Wednesday, November 7, 2012

Dear President Obama: Now is Your Chance to Clean Up the Financial Sector

Dear President Obama,

Now that you are a 2nd-term president, I am hoping that you will consider cleaning up the financial sector. I understand that a 1st-term president has to be cognizant of the realities of re-election; You need money. And a lot of money comes from Wall Street. So, as frustrating as it has been for Americans, I understand that you had to temper your displeasure with the financial sector. You felt like you had to coddle them so that they would not throw you under the bus.

Some would argue that they did throw you under the bus. They certainly favored Mitt Romney when it came to campaign contributions. On the other hand, you were not completely abandoned. They were hedging their bets, so to speak. And, as we all know, they are not very good at risk analysis.

I am not suggesting that you should go after Wall Street because they abandoned you. In fact, I am not suggesting that you "go after" anyone. What I am suggesting is that you pursue a few things that are central to America: 1. Rule-of-law, 2. A healthy democracy, and 3. A sound financial system.

There is something very simple that you can do to give this country a giant kick-start in the right direction: Appoint Bill Black.

Bill Black was a regulator during the Reagan Administration. Following the S&L Crisis, he was instrumental in putting over 1,000 elite criminals in prison. He is an attorney, an economist, and a criminologist. And he is honest. In fact, he is honest to a fault. He is an equal-opportunity critic. Yes, he has criticized you and a number of your appointees. But he has been equally, if not more, critical of Republicans who have shielded criminals from investigation and who have pursued policy that would make America more economically unstable. He strongly supported you in this election.

President Obama, Americans are unhappy with where this country is headed when it comes to basic fairness. As Glenn Greenwald so eloquently states, the USA was founded with an assumption that outcomes for individuals would vary greatly - as in some people would be very rich but most people would be ordinary or even poor. The Founders anticipated that this divergence of outcomes would be legitimized by equality before the law and political equality - as in everyone would have a vote, and justice would be blind.

As we all know, we are not equal before the law. And money buys politicians and legislation. Americans accept a lot when it comes to a compromised political economy. They accept that lobbyists write legislation to benefit special interests. They accept that regulators are captured and ineffective. They accept that politicians unabashedly favor their private sector benefactors.

But the lack of serious investigations into the fraud leading to the crisis is destabilizing in a number of ways:
  1. You cannot force taxpayers to socialize losses in firms that are reckless and criminal without serious investigations into the bad behavior that led to the crisis.
  2. Not investigating the fraud leading to the crisis leaves bad actors in position to defraud again, and teaches the industry that there are no repercussions for fraud.
  3. Shielding the rich and powerful from investigations is destabilizing to democracy - it attacks the legitimacy of our political system.
  4. Avoiding investigations leaves the fraud-friendly structures in place and guarantees that we will again face economic crisis.
You have a real opportunity right now to do the right thing for America. Appoint Bill Black to a position in which he is given the authority and resources to investigate the fraud leading to the crisis.

There is arguably no one as qualified to take on this task.  Bill Black possesses a unique combination of absolute integrity, unrivaled in-the-trenches experience, and unrelenting tenacity. Enlisting his service could well turn the USA onto a very positive trajectory.

We need a bold move to redirect America to political legitimacy, financial soundness, and a robust democracy. Appointing Bill Black to be the 2012 equivalent of a Ferdinand Pecora and creating a contemporary Pecora Commission will be a giant step in that direction.

This is your Franklin D. Roosevelt moment, President Obama. Appointing Bill Black will change where this country is headed in a fundamental way. It also has the potential to establish you as one of the great presidents of the United States of America.

Jaime Falcon

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