Monday Mailbag: Financial Reform? How About Criminal Prosecutions? (Plus: Bonus Ozzy Osbourne)

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Ozzy Osbourne

I was thoroughly depressed, and angry, after reading the amazing “Kill Team” story put together by Mark Boal and the editors here at Rolling Stone.  

I remembered covering the campaign in 2008 and hearing Democratic aides talking about how Obama was going to dodge the “soft on defense” label by campaigning loudly for a “presence in Afghanistan.” I’m convinced to this day that the only reason we’re still in that country is because a bunch of Beltway nerds with masculinity issues like Rahm Emmanuel collectively decided that the Democrats need a war, too – a so-called “good war” they could use to throw Bush’s Iraq adventure into relief.

Then they dumped planeloads full of other peoples’ children over there to be killed or turned into monsters themselves. The unbelievable cynicism behind the political decision to keep that war going, I just don’t understand it. Anyway I would hope those photos and that story would wake people up, although who knows … it may be that American soldiers murdering 15-year-olds doesn’t rate as a story anymore. You wonder whether the “Running Girl” photo would have had the same effect on the current TV-sedated population.

On to the mail:

Matt,
Last night I listened to the Citizen Radio episode where you appeared with Sarah Silverman. You mentioned Elizabeth Warren possibly challenging Obama for the 2012 nomination.  Do you think it will really happen?
Carter

Carter,
A few months ago I heard a vague rumor from someone who theoretically would know that such a thing was being contemplated, but I don’t know anything beyond that. I wish she would run. I’m not sure if it would ultimately be a good thing or a bad thing for Barack Obama – she could fatally wound his general-election chances by exposing his ties to Wall Street – but I think she’s exactly what this country needs. She’s totally literate on the finance issues and is completely on the side of human beings, as opposed to banks and oil companies and the like.  One thing I will say: if she did run, she would have a lot more support from the press than she probably imagines, as there are a lot of reporters out there who are reaching the terminal-disappointment level with Obama ready to hop on the bandwagon of someone like Warren.

Matt my man,
You’ve just got to get your perspective to Montana... This state is over the top, out of control, and we the people here could use your unique ability for clarification on the issues.

Omg, from federal raids on mm dispensaries to giving away guns at Radio Shack when you buy Dish Network, ("which is working like a charm"). You can't even imagine what’s in between those two and I can't even begin to articulate it.

Check this out...

What is driving this train?

Thanks for your attention to this matter. Please help.
Very respectfully yours,
Kathi Miller

Kathi,
This is cool, but I won’t be impressed until some McDonald’s franchise starts giving away loaded pistols with Happy Meals. My bet is on Tennessee or Arizona, but if it happens in Montana, consider me warned.

Matt …
If you agree these are major problems, is there any chance that the Gramm-Leach-Bliley and the Financial Modernization Acts will be reversed and so that we’ll get banks out of the insurance industry, abolish derivatives, and separate commercial from investment banks once again?  I just saw Inside Job for the 6th or 7th time and sit there dumbfounded and shocked at the gargantuan, global greed run amok.  And, of course, there is no laundry list of ‘calls to action’ to suggest to viewers at the its conclusion.  It seems we need massive antitrust enforcement to break up banks and other oligopolies.  Do we need a total systemic failure before we get real reforms a la the 1930s?  If you were czar, what immediate major reforms and repairs would you put into play in the U.S. system? 
Not holding my breath,
Joe

Joe,
First of all, if I had absolute power, I’m not sure I’d want to call myself a “czar.” If we’re going strictly by the Russian model, I’ve always liked the title owned by the head of the MChS – the “Minister of Extreme Situations.” I’d still live in the White House, but I’d want it covered in black scary vines and surrounded by a moat full of crocodiles, and… what was the question again?

In all seriousness, I’m for most of the reforms you list, plus a few others, but honestly, I don’t spend a lot of time thinking about policy solutions. The main thing that matters to me is that the very obvious violations of existing criminal laws against fraud and theft and bribery and insider trading get punished – let’s start with that, then see what happens. I think we’ll find out ultimately that a lot of our economic problems stem from a general sense of lawlessness and the perception the banks have that if they all act in concert to ignore this or that regulation, and dare the state to do anything about it, they’ll probably get away with it. A great example is this whole fiasco with MERS, the electronic registration system for mortgages. Here you have a situation where the banks essentially decided en masse to systematically evade state and local taxes by foregoing local paper registrations, and then dared the fifty states and the countless counties to do something about it. However many years and a massive paperwork/foreclosure crisis later, they’re still getting away with this, because they enjoy a kind of political impunity that makes state and local prosecutors afraid of taking them on. So from my point of view, before we even worry about new laws and regulations, let’s see if it’s even possible, politically, to force these companies to follow existing laws. I think what we’d find out is that it’s probably easier to pass new regulatory laws (which can later either be ignored or pumped full of loopholes) than it is to enforce the meaningful laws already on the books.

Hi Matt,

I bought the audio book version of Griftopia because I don't read books any more.  Did you choose the guy who narrated the book?  He sounds like someone's grandfather.  I laughed when he said the word douchewad.  Next time you should hire the guy who narrated Ozzy Osbourne's autobiography.  Ozzy's narrator sounds like Russell Brand and is genuinely funny when he says something like, "It was like sniffing glue, only a hundred fookin' times stronger!"

Regards,
Mark

Mark,
I didn’t have anything to do with the choice, but Patrick Egan is a much better reader than I am! Although Ozzy would have been a good selection – maybe I should get him to read the new chapters in the paperback version, i.e. pump him full of Benzos and have him read the bit on interest-rate swaps.

Matt,

Sergey Aleynikov was recently convicted in federal court of stealing proprietary code from Goldman Sachs while employed as a programmer there. He was sentenced to eight years one month in federal prison.  The lesson seems to be if you steal from Goldman you go to the hoosegow for nearly a decade, while if you steal for Goldman you get a government bailout and a hefty bonus.

Your thoughts?

Paul Ditz

Paul,
When Aleynikov was arrested I heard from a half-dozen friends on Wall Street who all laughed about how quickly the FBI sprang into action when the victim happened to be Goldman Sachs. There are people out there who’ve had their homes foreclosed upon by mistake who can’t even get the Justice Department to agree a crime against them has been committed, so the fact that the FBI tracked Aleynikov down and arrested him literally hours after Goldman made the complaint should tell us all a lot. What’s even more amazing is that the code Aleynikov allegedly stole was almost certainly a tool Goldman was using to steal from the public using elaborate front-running technology. Basically if you want to manipulate the stock market, the FBI will race into action to protect your “intellectual property."

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