May 10, 2010
The U.S. Securities and Exchange Commission (SEC) is taking Goldman Sachs to court. Attorney General Eric Holder says he might issue some criminal indictments. U.S. senators are having their photos taken chastising Wall Street execs. And the Obama administration promises another financial reform some time soon.
This follows a well-worn pattern. When the market for high risk junk bonds tanked after the stock market crash of 1987, Michael Milken, “the junk bond king,” was found guilty of fraud, sentenced to six years in prison and fined 600 million dollars. His employer, Drexel, Burnham, Lambert, was forced out of business.
During the savings and loan crisis in the late 1980s, after 2,000 banks failed, the government indicted hundreds of people for fraud, money laundering, bribery, etc. A big bank operator, Charles Keating, was sent to prison. Five important senators, who had accepted big contributions (bribes), “The Keating Five,” were sanctioned for ethics violations. New laws and regulations for the banks were enacted.
In 2002, in the wake of the crash of the high tech and stock market bubbles, Enron, WorldCom, Tyco, and Adelphia were brought down. Arthur Andersen, a top accounting firm, was forced out of business. A few executives were sentenced to prison, including Ken Lay, Jeffrey Skilling, Bernie Ebbers, and Dennis Kozlowski. Even Martha Stewart was put in the slammer. A new law, Sarbanes-Oxley, was enacted with the promise that company reports would be more honest.
None of these government actions stopped a damn thing – and much worse crises developed. Those laws enacted and those few executives convicted were nothing but window dressing – a justification for the huge amounts of taxpayer money that the government handed over, crisis after crisis, to big business.
Each time the Federal Reserve opened the flood gates and provided free money... money that helped fuel the next speculative bubble, and even bigger crash.
Today, after the worst crisis yet, the government pretends to bring the banks and Wall Street under control. It pretends to regulate the banks... as it hands over trillions of dollars in taxpayer money to the very same bankers and other capitalists.
No, the government does not regulate business. Big business “regulates” the government. It uses the government to help fuel its profits and wealth, no matter what the cost to the rest of society.