Two governmental agencies which investigated the causes of the 2008 financial meltdown—the Financial Crisis Inquiry Commission and the U.S. Senate Criminal Investigations Subcommittee—made criminal referrals to the U.S. Department of Justice. These referrals were never acted on. Soon the six-year statute of limitations on prosecuting financial fraud will run out, and it will be too late to prosecute.
Chris Swecker, former assistant FBI director in charge of its Criminal Investigations Division, issued a public warning back in 2004 about an explosion of mortgage fraud that could lead to calamity. The warning was not heeded. He told Al Jazeera English that the Justice Department has not allocated sufficient resources for investigation and prosecution. He noted that Attorney General Eric Holder and Criminal Division Chief Larry Breur were white-collar defense attorneys and have a “defense mindset.”
Bryan Georgiou, who served on the Financial Crisis Inquiry Commission, said the Justice Department’s inaction shows “a lack of accountability that is really quite unique in American history.”
Part of the reason is the large sums of money the big Wall Street firms spend on campaign contributions and lobbying. Goldman Sachs was President Obama’s largest corporate donor in 2008; the Justice Department terminated its criminal investigation of Goldman in August, saying there was no basis for indictments. Another reason is the revolving door between working for government and working on Wall Street.
William Black, an expert on white collar crime and litigation director of the Federal Home Loan Bank Board during the savings and loan crisis of the late 1980s, said the impact of the recent financial meltdown is roughly 70 times as great, in terms of its economic impact, as the S&L crash, yet the investigative and prosecution effort is much smaller. The subprime mortgage crisis was fraud from start to finish, from knowingly signing up borrowers based on false information to repackaging the loans and selling them based on false information.
He said the Justice Department appears not to understand “accounting control fraud,” in which executives who control a company loot it for their own benefit. “The best way to rob a bank is to own or control one,” he said. Unless President Obama and Attorney General Holder change course, the robbers will get away with it. And, no, there is no reason to think that Mitt Romney, with his shady financial history, would be any different.