by BAR executive editor Glen Ford
“Wall Street knows, with great intimacy, that it is perched on the lip of the abyss, that the next crash can come from any number of directions, that all its faults are active and all its contradictions, acute.” Wall Street’s protectors in the Obama administration understand this, too. “The U.S. Justice Department’s job, as Eric Holder sees it, is to immunize the criminals from prison time, and then fine their companies to preserve the illusion of justice.” However, when the next crash comes, a State of Emergency will follow.
Obama and the Bank Protection Racket
by BAR executive editor Glen Ford
“The fascist cat has been out of the bag from the moment in September, 2008, when Treasury Henry Secretary Paulson issued not-so-veiled threats of martial law.”
Many of the people that read this magazine and other Left publications believe that President Obama’s preventive detention legislation, his recent executive order authorizing the federal takeover of all U.S. communications media in an “emergency,” and the rest of the ever-growing police state infrastructure are primarily designed to silence domestic opposition to U.S. war policies, or to facilitate the suppression of urban (i.e., Black and brown) rebellions. From an historical perspective, our readers are certainly correct: Black people and anti-war folk have been viewed as the top domestic national security threats for the past 60 years. However, times change, and the powers-that-be are motivated by their own hierarchy of fears. The nightmare that most terrifies the finance capitalists who rule this country is not populated by aging Black revolutionaries and peaceniks, but by masses of “ordinary” (meaning, mostly white) Americans in open revolt against the banks.
Wall Street knows, with great intimacy, that it is perched on the lip of the abyss, that the next crash can come from any number of directions, that all its faults are active and all its contradictions, acute. Global capital and its servants in government are haunted by the memory of their own near-death experience: the meltdown four years ago, when they were compelled by cascading events to share with the public the specter of financial Armageddon. The fascist cat has been out of the bag from the moment in September, 2008, when Treasury Secretary Henry Paulson issued not-so-veiled threats of martial law, should the Congress not accede to the bankers’ demands for a blank check.
“The banksters must also be allowed to continue looting and rigging the system, since they cannot survive, otherwise.”
Once revealed, the repulsive corpus of depraved capital is seared into the public brain, indelibly. Three Septembers after the meltdown, it took only a few amateurish but determined white kids (and some cooperative New York City cops with mace) to refocus revulsion against Wall Street, even as both corporate parties roared “Austerity!” in unison. How easy it was to return the conversation to the central contradiction: that the system is decayed, infinitely corrupt, a cancer on the society, run for the benefit of a tiny minority. Even overt white racists get it – although their Black-hate, as always, prevents them from properly acting upon that knowledge.
Capitalism’s irreversible nakedness means permanent crisis for those whose job it is to protect Wall Street. The beast survives only by ever more blatant theft and manipulation. Whatever corporate political party is in charge must, somehow, assure the public that the rule of law still exists, while protecting their Wall Street masters. Ultimately, this becomes impossible, since the task requires more than mere impunity for the criminals. The banksters must also be allowed to continue looting and rigging the system, since they cannot survive, otherwise.
It’s a helluva job, but somebody – like Attorney General Eric Holder and his Justice Department – has to do it.
Only in this context do Holder’s grants of immunity to Barclay’s Bank (British) and UBS (Swiss) in the LIBOR scandal make sense. Immunities are traditionally granted to smaller fry in order to indict bigger fish, but all sixteen of the banks potentially involved are huge (too-big-to-fail), and Barclay’s beat UBS to the punch in admitting wrongdoing and consenting to be fined $450 million. UBS, as New York Times financial columnist James B. Stewart reports, “is in a league of its own given its track record for scandals,” having been fined over a billion dollars by the feds in recent years. The bank was also forced to reimburse $22.7 billion defrauded from customers in a toxic securities scheme. If UBS gets immunity, then so will U.S. megabanks JP Morgan Chase and Citigroup. (One cannot imagine a prosecution of President Obama’s friend Robert Wolf, the outgoing chairman of UBS’s American operations, who vacations, golfs and plays basketball with the president, and has bundled $500,000 towards his re-election campaign.)
The U.S. Justice Department’s job, as Eric Holder sees it, is to immunize the criminals from prison time, and then fine their companies to preserve the illusion of justice. As we discussed in these pages two weeks ago, Holder successfully contained the national bankster robo-signing scandal, earlier this year, by brow-beating state attorneys general into dropping their suits and investigations, and forcing an affordable monetary settlement – most of which will never reach actual homeowners.
“No one would know where to start in shrinking hundreds of trillions in derivatives down to a size that was no longer a lethal threat to the real economy.”
Holder cannot pursue the normal prosecutorial strategy, immunizing low-level LIBOR fixers and collaborators in order to get indictments of the higher-ups, because his real mission is to hide the facts of the scheme: its long duration and centrality to global capital’s criminal enterprise. A successful immunity strategy requires scaring the small fry to death with threats of imprisonment, so that they will rat out their superiors and divulge detailed information on possible additional criminality. Years of Barclay’s Bank emails show how casually the LIBOR rate was manipulated by guys way below the top offices. But it is precisely that level of bankster that Wall Street’s protectors in government don’t want to spook: there are too many of them, and they are apt to tell too much. Instead, Holder and his British counterparts give blanket, institutional immunities, and extract a fine. The crimes, in all their variations, continue – as they must.
Although the LIBOR rate has some impact on every conceivable financial transaction, it is clear that derivatives lie at the heart of the crime. With $600 to $1,000 trillion in derivatives floating around, most of them held by too-big-to-fail banks, the movement up or down of a basis-point (100th of a percent) puts billions in motion. Global banking invented derivatives to create their own speculators’ economy, much larger than – but acting as a great weight upon, and holding as hostage – the mere $75 trillion real world economy.
(The idea that LIBOR manipulation is key to keeping “free” Federal Reserve money flowing to the banksters also appears sound. There are many uses for rigging the world’s interest rate benchmark.)
It is far too late to “unwind” the derivatives monster, to disassemble it, like a bankrupt bank. No one would know where to start in shrinking hundreds of trillions in derivatives down to a size that was no longer a lethal threat to the real economy – and no Wall Street institution would survive the transition. Thus, finance capital lives daily with existential threats: first, from its own inventions and contradictions; and second, from a public that would tear them limb from limb if the people understood the true depth of Wall Street’s crimes and how much danger the rich pigs have put the rest of us in.
Wall Street’s protectors must prepare for a State of Emergency, a great imposition of silence, and the possibility of a great lockup – because the crash is coming, and they know it
BAR executive editor Glen Ford can be contacted at [email protected].