The U.S. Justice Department announced last week that it would not be prosecuting Goldman Sachs for deceiving investors into purchasing investments that internal Goldman emails called “crap” and “junk.”
For those who do not completely understand how America’s economy collapsed, the selling of these investments was a crucial link in a long cause and effect chain of events.
A Bit of History
After selling their toxic investments, Goldman took avarice to another level by taking out insurance policies on them. That’s right; the diabolical execs at Goldman Sachs bought insurance policies for investments they no longer owned because they knew the investments were “crap.”
“But why would an insurance company insure such a bad investment?”
I am glad you asked.
Goldman’s deceit did not end with giving investors a bogus valuation of their product. Goldman proceeded to deceive the insurance company too. This was easy. The agencies responsible for determining the credit rating of Goldman’s investment products were paid to do so by…you guessed it, Goldman Sachs. Both the insurance companies and the investors thought they were getting a good investment because Goldman paid credit rating agencies to overvalue their products.
When the investments failed, Goldman collected the insurance money. In fact, they collected so much money that they put America’s largest insurance company, AIG, out of business. It took $182 billion of taxpayers’ money to bring AIG back to life.
Many more bailouts would follow for other institutions that were notoriously labeled as “too big to fail,” and the economy has been struggling to recover ever since.
Turn the Other Check
Now the Justice Department is letting the people most responsible for ruining the economy off the hook. It is hard to say exactly why this is happening. The Justice Department says that it “ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time.” As if the facts are going to magically change.
I have my own more philosophical explanation for why Goldman’s executive officers will be spending the rest of their lives sitting at tiki bars instead of behind prison bars.
Aside from the fact that Washington has been infiltrated and poisoned by former executives from Goldman and other Wall Street financial institutions (thank you, Mr. President), there are two fundamental reasons why the worst crooks in America are free to operate with impunity.
To fully appreciate the two reasons, first watch this 90 second video that explains societies’ inability to deal with a different type of criminal enterprise:
Izzard’s first point that mass murderers get away with their crimes because they kill their own people is a sad reality. Similarly, Wall Street villains have benefitted from America’s apathy when it comes to billion-dollar corporate fraud, and the reason is simple: banks like Goldman Sachs directly robbed wealthy investors and multimillion-dollar companies—in other words, they killed their own kind.
Of course, many of the hoodwinked investors represented the collective pensions and retirement savings of millions of average Americans, but the investment agencies themselves—the middlemen—do not receive public sympathy. Most average Americans do not understand how companies like Goldman Sachs killed their individual retirement funds, but they do understand that multimillion-dollar companies make and lose huge sums all the time. When a large company loses money—even if by the dishonest practice of another large company—most Americans just do not care.
The absence of appropriate public outrage makes it much easier for the Justice Department to quietly close the case on Goldman—four years later.
The other point that Izzard makes about mass murderers also applies to Wall Street’s worst white-collar criminals. People just cannot fathom the atrocity of murder (or in this case, larceny) on such a large scale. There is a tendency for some people to simply stand in awe of Wall Street’s illicit “success.” This especially applies to the staunch believers in the invisible guiding hand of the free market (i.e. pure capitalism).
Such blind admiration for monetary gain is at the root of the evils carried out on Wall Street, and this kind of amoral outlook from many Americans helps to ensure that Goldman’s executives will never have to face the consequences of their actions, at least not in this lifetime.