Annals Of Corporate Oligarchy: Burying Wall Street Fraud
This isn’t my usual bailiwick. But the appalling, frustrating, and ultimately dispiriting story Matt Taibbi tells about the fate of key Wall Street whistleblowerAlayne Fleischmann reveals (yet again) the essential corruption of our democracy, and the degree to which corporate power and influence dominate public policy. And that is arguably one of the biggest hurdles to getting anything sensible done on everything from climate change to income inequality.
Here’s the set-up:
Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.
Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”
Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.
She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.
This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.
And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”
Read the whole thing. Here’s how one watchdog describes the problem to Taibbi:
“The kid-gloves approach that the DOJ and the SEC take with Wall Street is as inexplicable as it is indefensible,” says Dennis Kelleher of the financial reform group Better Markets, which would later file suit challenging the Chase settlement. “They typically charge only one offense when there are dozens. It would be like charging a serial murderer with a single assault and giving them probation.”
Like Edward Snowden, Fleischmann tried to do the right thing by working within the system to report the fraud she witnessed. As with Edward Snowden, the system failed, chewing her up and trying to bury her instead of addressing the crimes she reported. So, to her credit, she went outside the system despite the consequences to her life and career, in the desperate hope that justice will be done.
That is an act of bravery. Hopefully, that will turn out to mean something.