Egypt Diverts Media Attention from U.S. Economy
By Greg Hunter’s USAWatchdog.com
The revolution in Egypt has been going on for nearly two weeks. It is intensifying. There are reports of gunfire, beatings of foreign journalists and looting. It is a riveting story because so much is at stake for America. However, the Egypt saga is sucking up resources and attention away from other stories that are also very important for America.
Crowded out of the news picture is the recent Financial Crisis Inquiry Commission (FCIC) report on the causes of the financial meltdown in 2008. The report was released late last week. One of the conclusions to the report was “the crisis was avoidable.” Some of the other conclusions were: “Widespread failures in financial regulation . . . too many financial firms acting recklessly and taking on too much risk . . . An explosive mix of excessive borrowing and risk by households and Wall Street . . . And systemic breaches in accountability and ethics at all levels.” (Click here to read the FCIC report conclusions.)
This enormous debacle cost $12.3 trillion to contain (according to the Federal Reserve) and, yet, this report has gotten very little scrutiny in the mainstream media. This financial crisis is both historic and outrageous. Historic, because of the vast amounts of money created to stem the debt tsunami has never been done before. Outrageous, because not a single financial elite, that caused the problem, has been indicted or jailed. One of my favorite lines from the report is, “. . . we clearly believe the crisis was a result of human mistakes, misjudgments, and misdeeds that resulted in systemic failures for which our nation has paid dearly.” “Mistakes, misjudgments”–what happened to crime and fraud?
The FCIC’s 14 page conclusion only mentioned fraud and crime in one short section. The report read, “The report catalogues the rising incidence of mortgage fraud, which flourished in an environment of collapsing lending standards and lax regulation. The number of suspicious activity reports—reports of possible financial crimes filed by depository banks and their affiliates—related to mortgage fraud grew 20-fold between 1996 and 2005 and then more than doubled again between 2005 and 2009. One study places the losses resulting from fraud on mortgage loans made between 2005 and 2007 at $112 billion.”
In the wake of the Savings and Loan crisis in the early 1990’s, 1,000 financial elites were successfully prosecuted according to white-collar crime expert William Black. Black is a professor of economics (University of Missouri-Kansas City) and says the 2008 crisis is at least 40 times bigger. Not a single indictment?
Mike Whitney at Counterpunch.com feels the same way and wrote an excellent post on the recent conclusions from the FCIC. Whitney said, “So, the report is actually a cover up, a way of going over the events in excruciating detail without assigning blame. The whole 500-page rehash could be summarized in two words, “shit happens”. Maybe that’s the best the commission could do, but it’s going to take more than that to restore the public’s confidence in the system.” (Click here to read Whitney’s complete post.)
Whitney goes on to say, “. . . Predatory lending is bad, ethics matter, corporate governance needs watching, and regulations need to be tightened. While this is all true, it doesn’t get to the heart of the matter: Who’s responsible? That’s what the public wants to know. They don’t want to know who sold what CDO to whom. They want justice. That’s all.” It doesn’t look like there is going to be justice anytime soon.
Meanwhile, the banks are continuing to use government sanctioned accounting fraud to value real estate and securities they own at peak levels, and not what they could sell for today. This makes the banks’ balance sheets look better than reality. Many banks would be insolvent without this dishonest accounting. If the accounting is allowed to be rigged on a massive scale, and the cover up of vast alleged crime is so orchestrated, the situation must be dire.