The first ingredient of any banking/government cronyism scandal is to have a partisan think tank like the Government Accountability Institute (GAI) uncover documents to reveal that the U.S. Attorney General has ties to some part of the banking industry.
The second ingredient is to claim that the opposition party President and the banks are involved in a cronyism deal based on campaign contributions. The final ingredient of a political conspiracy theory is to deny that any cronyism ever existed before the current president came into office.
The truest reason why the banking collapse of 2008 occurred was as President Obama described it: “reckless speculation of bankers”, according to the Daily Caller, a right wing website.
However, the Daily Caller is right to reveal that Attorney General Holder campaigned on fiery outrage and rhetoric, but never followed through on that rhetoric.
“Holder charged that ‘unscrupulous executives, Ponzi scheme operators and common criminals alike have targeted the pocketbooks and retirement accounts of middle class Americans’, they haven’t “filed a single criminal charge against any top executive of an elite financial institution,”
What the Daily Caller has been untruthful about is this: the U.S. Attorneys general, Congress, presidents and the banking industries have had incestuous political and professional relationships since the 1930s, not just since the Obama administration came along. Such cronyism is, for a relatively new nation like America, an ancient institution.
To summarize the current situation, Jon Corzine is the former New Jersey Governor who took over at MF Global. He was there when over $1.6 billion in client funds went missing. Eric Holder is the nation’s Attorney General and Lanny Breuer is Assistant Attorney General. They previously worked at a law firm called Covington & Burling. MF Global was a client of that law firm. Representative James Harry Covington founded Covington and Burling in 1919.
Covington and Burling represented many banks, including JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs and UBS. This law firm is an old and powerful player in banking and government circles.
Just after the stock market crash of 1929, Covington and Burling set out to defend Charles Mitchell, leader of a bank that is now called Citigroup, but was National City Bank at the time.
A more rational source, Bloomberg, reveals the full truth that cozy relationships between Washington and the banking industry are old news. The cozy relationships have created an institutional aversion to prosecuting Wall Street that crosses all boundaries between political parties and presidential administrations:
“When it comes to financial debacles and Washington, some players never change.” Bloomberg says that the MF Global scandal dates back to the 1930s, when cozy relationships between bankers, Congress, presidents and Washington’s Attorney Generals had their origins. Bloomberg comes to the proper conclusion about the current cronyism allegations, which is to stop isolating individual administrations and sessions of Congress and to fix the problem by hiring Attorneys General who do not have ties to the banks or their lawyers.
“This isn’t to say it’s a good thing for the Justice Department’s leaders to have such close Wall Street ties. It’s not, especially when the government has brought so few fraud prosecutions related to the financial crisis. Whoever wins the presidential election this fall, here’s a suggestion: Find an attorney general who doesn’t have these kinds of connections. It would go a long way toward restoring Americans’ faith in the justice system.”