforcement Director and former Deustche Bank general counsel Robert Khuzami boasting about the latest slap on the wrist directed at a major bank, this time a $228 million fine of JP Morgan Chase for a bid-rigging scheme involving municipal bonds. The Chase ruling is the latest to come down in a series of fines involving a number of banks, including Bank of America and UBS.

This is one of the best examples we’ve had yet of the profound difference in the style of criminal justice enforcement for the very rich and connected, versus the style of justice for everyone else. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.

What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.

This is absolutely no different from what mafia groups in New York used to (and probably still do) do for public contracts – the proverbial five families would get together, divide up the boroughs and neighborhoods between them, and each family would individually buy or intimidate their way into the bidding process, corrupting the game so that the public had to overpay for their garbage collection or their construction labor or whatever. The only difference here is that we’re talking about debt, not garbage. But the concept is exactly the same; it’s the same crime.

If Khuzami’s defendants had been a bunch of Italians from Howard Beach, they would be facing RICO charges and would be looking at years in prison, plus seizure of all their ill-gotten gains, in addition to civil suits and penalties.

As it is, as my friend Eric points out, the endgame for banks like Chase is, “Admit nothing, pay two hours of revenue and all good!”


How would the California resident have any way of quantifying how much money he personally loses when Chase cheats his state out of true bids in municipal bond auctions? When his taxes get raised five years from now to pay off this artificially inflated debt, will he have any clue what’s behind the increases? By the time anyone figures it out, in the very rare case that anyone does, it's five or ten years after the banks have paid out the bonuses to the guilty parties.

Moreover, this particular scheme also targets the federal government, which normally taxes the proceeds of investment earnings from tax-exempt bonds. Now, they collect less in taxes. You can bet, when the Tea Party starts calling for NPR and food stamps to be sacrificed to reduce the deficit, that nobody will be bringing up the tax revenue Chase, UBS and BofA swindled the Treasury out of in these bid-rigging schemes.
It is utterly, utterly clear that the Obama administration isn't interested in cleaning up a corrupt, bubble-blowing Wall Street. They are just too happy with all the money flowing in under the table to get them re-elected. So much for "democracy" in the US. The only votes that count are the greenbacks. The poor suckers who show up at the polling stations to pull levers don't realize that that whole charade is disconnected from the real transmission mechanism of power in the US.

Go read the whole article by Taibbi to get all the sordid details.

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