Last year broke my Super Bowl-less streak of eleven years as my friend Ryan invited me over to his house for a Super Bowl party, the first one I'd actually sat down and watched since Denver and Green Bay played in 1999, my final year at Oregon State.
This year, though, I resumed the streak and finished reading Charles Ferguson's exceptional book, "Predator Nation." This book is a follow up to his Academy Award winning documentary Inside Job, which exposed the highly corrupted system between Wall Street, academia, and both political parties.
Predator Nation, written in the Spring of 2012, goes even deeper than Inside Job as Ferguson uncovers many of the mortgage frauds committed by the large Wall Street banks that are currently working their way through the courts, where mortgage investors like pension funds or the monoline insurers like MBIA or AMBAC, who insured the mortgage bonds based on the false information supplied by the originating Wall Street banks, are proceeding through the judicial process, which will most likely result in the banks paying out huge sums due to the overwhelming evidence against them.
The email conversations by the bankers are pretty damning and show that nearly every single bank was fully aware that they were selling garbage loans that would fail while misrepresenting and withholding vital information discovered in due diligence examinations by outside DD contractors, who were finding up to 85% of loans in a given pool to be defective. (Stuff like a cashier at Burger King claiming to earn $7,500/mo would be considered one example of defective).
Yet, with all the laughing and joking in company emails that the loans were garbage while telling investors and bond insurers about the exhaustive underwriting scrutiny and exceedingly high quality of the subprime loans in the mortgage bond security, why the hell hasn't the US Government filed any fraud cases against individuals at the banks or against the banks?
Well, this is where Ferguson goes beyond Inside Job. He shows how the laws have been gutted over the past thirty years to minimize white collar financial fraud. He shows how the financial services industry copied the playbook of the complacent and non-innovative American manufacturing industry in the 1970s and 1980s, whose management realized it was far more personally profitable to pay academics to write junk research reports that would "prove" to politicians that protecting an oligopoly or monopoly in certain industries (think AT&T, Steel, Big Three Automakers) was far superior than allowing far more innovative or efficient competitors entry into the market.
Taking it one step further, low paid and industry friendly politicians could look forward to earning up to ten times their government salary by becoming a lobbyist or working for an industry funded think tank after they left office.
The top ten banks and insurers in the financial services industry are an oligopoly cartel who "invests" 1% of its profits into lobbying politicians and paying top economists to write research reports that tout the virtues of self-regulation, claiming that the market will drive out the bad actors, when in fact, the opposite is true that the market will copy the bad actors because that's where the massive profits are generated.
With evidence of fraud during the manufacturing of the mortgage bubble so pervasive, why is it that the Obama Administration continues to claim that it's nearly impossible to prove fraud against the bankers and banks themselves?
Easy. Most of his top appointees and advisers came from the banking industry or were white collar crime defense attorneys who represented the Wall Street banks and will go back to their old firms after leaving their government position. Or, they're discredited policy makers like Larry Summers or Tim Geithner, who've been plying their trade as conflicted cheerleaders to big finance. Summers bounces back and forth from academia, government, and hedge funds, reaping millions each year in income, giving speeches about the virtues of an ever-expanding unchecked financial system, even though what he's promoting blew itself up and took down the rest of the world economy with it.
Obama didn't appoint one single economic dissenter to the status quo to advise him besides former Fed Chairman Paul Volcker, who advocated a return to a modern version of Glass Steagall, separating commercial and investment banking, which the banks and their lobbying dollars have watered down and delayed becoming law. This law will most likely never see the light of day.
We won't see prosecutions from the Obama Administration because the foxes are running the hen house. Sadly, I believe, it will take another massive blowup in the financial system to get the reforms that the public demanded and should have received in 2008 and that the Occupy movement has continued to demand.
Ferguson's book is a must read for anyone who wants to understand why modern America feels like an endless PR charade, where everyone knows that the government and big business are lying and colluding to pass laws and policies that benefit the top 1% of the top 1%, or about 27,000 people, even though they use the media and the two party system, who differ on moral or social issues but completely agree on expanding inequality, to make people think that they're looking out for the little guy. Predator Nation will help people put the pieces of the puzzle together as to how we got here, where we are now, and where we're likely to go in the future.