Frontline Exposes DOJ’s Failure To Prosecute Wall Street
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Last night Frontline aired a program on the Department of Justice’s failure to prosecute Wall Street executives over fraud in the mortgage market that caused the 2008 financial crisis. The program included compelling testimony from the “due diligence underwriters” those responsible for the integrity of the loans that were being originated from firms like Countrywide (now Bank of America) then chopped up into derivatives and sold by Wall Street to the world.
Somehow Frontline was able to get multiple persons involved in fraud in the mortgage market to go on camera while Assistant Attorney General Lanny Breuer, who was interviewed for the program, claimed he and the Justice Department could not make a case against Wall Street. Breuer was asked about a speech he gave to the New York City Bar Association in which he claimed to have been worried about the consequences of prosecuting big banks – a concern that seemed to trump his commitment to enforcing the law. Breuer’s FBI counterpart, also interviewed, expressed frustration at the inability to make criminal cases against bankers claiming to have argued continually with Breuer and divulging that on a personal level he felt there was criminal fraud.
What is made extremely clear by the program – aside from DOJ’s outright refusal to prosecute Wall Street despite robust evidence – is the existence of a coordinated effort by Wall Street to drive down loan standards. Wall Street’s system no longer required those making the loans to be responsible for the loan payments, so with the incentive to make responsible loans removed the only remaining interest was in generating loans to sell to Wall Street. This system, not surprisingly, lead to fraud on a massive scale creating a bubble in the housing market that, when popped, brought the entire global financial system to its knees.
And no one responsible has been brought to justice. Is Wall Street above the law?