I’ve been meaning to get to this killer piece by Matt Taibbi (linked to earlier this week) regarding one of the biggest tragedies of the Bush/Obama administrations: Why The Government Won’t Fight Wall Street.

Taibbi’s intro spells it out:

“The great mystery story in American politics these days is why, over the course of two presidential administrations (one from each party), there’s been no serious federal criminal investigation of Wall Street during a period of what appears to be epic corruption. People on the outside have speculated and come up with dozens of possible reasons, some plausible, some tending toward the conspiratorial – but there have been very few who’ve come at the issue from the inside.

We get one of those rare inside accounts in The Payoff: Why Wall Street Always Wins, a new book by Jeff Connaughton, the former aide to Senators Ted Kaufman and Joe Biden.

Jeff is well known to reporters like me; during a period when most government officials double-talked or downplayed the Wall Street corruption problem, Jeff was one of the few voices on the Hill who always talked about the subject with appropriate alarm. He shared this quality with his boss Kaufman, the Delaware Senator who took over Biden’s seat and instantly became an irritating (to Wall Street) political force by announcing he wasn’t going to run for re-election . . .”

Also of note are damning revelations from Connaughton. Although a Democrat, he paints a “not flattering portrait of key Obama administration officials” like SEC enforcement chief Robert Khuzami, Department of Justice honchos Eric Holder, Lanny Breuer, and Treasury Secretary Tim Geithner.

The full article is well worth exploring, as it touches upon one of the nations most damaging political problems: Corrupted elected officials, campaign finance and the revolving door between elected officialdom and industry. Taibbi’s post was barely a day old when we learned that Tim Pawlenty, former Governor of Minnesota (2003–2011), was leaving the Romney campaign to become CEO of the Wall Street lobbying group Financial Services Roundtable.

You will also find the discussion of “The Blob” rather dispiriting; That is Connaughton’s term for the “oozy pile of Hill insiders who are all incestuously interconnected, sometimes by financial or political ties, sometimes by marriage, sometimes by all three.

The current system is broken. Campaigns are financed by big money. Legislation is awarded to the highest bidder. This is not the way the founders of America envisioned how Democracy would work.



A Rare Look at Why The Government Won’t Fight Wall Street
Matt Taibbi
Rolling Stone, September 18,


Category: Markets, Really, really bad calls, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “Why The Government Won’t Take On Wall Street”

  1. It’s possible to both greatly expand the role of citizen lobbying while drastically lowering the cost of campaigning.

    On Tools for Citizenship: the Neglected Essential

    Technology has a role in leveling this landscape.

  2. DSS10 says:

    The government also won’t pursue any anti-trust action, actions against defense contractors, certain non-profits (501.C lobby groups) and the status of certain 501.C “Think Tanks.” They refuse to install any barriers to conflict of interest for elected officials and, for the most part, both regulate and police their own activities. Government agencies are told to sit on their hands or have their funding evaporate through congressional appropriations while the congress furiously works to undo any meaningful legislation that has survived from before 1980s. To ask why there hasn’t been any action taken against the fraud that was committed by wall street over the last twenty years or so is like pointing out a hang nail on a leper. In typical Washington behaviour every one gets all up in arms about an issue but they feel passionate about (or can leverage) but the end result is that they will make noise, sell a book, do some media time, then move in to some DC institution with nothing changed……

  3. Bill Wilson says:

    I’m surprised that Mitt Romney has offered no alternative to Dodd/Frank. Simple rules like smaller banks, less leverage, and a return of the 37 page Glass/Steagall would appeal to many conservatives and moderates. It also makes a nice contrast to the 2319 page, unenforceable, incomprehensible, disaster known as Dodd/Frank.
    Mitt Romney and the Republicans (other than John Huntsman) have offered nothing to counter President Obama’s have your cake and eat it too vision of keeping big banks and making them safer with Dodd/Frank.

  4. ConscienceofaConservative says:

    Today we hear the mortgage task force is set to announce action soon, since as he writes “we need to convey the sense that nobody is above the law”, yet in the same story another official , apparently unnamed, says that any action will be civil not criminal which for me negates Schneiderman’s face saving comments and implies ineffective SEC style slap on the wrists with a trivial monetary penalty and a promise not to recommit the same offense.

  5. Christopher says:

    Govt of the corps, by the corps, for the corps.

    Why would either head of the DC snake want to end that?? It is the source of the DC wealth.

    Bread and circuses complete the equation of sheeple complicity.

    However, if the bread runs out….

  6. digistar says:

    Corruption of this sort has happened many times, in many places through the ages.

    It eventually collapses from the damage it causes to the host population from which it sprang.

    That would be when “the bread runs out”, as Christopher says.

    Here’s hoping the end is near and that only the corrupt people suffer.

    I know, wishful thinking.

  7. Moss says:

    All part of the unspoken rule to maintain the status quo. Self indictment is NOT a good career move. The people in power, with very few exceptions, are more interested in saving the system as it is currently constructed and with it those who stand to benefit most. It is NOT a democracy . The cynical anti -big government blowhards are more interested in tilting the largesse of the government to their favor while pretending it is all good for the general citizenry. Prosecuting the corruption would result in unabashed backlash and black listing. While Rudy G. was successful in getting Drexel, Milken, Boskey and some others because the rest of the street had total disdain for Drexel as they were making all the money with their High Yield revolution, stepping on all the white shoes of the IB establishment. Bear and Lehman were expendable as well.

  8. bozwellian says:

    Technically speaking, BR, the founders of America envisioned a republic.

  9. jb.mcmunn says:

    @bozwellian: “A republic, if you can keep it.” — Ben Franklin

    How prescient. When do we get our emperor? Or do we have to have a formal hereditary aristocracy first?

  10. ToNYC says:

    In a Race between two Corporates when you have Skin in the game, I’d bet on the one who more closely acts like a Human.

  11. Frilton Miedman says:

    The government of my government is the highest bidder, Democracy for sale.

    All complaining, discussing, disseminating and vivisecting over who did what is chasing tails.

    Get bribery out of politics and this problem is over, it’s just that simple.

  12. Defining Quality says:

    Corruption is the Defining Quality of America!
    Tax all Net Worth above $10,000,000 at 100% world wide and watch the corruption in banking and government go away!!
    Government has sold out We The People – Money Talks – We’re all fucked!

  13. ricecake says:

    1) Because the government don’t know how witout Wall Street telling it how.

    2) The U.S government needs Wall Street to fight the U.S financial world war. They won’t break up the big banks because only the big enough banks can go out there to sucking in lots money from the foreign lands. Small banks are too weak so the don’t stand a chance to fight the world’s currency war.

    So we must tolerate the big banks (which are the U.S force in financial terms) just like we must tolerate the U.S military defense complex. Because they are the enterprises defy the U.S dollars.

  14. philipat says:

    The whole point of a Constitutional Republic is that power remains with the people, as in “Of the people, By the people, For the people. It’s difficult to pinpoint exactly when the transition to Totalitarianism took place?

  15. Defining Quality says:

    @philipat – It’s difficult to pinpoint exactly when the transition to Totalitarianism took place?
    The transition took place when the CentaMillionaire$ and Billionaire$ (UHNWI’s)were allowed by We The People to exist!
    They need to be eliminated and We The People need to tax them out of existence!!!!!!!!!!
    UHNWI’s have corrupted everything their personal greed has touched – and that’s a fact of our observed reality which my Shit for Brains fellow Americans refuse to recognize!
    They own us – and we are their slaves – and that’s the truth!

  16. 873450 says:

    Don’t blame President Obama. People forget he said “Wall Street Fat Cat” once or twice a few years ago. To this day TBTF CEO’s remain traumatized and may never recover from Obama’s shameful insults. It’s a wonder how they can still drag themselves out of bed every day to go out and do God’s work. Why are Americans so upset? Why do they hate success? When did we become a nation of whiners?

    Bill Wilson Says:
    “I’m surprised that Mitt Romney has offered no alternative to Dodd/Frank.”
    Taking into consideration where Romney’s wealth came from, hardly anyone else is surprised. Besides, he is offering an alternative – kill Dodd/Frank, shrink government and slash regulations handcuffing Wall Street so Americans can be free again.

    Christopher Says:
    “However, if the bread runs out….”
    … then let them eat cake.

    The solution is Pitchforks.

  17. ravenchris says:

    What name do you give to elected officials who put their political parties and careers ahead of the well being of the electorate?
    The 28th Amendment to our Constitution would set a one term limit for all members of Congress.
    Protect yourself and the future now by not reelecting incumbents.