Friday, November 19, 2010

A Nation of Laws?

I remember the Savings and Loan debacle of the 1980’s very well. I lived in Arizona at the time, and not only was Arizona a hotbed of failed S&L’s, it was home to Charles Keating and the legislators of the “Keating Five” fame. The numbers involved in that financial collapse were huge and frightening at the time, but we ultimately emerged from it unscathed, and that debacle has been rendered almost insignificant by a subsequent one some forty times bigger in scope.

More than a thousand felony convictions were made as a result of financial irregularities committed during that period by bankers, realtors and related professions. Repeat, more than a thousand people were convicted of felonies and sentenced to prison terms in a financial scandal that was forty times smaller than the current one, which has not resulted in one single indictment, let alone conviction. We are not even making an attempt to find and punish the guilty today.

No, Bernie Madoff is a separate case, not related to the financial collapse.

The financial houses which failed in the 80’s were not “recapitalized” with taxpayer money, they were taken over by the government, their overvalued assets were sold off for whatever price could be obtained, and the deposit base was sold to financial institutions which could service it responsibly. They no longer exist today.

I remember celebration of the regulations and oversight that were put in place to assure that such a failure could not happen again. “We learned from our mistakes,” it was claimed, and never again could the nation be placed at such risk. Never again could we allow the savings and the retirement accounts, citizen’s dreams and hopes, to be vaporized by the greed and avarice of Wall Street.

Those regulations and that oversight were promptly ignored, and where they could not be ignored they were repealed. Fast forward to 2010, when we are being told that new regulations are in place to assure that a financial collapse “can never occur again.”

Yes, and we were told that in 1991, when the “Prompt Corrective Action” law was passed, a law that remains in effect today and which the government has ignored completely from that day to this one. We were told that when Glass-Stiegal was passed; a law which, impossible to ignore, was repealed by Congress. When an attempt to reinstate that law was made last year, Congress rejected it. The list goes on.

Merely having laws does not make us “a nation of laws.”

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