Vail Daily letter: The broader context
Edwards, CO Colorado
I find the uproar over Martin Erzinger’s slap-on-the-wrist quite understandable. That the story and the response should go countrywide is a bit surprising. Though when put in the broader context of the financial collapse, its associated fraud, and complete lack of legal accountability, it becomes predictable.
In trying to understand the crisis and its causes, as well as the bailouts and subsequent damage to our economy, it is clear to me that a major fraud was perpetrated. There were many actors, some simply greedy, others outright culpable. And all, facilitated by an emasculated and actively obstructed regulatory environment.
Simply put, mortgage brokers profited handsomely by making millions of bad loans; these loans were packaged into complex financial instruments instead of, as in the past, held by the lending banks; the ratings agencies, perhaps the most culpable, made large profits by unethically, and I would say criminally, enabling the fraud by giving these bonds their highest AAA rating, providing cover for their risk; pension funds – required by law to invest in only the highest rated bonds – along with unwitting investors, purchased them; these bonds were insured from default by AIG; the very companies packaging and selling the bonds, knowing their danger, touted them to investors and bought insurance against the inevitable failure of their own products; everyone in the chain made loads of money; ultimately, the house of cards came tumbling down.
Of course, the entire process was far more complex and played out over years. The scenario has many similarities to the Savings and Loan fraud of the 1980s, yet unlike that debacle, where many people went to jail, there have been precious few prosecutions. Certainly none of the major players are in prison or even under threat of prosecution. They stole trillions, deeply damaged the world economy, rewarded themselves extremely handsomely in the process and got away with the it, making Bernie Madoff look like a piker.
This is the scenario in which Erzinger’s plea bargain plays out; another fat-cat Wall Street-type getting away with a horrendous crime. And all because he’ll have difficulty finding work in his profession. Wahh.
If he has been simply competent in his work, he should have more than enough money to last the average person several lifetimes.
It feels as if the rule of law applies only to the average person, that the extremely wealthy and powerful are above the law, that they can buy their way or bully their out, that they can use their massive influence to avoid prosecution and justice.
This is dangerous for society. Once people feel that a class is above the law and can act with impunity, anger and disillusionment can’t be far behind. For a populace feeling helpless in the face of unrelenting hypocrisy, betrayal and injustice, demagoguery finds willing ears. If left uncauterized by justice, the wound festers and disaffection rages.
Isn’t that what is happening in our country right now?
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