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Wall Street bankers who broke the law belong in jail
Eric Griego
I’ve made Wall Street accountability a core issue in my Democratic primary against two more conservative opponents in New Mexico’s First Congressional District.
Today, I’m proud to become the first congressional candidate in the nation to air a TV ad that stands for a simple, principled idea: Wall Street bankers who broke the law belong in jail.
I’ve made Wall Street accountability a core issue in my Democratic primary against two more conservative opponents in New Mexico’s First Congressional District. If candidates like Elizabeth Warren and me win this year, it will send a signal to the political establishment that it’s time to truly hold Wall Street accountable.
Here are five specific things I would do if elected to Congress:
- Fight to increase 20-fold the number of investigators for the financial crimes federal task force led by New York Attorney General Eric Schneiderman. Right now, this task force only has 55 investigators and prosecutors. The Savings and Loan crisis of the 1980s was staffed with over 1,000 investigators, experts and prosecutors. That effort yielded more than 600 convictions and $130 million for taxpayers. One of the first bills I offer will be to increase the funding and staffing for this financial crimes task force.
- Push for increased funding for the Consumer Financial Protection Bureau – the federal watchdog on Wall Street, created by Elizabeth Warren – to strengthen its investigative capabilities. Even a small additional investment can avert billions, or trillions, of dollars in economic damage by Wall Street.
- Push the U.S. Justice Department to more aggressively prosecute white-dollar crimes by Wall Street bankers. To this day, not one Wall Street banker who broke the law, tanked the economy and took away people’s homes and savings is in jail. We need to hold them accountable, and members of Congress can exert key leverage with the Justice Department to make investigations and prosecutions happen.
- Strengthen the Dodd-Frank Wall Street Reform and Consumer Protection Act, and close the loophole in the legislation’s “Volcker Rule” that was exploited by JPMorgan recently – when their risky bets lost $2 billion. Many of the legislation’s provisions are designed to go in effect in 2014, so the rules are still being written. Congress can’t allow Wall Street bankers to write their own rules – we need Wall Street reform to stay on the agenda in Congress.
- Pass a new Glass-Steagall Act to separate investment banks from traditional banking – so people’s life savings are not gambled away by Wall Street. Elizabeth Warren and the Progressive Change Campaign Committee started a grassroots campaign for a new Glass-Steagall on Monday, and within hours over 40,000 people joined the cause. I’m proud to be one of those people – and passing a new Glass-Steagall will be a priority of mine in Congress.
A long, consistent record
In this race for Congress in New Mexico’s First District, I am the one Democrat with a long, consistent record of taking on the status quo and powerful corporate interests. Not just when it’s easy, but even when it’s hard.
On the Albuquerque City Council, I took on predatory lenders and fought to get corporate money out of Albuquerque elections. I took on the mayor’s Republican coalition to fight to increase the minimum wage and to create the inspector general’s office to investigate fraud and abuse in City Hall. I also took on the mayor and his powerful big developer allies to fight for smart growth.
In the State Senate, I took on the oil and gas industry to invest in clean energy jobs. I took on the insurance companies to stop them from charging women higher premiums. I even took on my own party’s conservative Blue Dog leadership – the same ones who have endorsed Commissioner Michelle Lujan Grisham in this congressional race – and their Republican-ALEC coalition against their proposed cuts to Medicaid, pensions, public education and women’s health. And I took them on again with bills to get the rich to pay their fair share, to end corporate contributions in state elections, and to shut the revolving door between politicians and lobbyists.
My opponents like to brag about working with or for Republicans to cut programs, privatize public services, deregulate industries and block reforms that have helped the rich and big corporations at the expense of kids, seniors and working families.
I am a different kind of Democrat. I stand on my Democratic principles, and I am not a go-along-to-get-along politician. I am proud of my long, consistent progressive record of taking on the status quo, even in my own party, to change the system and deliver results that have really helped kids, seniors and working families. In Washington, I will fight to hold Wall Street accountable.
State Senator Eric Griego is running to represent New Mexico’s First Congressional District.
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Easy answer Mr. Spear, Corzine is a left wing Democrat, Obama and his administration will never go after his base, no matter what they do. It’s called politics.
Will any Progressive tell me why John Corzine has not been indicted for stealing money from me and the many others?
Although I got part of my money back, I have not gotten it all back.
Mr. Schneider lets parse our argument just a bit.
I know a fair amount about auction rate securities. As does the state of NM who invested in them. State and County governments who pool their funds often times go to the State Treasurer to invest funds and did this years ago. The State of NM treasurer is not stupid, has very detailed investment policies …but doggonit…..made investment in aome auction rate securities that broke the $1…..Oh well, stuff happens even to the most prudent investor. Just go ask the investors at MF Global run formerly by Governor of NJ Corzine…one of those “greedy” bankers of Goldman Sachs.
Now you are relieved that FDIC paid off your CD’s in the tow banks that you had deposits in who failed. Good for you and the rest of the depositors. But who took on the risk of paying you off? Why it was the FDIC, a GSE, and GSE’s are funded by who Mr. Schneider? By the tax payer of course!.
Now markets have ahd booms and busts since the days of the tulip trading and coffee trading of the 1500-1600′s….and no doubt before that. What makes you think that the Government is such a great allocator of resources? Why i don’t even believe either you or I are that smart! God bless free markets and the USA!
MJM, failures of financial institutions get spread around to all of us even without GSEs – and in some cases, they get spread around less because of the government taking some of the risk.
Consider bank runs. I’ve mentioned James Stewart in It’s a Wonderful Life before, and I’ll probably mention it again. That’s a bank run. When there’s a bank run, and the bank becomes insolvent, all the depositors lose. The result is that bank runs tend to happen ever faster and ever more often, because he who panics first usually makes out best. And those panics can bring the financial system to a halt, harming everyone, along with wiping out depositors.
The FDIC changed all that. Now there are no bank runs of FDIC insured banks. I myself had CDs at at least one, maybe two failed banks. I didn’t worry. I didn’t panic. I got paid off in full within a week or so of the bank failing.
Do you remember some things called Auction Rate Securities? (1) My broker tried to sell me some, claiming that they were quite safe, liquid, and paid better interest than FDIC insured deposits. I didn’t bite, which is a good thing. They failed. People couldn’t get their money out of them. That’s because they weren’t federally regulated, weren’t federally insured – and yet the resultant liquidity problems hit the whole economy.
The major difference of the GSE’s is that they like to spread that failure factor around to us all.
Wrong. When Countrywide and Lehman and AIG failed, that failure itself caused the panic and the liquidity crisis, it caused the flight to safety which hurt so many people. The governments actions – including the government bailing out the GSEs – in the end REDUCED the harm to everyone that those private mistakes caused. You may not have noticed the stock market crash which followed all those private mistakes, but a lot of folks did because they suddenly discovered that their retirement funds weren’t enough to let them retire. That hurt a lot of folks. You may not have noticed that a lot of people suddenly found their savings had evaporated when their houses weren’t worth enough to cover their mortgages. That hurt, too. You may not have noticed, but the financial panic and the flight to safety, and the drop in house prices and stock prices, caused aggregate demand to plummet – and that cause dreadful unemployment. That unemployment hurt a lot of folks, too. Those were a whole lot of people who got badly hurt – probably including the majority of Americans, if not practically all Americans – and it was all caused by private firms screwing up. So don’t tell me that the failures of private firms don’t spread the failure to all of us.
(1) http://www.securitiesarbitration.com/auction-rate.php
Mr Schneider
I certainly appreciate your comments. But I am hardly moving a goal post. Rather, just pointing out that the public sector has one major characteristic of the private sector. It is run by human beings….and all of us make mistakes. The major difference of the GSE’s is that they like to spread that failure factor around to us all. No matter how noble the cause, federal, state and local governments do not do the broader society any favors by not letting these failed institutions go through an orderly liquidation. At least with the case of several of the banks and AIG we tax payers are getting a portion of our investment back. (i would have preferred to see these bankers and insurance companies get liquidated.) By failing to do this we are now promoting bad behavior. Michael, risk does not go away by sprinkeling Federal Pixie Dust on the problem. It just gets kicked down the road. Look at the recent events with JP Morgan Chase this last week. You think more regulation would have prevented this from happening? Sure does not appear that way. Oh and you do know that because of there size, major banks have entire legions of regulators at those institutions daily. Alot of good that has done…
Michael, I said I wasn’t always serious, that’s not the same as lying. I’m glad you aspire to such lofty goals but you show no inclination to compromise or acknowledge anything you’ve ever supported could be wrong. Its pretty obvious you just want to convince us that improving the country means doing things your way.
Stever:
Setting aside your obvious projection problems (“…you to believe you are always right without ever having to consider that you are wrong.”), you seem to have this rather unfortunate belief that something ceases to be a fact simply because it doesn’t dovetail with that which you have already chosen to believe independent of evidence. I’m afraid that it really doesn’t work that way; your level of credulity is hardly a measure of factual accuracy. Indeed, considering how rarely things you believe are supported by evidence, your personal level of belief seems to be a fairly good inverse measure for accuracy.
MJM, you’re moving the goalposts, changing your argument without admitting it.
You started by drawing a parallel between financiers who broke the law, and the two GSEs. You said “So do you think we should go after them first sir? ”
I replied that they had neither broken the law nor done very much to cause the recession.
Now you are merely claiming that they lost money. Well, duh, of course they did. They were created in order to bear risks. They bore those risks. It turned out that some of those risks caused losses. That’s what risks do. You might as well be upset that the FSLIC lost money during the S&L crisis, or that the FDIC loses money when it takes over banks. We created those two GSEs to bear the risks of mortgage defaults so that we could encourage a liquid mortgage industry and help people buy houses. It worked. It’s not their fault that companies such as Countrywide practiced a lot of fraud and other illegalities in order to make bad loans and then lie to the people they sold them to.
You will find that they took the risk…and the tax payer paid the bill…..
Yep. Nothing necessarily wrong with that.
You are now proud to be a liar, Stever? I’m shocked, shocked.
some times I’m serious, sometimes not, but you can’t resist
The point of talking politics is to figure out how best to improve this country. That’s what I’m doing. You, apparently, are so convinced that you know best that you see no need to have facts or logic to support your position. Frankly, I expect the US to collapse and disappear in a mess of blood and death before the end of the century – because people such as yourself have failed so miserably at Domocracy 101.
Mr. Schneider,
Your comments are appreciated but unfortunately misguided if you would take the time to do some research. If FNMA and FHLMC were so doggone good at their underwriting risk they would not be in bankruptcy. Same for AIG as their underwriting of risk was to ay the least lacking. Now Barney Frank gave us the statement that FNMA was a great riks, same for Freddie Mac. If you take the time to do some research you will find that these two agencies issued all kinds of debt and preferred securities. FNMA was traded on the NYSE..TAKE A LOOK. You will find that they took the risk…and the tax payer paid the bill…..
Michael, like many you believe you have a monoploy on the facts, when in reality you don’t. It allows you to believe you are always right without ever having to consider that you are wrong. Its quite a pleasure to create a need in you to respond, some times I’m serious, sometimes not, but you can’t resist because you are always right.
You’re just making stuff up again:
… these “investments” that are based primarially on political influence
You’ve got ZERO evidence that the loans were based on political influence. Sure, the Obama administration supports green energy. They’ve been saying that since 2007. It’s well known. Sure, companies in the green energy business also support green energy (duh!) and so they also support and contribute to the Obama administration. That’s no different from oil companies heavily supporting Republicans who, in turn, support making drilling for oil in the US easier. People support politicians who support the things they want. That’s our system.
Now, can anyone imagine a government employee being smart enuf or knowledgeable enuf to recognize what the people in the business failed to see?
Certainly. It happens all the time. Look at this chart of financial panics:
http://krugman.blogs.nytimes.com/2012/05/13/the-cost-of-pre-fed-panics/
You’ll see that “the people in the business” did a really lousy job of avoiding financial panics before there was federal regulation. After the Fed, it was much better.
Another example: Remember James Stewart in It’s A Wonderful Life ? That was a movie about a bank run. You may notice that since we got good federal regulation and insurance on banks we haven’t seen a single run on a regulated and insured bank.
So we don’t have to imagine a circumstance in which you are wrong, all we have to do is look back at history to see examples where you are wrong.
I don’t understand how you can faill to grasp this elementary principal that seems so obvious a third grader could grasp it” government is the mechanism we use when working together makes us all better off
Really? A third grader? You apparently have no problem with these “investments” that are based primarially on political influence. I have a problem with it, no matter the parties involved or historical precedence. Thats my state of nature.
The justice dept has been in control of libs for over 3 years now and I would guess that no laws were broken or Obama would be waving the bragging flag. So a little ridiculous for Griego to wave the sanctimony flag. I start from the premise that these CEOs and upper management types in Bear Stearns, Lehman, etc can’t possibly want their companies to fail; so I have to conclude they went in the toilet because of risks they took that they didn’t recognize…….Now, can anyone imagine a government employee being smart enuf or knowledgeable enuf to recognize what the people in the business failed to see? What we have today is small banks unable to offload loans to bigger investors and therefore too scared to lend money to small borrowers…….
Saying “Proof!!11!” doesn’t actually mean you’ve proved anything.
Proof positive the government should not be in the business of investing our tax money in their hand picked schemes. … But you think that “normal”?
Of course it’s normal.
Investing is risky. Just ask the millions of private investors who have lost billions on companies like Sears, Woolworth’s, Enron, Global Crossing, AOL, Citi, and so many others. Some investments will make money, some will lose money, but by investing we make possible thing that make us all richer.
Our government has invested in all kinds of things that make us all richer and better off. Things such as the Erie Canal, the Interstate Highway system, the transcontinental railroad, the GPS system, the Internet, medical research, and so many other things. Some government investments didn’t work out so well, such as the wars in Iraq and Afghanistan, the Trasportation Security Administration, and oil depletion allowances. Win some, lose some – just like private investment.
If solar energy becomes more efficient we’ll all be better off. Investment is necessary before it can become more efficient. The investment is risky. There will be losses. If it was a sure-fire winner then private investment would be enough. It’s not sure-fire, it’s risky, so in order to spread the risks among the same group who will reap the benefits, we have the government take the risk and make the investment.
I don’t understand how you can faill to grasp this elementary principal that seems so obvious a third grader could grasp it” government is the mechanism we use when working together makes us all better off. Several hundred years ago it was obvious to Thomas Hobbes, who pointed out that without government we’d all be living lives that would be nasty, brutish, poor, solitary, and short.
Do you really, really want to live in a state of nature, without government investment??
“Some of those loans were expected to go bad, some of those companies were expected to fail. That’s why they needed the government guarantee in the first place. Contrary to your apparent baseless belief, the fact that some of those loans went bad is proof that the program was working properly.”
Proof positive the government should not be in the business of investing our tax money in their hand picked schemes. They are not competent , have no experience, and do it on the basis of political partisanship and special interest favoritism, all recipes for disaster on investing. But you think that “normal”?
It will be awesome to see either Griego or Lujan-Grisham swing wildly back to the center after this primary. If Janice Arnold-Jones has any sense, she will find someone who knows how to run a campaign; her lack of effort has been troublesome at best.
Republicans have a good opportunity to pick up this seat (or had at least). Democrats know that if Arnold-Jones continues her path of a lackluster campaign, they can move as far to the left as possible. Scary…I thought CD 1 was a swing district.
Does that jail requirement also apply to John Corzine (D-NJ) who stole money from my personal Lin-Waldock account?
I support Martin Chavez in this primary, but I admire Eric Griego’s courage and good sense on this issue. In addition to being the right thing to do, I think it is good economic policy to hold people accountable for fraud in business.
This recession was caused by millions of fraudulent transactions in the finance, insurance, and real estate sector of our economy. At Countrywide, according to their own internal investigator, 80% of their mortgages were fraudulent near the end of the debacle in 2007. A business that is 80% illegal and no Countrywide executive has gone to jail? They deserve to go to jail just as much as Bernie Madoff deserved to.
I think Marty Chavez has a better sense of how to great jobs than Eric Griego, but on this issue Senator Griego is making a lot of sense economically and he is also in the moral right.
Another comment … full of sound and fury, signyfying nothing:
Yet another liberal howling at the moon, raging against the machine, and doing nothing but creating hot air to aggravate global warming.
No facts, no logic, no reasoning, just raw emotion; is it poetry?
in a mood to go after fraud and malfeasance, how about Solyndra, Evergreen Solar, and the other dozens of companies that got ObamaStimulus tax money only to fail
Do you have any actual evidence of fraud or malfeasance?? Some of those loans were expected to go bad, some of those companies were expected to fail. That’s why they needed the government guarantee in the first place. Contrary to your apparent baseless belief, the fact that some of those loans went bad is proof that the program was working properly.
The fact that Lehman and AIG went belly up, however, was not expected. It was evidence that the free market failed because of lack of reasonable regulation.
True MJM, and while Mr. Griego is in a mood to go after fraud and malfeasance, how about Solyndra, Evergreen Solar, and the other dozens of companies that got ObamaStimulus tax money only to fail and yet the owners contributed huge sums to the DNC and Obama.
Correction: the GSEs did issue CDOs, but their CDOs weren’t a real problem. There were defaults, sure, but not on a scale like the private ones. And it was the CDSs that brought down AIG and Lehman and froze the short term paper market.
Fannie May and Freddy Mac didn’t break any laws, didn’t do a lot of sub-prime lending, weren’t in the lead of those making this mess, and were largely johnny-come-latelies to the party. The worst thing they did was to hire Newt Gingrich as a consultant.
As I take a look back in my crystal ball two big companies come to mind. One called Fannie Mae the other called Freddie Mac
The big baddies were companies such as Countrywide Mortgage, which were not government subsidized or government guaranteed and weren’t even subject to the Community Reinvestment Act. This was the Free Market Gone Wild, running through the streets flashing its whatevers.
And anyway the really big problems were caused by the CDOs and CDSs, and neither GSEs had anything to do with those. If it had just been the mortgages that went bad we wouldn’t be in this mess, it was the collapse of all those AAA rated CDOs and the CDSs that were supposed to hedge that risk that collapsed the system.
If candidates like Elizabeth Warren and me win this year
Shouldn’t that be “Elizabeth Warren and I”?
Mr Griego,
As I take a look back in my crystal ball two big companies come to mind. One called Fannie Mae the other called Freddie Mac. Perhaps we can throw in Sallie Mae Student Loans too. Would you not agree that tax payers have paid out billions of dollars to support the clean up of these two huge “private” companies mr Griego? So do you think we should go after them first sir? Now take a look at who ran these companies and their political ties before you answer Sir. Oh, don’t you think we can do a little clean up with some of the non-profit abusers too Sir?
One more item Mr. Gridgo. take a look at how many public companies are domiciled in NM? Compare this to all the states around NM. Now ask yourself if your pronouncements are going to get any one to come to NM to establish a HQ here if you are ellected.
Yet another liberal howling at the moon, raging against the machine, and doing nothing but creating hot air to aggravate global warming.
While Occupy Wall Street protesters were arrested by the thousands, the bankers go free and continue their unregulated, high-risk investment schemes. Yea, good luck with putting any of them in jail at this late stage.