Lloyd Blankfein, CEO of Goldman Sachs. Why isn't he in prison? Friends in high places, a great many of them (source).by Gaius PubliusI've been wanting to write for a while about all the reasons the bipartisan Establishment — the people at the top running the "big game" that makes them all rich and keeps them in power — can't ever let Bernie Sanders get control of the Executive Branch of government. There are quite a few reasons, including the fact that people like Lloyd Blankfein, CEO of Goldman Sachs, would certainly be prosecuted and most likely jailed for fraud.But one story that's been making the ginned-up news rounds lately is that Sanders, in an interview with the NY Daily News, seemed in the Clinton camp's telling not to know how to go about executing one of his own policies, breaking up the too-big-to-fail banks.The problem with that framing — which every news outlet, including the so-called leftie outlets — immediately jumped to support — is that it's exactly backwards. Sanders knows exactly how to break up the big banks, and he will.And that's the problem Bernie Sanders presents. The problem isn't that he doesn't know how. The problem is that he does know how, and he will.Robert Reich explains:
Robert Reich: Sanders Knows How to Break Up the Big Banks—That's Why He Scares the EstablishmentOf course Sanders knows how to bust up the big banks. The recent kerfluffle about Bernie Sanders purportedly not knowing how to bust up the big banks says far more about the threat Sanders poses to the Democratic establishment and its Wall Street wing than it does about the candidate himself.Of course Sanders knows how to bust up the big banks. He’s already introduced legislation to do just that. And even without new legislation a president has the power under the Dodd-Frank reform act to initiate such a breakup.But Sanders threatens the Democratic establishment and Wall Street, not least because he’s intent on doing exactly what he says he’ll do: breaking up the biggest banks.
And they should be broken up, for our own safety as well as theirs:
The biggest are far larger today than they were in 2008 when they were deemed “too big to fail.” Then, the five largest held around 30 percent of all U.S. banking assets. Today they have 44 percent.According to a recent analysis by Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, the assets of just four giant banks – JPMorgan Chase, Citibank, Bank of America, and Wells Fargo – amount to 97 percent of our the nation’s entire gross domestic product in 2012.
If this isn't stopped, the next crash will be another "big one," perhaps bigger than 2008, after which there will be some flavor of bailout (or worse), followed by a revolt by everyone, left and right, who already hated the last one. I'd rather not see any of that occur.What's Sanders' Plan?Here's the Sanders plan from the Sanders campaign (quoted here):
Within the first 100 days of his administration, Sen. Sanders will require the secretary of the Treasury Department to establish a “Too-Big-to Fail” list of commercial banks, shadow banks and insurance companies whose failure would pose a catastrophic risk to the United States economy without a taxpayer bailout.Within a year, the Sanders administration will work with the Federal Reserve and financial regulators to break these institutions up using the authority of Section 121 of the Dodd-Frank Act.Sen. Sanders will also fight to enact a 21st Century Glass-Steagall Act to clearly separate commercial banking, investment banking and insurance services. Secretary Clinton opposes this extremely important measure.President Franklin Roosevelt signed the Glass-Steagall Act into law precisely to prevent Wall Street speculators from causing another Great Depression. And, it worked for more than five decades until Wall Street watered it down under President Reagan and killed it under President Clinton. That is unacceptable and that is why Sen. Sanders will fight to sign the Warren-McCain bill into law.
I'm sure if Congress initially balks, and it's likely they will, Sanders will persist on the legislative front (as we're seen, he doesn't have much quit in him). But I'm also sure that if Congress fails to pass legislation, "within a year" he'll use every power he has as president to accomplish this breakup from within the Executive Branch. We have a very powerful executive branch, and a big-bank breakup is that important.About Lloyd Blankfein...Why isn't the CEO of Goldman Sachs, Lloyd Blankfein, in jail awaiting trial? Eric Levitz in New York Magazine reports on his and his firm's crimes (my emphasis):
Goldman Sachs Admits It Defrauded Investors, Pays $5 Billion FineIn April 2006, Goldman Sachs provided investors with a bullish report on Countrywide’s high-quality mortgage loans — loans the bank had helpfully packaged into AAA-rated mortgage-backed securities, thereby offering those lucky clients a low-risk way of profiting from America’s housing boom. When the bank’s head of “due diligence” saw the report, he typed a short email to his colleagues: “If only they knew…”Now we know. On Monday, the bank completed a $5.1 billion settlement with state and local authorities for its role in perpetuating the subprime-mortgage crisis. Goldman is the last of the major banks to pay for its financial-crisis sins, but unlike some of its peers, the firm has agreed to formally acknowledge its malfeasance. While Monday’s settlement does not include a confession of legal wrongdoing, it does contain a signed “statement of facts” that details the various ways Goldman Sachs misled investors about the risks inherent to its mortgage-backed securities. [...]
"Mislead investors" is code for "lied to investors about the facts in order to take their money." Which is code for "fraud." Matt Taibbi:
Re Goldman: if these firms were truly committed to reforming, they would want to serve up guilty execs for prosecution as a cheaper solution— Matt Taibbi (@mtaibbi) April 11, 2016
So why isn't Lloyd Blankfein in a courtroom counting the days before he wears the orange jumpsuit? Because he has friends in high places, lots of them. Does Blankfein fear a Sanders presidency? Almost certainly, with every fiber of the last remaining shred of his soul. I wonder who Blankfein is backing...(Blue America has endorsed Bernie Sanders for president. If you'd like to help out, go here. If you'd like to "phone-bank for Bernie," go here. You can volunteer in other ways by going here. And thanks!)GP