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A Team: Crooked Government, Crooked Large Banks

Written by Gary North on July 27, 2012

Occasionally an article is published that gets to the heart of the matter, and also supplies documentation. I am going to cite such an article. It was published anonymously on the Zero Hedge site.

If you have suspected that the U.S. government does not regulate the largest U.S. banks to protect the public, but in fact regulates the large banks to protect the bankers from the public, you have the right idea. This has been the primary function of all federal regulation ever since the establishment of the now-defunct Interstate Commerce Commission in 1887.

In other words, the textbook versions of “regulation to benefit the public” are propaganda accounts that the regulated industries have always promoted.  So has the government. It keeps the voters happy.

High-level employes of the industry get appointed by the regulatory agencies. Economists call this process the capture of the regulators.

An example. I went to grade school with a boy who grew up to be the CEO of the largest aerospace defense contractor. He resigned to join the Defense Department’s Air Force branch. He wound up as Under Secretary of the Air Force.

Here are highlights of the banking article.

* * * * * * * * * * * * * * * * *

Yet the government has more or less made it official policy not to prosecute fraud, and instead to do everything necessary to cover up for Wall Street.  For example, the Obama administration is prosecuting fewer financial crimes  than under Reagan or either Bush.

For example, we pointed out in 2010:

The government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are.

But it is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud.

Here are just a few of many potential examples:

  • Tim Geithner was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth” . . .
  • The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen
  • Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not

Continue Reading on www.zerohedge.com

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4 thoughts on “A Team: Crooked Government, Crooked Large Banks

  1. devilrider says:

    Furthermore, once the foreclosures and "short sales" began, who came in with cash offers to scoope up these homes at a fractiion of their market value of a few months earlier. Mortgage lenders and employees of mortgage lenders and employees of the federal government agencies who were supposed to be the watchdogs. Very corrupt indeed.

  2. Evermyrtle says:

    In other words, "we need to pray without ceasing," if we have any money in any bank!!!


    * TruNews with Rick Wiles (Including the archives).
    * The PowerHour with Joyce Riley.
    * Politics & Religion with Irvine Baxter.

  4. What's worse, after that lone investor went public and gave the SEC evidence there was no way Bernie Madoff could be making the kinds of returns he was year after year without fraud, when the regulators went to investigate Madoff, they were giving him their resumes!