The New Untouchables

Before this economic firestorm erupted in September I will bet 99% of the American public had never heard of A.I.G. I hadn’t. But I soon learned it was American Insurance Group and they were near bankruptcy and then we were told by Secretary Paulson this was a company that was too big to fail and had to have an immediate bail out by government funds. All the experts in these matters of high finance, including our sage representatives in Congress, quickly concurred or capitulated and it was a done deal.

Robert Stack AKA Eliot Ness

When we are told anything is too big to fail, except for the Army, Navy, Air Force, then alarm bells should immediately go off in our heads that there is a sting involved and the stingee is us, the tax payer. And when anything is rushed through Congress before it is thoroughly explained and examined and debated, then it is a 100% sure sting operation. History teaches that lesson over and over. I give you as evidence the so-called Patriot Act, for one.

All sting operations have to have as a cover a name to hide their real activity. As in the 1973 classic film The Sting, where Robert Redford and Paul Newman, a couple of small time bunco artists invent a bookie operation to sting some larger hoodlums. It turns out AIG was a front operation for a hedge fund, which in turn is a name invented to disguise a casino operation. It further turns out that the liabilities of the AIG hedge fund far outweighed the assets of the insurance operation.

Imagine if the name was American Hedge Fund Company and Congress opted to give a taxpayers bailout to them? The peasants might have actually woken up from their slumber and taken to the streets. Instead Paulson and coterie circulated the notion that this too big to fail was vital to the whole banking system not only in America but world-wide. Now that AIG had come to the public trough again for a total of $150 billion, with no apparent end in sight, some Congressmen are actually starting to ask questions, as if they’re afraid the peasants back home might catch on to the sting and blame them.

One is the obvious: if a privately held company is said to be too big to fail in any field isn’t it then by definition a monopoly? And isn’t it true that we have anti-trust laws that our Congress is supposed to strictly (ha ha) enforce? Remember Ma Bell was said to be too big and had to be broken up? Secondly, don’t we have something called the SEC, Securities and Exchange Commission (ha ha), to regulate hedge funds? And isn’t the SEC under the control and funding by Congress? And thirdly, don’t we have independent rating institutions like Moodys and Standard and Poors to give investors confidence that what they invest in isn’t a sting operation? Reality check; the day Lehman Bros. went bust they had an AA rating, with AAA being the gold standard.

As they say, follow the money. In the last ten years the banking industry has given Congress something to the tune of two billion dollars in campaign funds, which is another word for bribe, to write the laws they needed to open up more casinos. Reality check; it turns out even when fraud was pointed out to the SEC in some of the most high profile hedge fund cases, such as the Madoff affair, they ignored the fraud. It has been revealed that a fraud investigator by the name of Harry Markopolos fingered the Madoff ponzi scheme in 1999 to the SEC, but they failed to shut it down. It too must be asked, were they bought off? It is well known that former Treasury boss Robert Rubin made some calls to the rating industry to stall them giving Enron a lower bond rating. Rubin when asked about it said he had no regrets, no apologies. Within the culture of banks and Wall Street there is a sense of entitlement and we take care of our own first. No regrets. No apologies.

So everybody is covering for everybody. The Congress doesn’t bust monopolies, just bails them - out - and takes their campaign donations. The SEC doesn’t investigate, even when shown where fraud exists. Insurance companies front for hedge funds, which front for casinos. And the cabinet members, such as Secretary of the Treasury, like Rubin, Paulson, and now Timothy Geithner, all have connections to the Wall Street investment bank, Goldman Sachs. While all drew their salary from the U.S. Government one must ask does their loyalty to the banks come first or to the tax payers of the U.S.?

And that leads to the inevitable question if Obama is really about change why do we see the same tired old faces coming from the same places in such a key post as Treasury?

Once again, I ask you, can you imagine a Harry Truman putting up with this unholy mess? Even John Kennedy when the steel industry tried to stiff him, Kennedy had the backbone to call out the, at the time, powerful steel industry and put them in their place. Compared to Truman and Kennedy Obama is looking more and more like a man without backbone.

Everyone knows what must now be done to clean up the mess: nationalize. But Obama can’t pull the trigger. Why? Like his promise to get our troops out of Iraq he is hedging and waffling and walking sideways. Writing in The Guardian newspaper Larry Elliot summed it up, “There is little agreement on what makes the difference between a recession and a depression, but the one put forward by Stephen Lewis is as good as any. A recession is when policy works; a depression is when it doesn’t.”

So far the Obama policy of piecemeal bailouts to zombie institutions in place of taking them over has been an abject failure both as a practical matter and as a policy to inspire the confidence of everyday Americans. We are waltzing toward a depression.

“No one is above the law,” must once again be a reality not an empty slogan. It means, among other things, whether it is about the lies of Iraq or illegal wiretapping or ponzi schemes, names must be named and people held accountable, including jail time, if it comes to that.

Then and only then will Americans once again be proud of their government and proud to be Americans.

In the early 1960s there was a popular TV show called The Untouchables. It was about Chicago during the prohibition when gangsters ran wild and an FBI agent named Eliot Ness was sent to clean up Chicago. Ness, played by Robert Stack, won out over evil and corruption, often with uncompromising, iron fisted methods. No regrets. No apologies.

It is looking more and more like what we need most is not a president from Chicago but an Eliot Ness from Chicago. For it seems there is a permanent class of untouchables in Washington and elsewhere and weeding them out takes a man with more grit than merely having studied law at Harvard. Where are you Eliot Ness when America needs you?

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