In light of new serious banking abuses, Paul Krugman looks at the worrying trend of politicians targetting prosecutors of banks rather than the banks themselves:
Look at the complaint filed by Nevada’s attorney general against Bank of America. The complaint charges the bank with luring families into its loan-modification program — supposedly to help them keep their homes — under false pretenses; with giving false information about the program’s requirements (for example, telling them that they had to default on their mortgages before receiving a modification); with stringing families along with promises of action, then “sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions”; and, in general, with exploiting the program to enrich itself at those families’ expense…
We’re not talking about the business practices of fly-by-night operators; we’re talking about two of our three largest financial companies, with roughly $2 trillion each in assets. Yet politicians would have you believe that any attempt to get these abusive banking giants to make modest restitution is a “shakedown.” The only real question is whether the proposed settlement lets them off far too lightly.
America’s inability to hold financial institutions to account spells disaster for its long term economic survival. The banking industry is so crucial to the fiscal heatlh of America and wields so much power that it can break the economy in a matter of days (as witnessed in 2008). There are arguments to be made about the necessity of the banking system in its current form, but at the very least, making sure it isn’t overtly stealing from its customers seems like a no brainer.
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.