The investigation is legitimate in the sense that this band of thieves are trying to discover how their looting got so out of hand. Such developments throw too much light on their activity and undermine workers’ faith in the system. “Though lacking evidence of outright fraud” the Wall Street Journal stresses, “the report shows Wall Street in gritty, day to day detail, angling to profit from a booming mortgage market, and then scrambling to cope with its collapse.”
“Outright fraud”; now what’s that? The WSJ doesn’t explain it but my dictionary here describes "outright" as “openly and without reservation” as an adverb and “complete or total, without restrictions or limitations.” as an adjective. One of the investigators describes this fraud that wasn’t “outright”. He says that Goldman Sachs “deceived some clients by betting against home loans in 2006 and 2007 while simultaneously selling mortgage securities.”
Language matters, as the use of the term “outright” shows. But a key term here is “clients.” The clients are other speculators and coupon clippers who were looking to make money without having to do any productive Labor, betting on whether or not some poor working Jane or Joe would be so strapped they would default on their loans; that they would be bled so dry by the moneylenders that they couldn’t pay the interest any more. Maybe they lost their job, maybe they got sick; it doesn’t matter. The main thing is will they pay or won’t they? On one of these two outcomes the bet is made.
It comes as no surprise to those of us that read the serious journals of capitalism that these crooks knew that a catastrophe was around the corner. Knowing this, Goldman executives met in 2006 and agreed that the firm should “cut its bullish bets on mortgage bonds” The next step was to pass such bets on to ”unsuspecting investors.” The problem with this sort of fraud that is not “outright fraud” is that it sort of violates the honor among thieves rule. That the by-product of this game is lost homes and shattered lives of the worker or small businessperson that could no longer pay up matters not to them, that’s collateral damage in market warfare.
The head of Goldman’s mortgage unit even went so far as to push sales managers to offer “ginormous” incentives to traders who could find investors for what they now knew were sure to fail ventures. Even as far back as 2004, a risk officer for Washington Mutual warned about house prices falling, in other words, that the a bubble was forming and soon to burst. Sloppy underwriting “will come back to haunt us” the official wrote in an e mail. But as one commentator once said, the coupon clippers were having a sumptuous feast. Chuck Prince, one of the central figures involved in the financial meltdown made the now infamous comments about how it wouldn’t hurt his bank and, "...as long as the music is playing, you've got to get up and dance. We're still dancing." Nothing but complete collapse was going to stop them. Drug addicts don’t like to hear about the negative effects of their habit; the official was nicknamed “Dr. Doom” and ignored and workers and the middle class ended up bailing Chuck Prince’s (Citi) bank out.
The report points out that Washington Mutual’s management did nothing to stop the sloppy lending practices. In fact, even after an internal investigation that discovered “an extensive level of loan fraud” the bank went on rewarding salespeople for increasing the volume of loans including giving them free trips.
People like Sanford Weill, Chuck Prince, Alan Greenspan, these people, like their counterparts in the military and political sphere don’t worry too much about all this as there is rarely any consequence for their actions. Because capitalism itself is a system of legal thievery, how can you be guilty of anything? Sure, on occasion they might sacrifice some Bernie Maddoff or a banker here and there. After all there is supposed to honor among thieves and there are more sober and responsible sectors of the capitalist class that abhor what they call “crony” capitalism and want to bring more stability and equilibrium back to the system. Too much blatant theft creates unrest and undermines the system in the eyes of those who are its victims.
As we have pointed out before, Capitalism has lost much of its glamor in the US. The US Chamber of Commerce was unable to use the term “capitalism” in its national campaign to return credibility to the market in the eyes of the masses after the crash. It was unable to do so as it’s marketing discovered that most people associated the term with greed and the “strong dominating the weak”. And the recent poll that we published here found that support for capitalism has declined in the US. Being strong champions of the market, the heads of organized Labor refuse to take advantage of such an opportune moment.
Such investigations like these are an attempt by the capitalist class to tighten up the system a little, reign in some of the mavericks and prevent them robbing from each other. It also is keeps the politicos working at taxpayer expense. The victims from their point of view are the investors, speculators and other capitalists; in other words, the clients of this corrupt section of the capitalist class in the financial sector. As I said, there must be some honor among thieves and some rules and regulations that allow the system to function in the long term.
The Senate panel is not so worried about the millions of victims whose lives are shattered by the market. It is not so concerned with the billion or two that starve to death on this planet of ours due not to natural disaster but to market disasters. The catastrophe in Japan is one of capitalism. The extreme hunger, disease and death throughout the former colonial world is market driven. I remind folks of the senior citizen, still working at 89 and terrorized by the moneylenders during this crisis. Gertrude Johnson, an 89-year-old was still working as a health aide. Her mortgage, at more than $3000 was more than she could handle: "I just wanted to be able to eat and sleep in my house and have a roof over my head", she told the Wall Street Journal, "Every day at midnight when I go to sleep, I think maybe when I wake in the morning they'll tell me to get out." *This is the reward for a life of Labor.
As a Union steward on the job I saw decent workers lose their jobs and livelihoods over issues that pale when compared to the crimes of these individuals who gorged themselves at the public trough in one way or another. There are two million people in the American Gulag, mostly workers and the poor who are not criminals but capitalism’s victims. No Senate committee will prevent the Gertrude Johnson’s of this world from escaping their fates at the hands of market forces.
Only a democratic socialist transformation of society can open this door. And it is the historic task of the working classes, the market’s very own creation that can accomplish that.
* WSJ 3-12-07
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