There is finally, finally, finally some momentum starting to build toward accountability for the biggest banks. The results of the election will determine whether it continues to build or completely fades away.
I will be the first to admit that there is a certain irony in that last sentence. Tim Geithner and Eric Holder haven't exactly been jumping up and down in excitement to prosecute the Too Big To Fail (TBTF) banks for their evident fraud in pumping up the housing bubble and making billions off it. The wheels of justice have turned pathetically slowly. Martin Luther King said that "the arc of the moral universe is long, but it curves toward justice", but in the case of banks this big and powerful, that arc is even longer. Inch by inch, though, the wheels long stalled have begun to move, and now the pace is beginning to pick up.
In the last several weeks, JPMorgan (twice), Wells Fargo, and now this week Bank of America have all been taken to court by different parts of the government. And while we don't know how things will turn out, none of these are small potato cases. Together, they represent the broadest cases against the TBTF banks that we have seen since the crisis hit. And the Residential Mortgage Backed Securities (RMBS) task force co-chair says that more are coming.
My colleagues in the Wall Street accountability movement, burned by the lack of action from the Department of Justice (DOJ) for four years, have been understandably skeptical of the RMBS task force, especially when it took what seemed like forever to bring its first case. But without that commission from the president, I don't think any of these cases would have been brought, because it focused resources (definitely not enough, but some) on investigations, and it raised the political stakes on not doing anything.
Where this heads next will be fascinating. I suspect what Schneiderman and the other more aggressive prosecutors in the task force want to do is to build a web of tough, broad cases against these banks in order to given them maximum leverage. Such a legal strategy could well reap major benefits as investigations proceed.
But imagine a scenario where President Obama loses, and the Democrats lose the majority in the Senate. The multi-agency, multi-jurisdictional task force shuts down, ending the center of gravity for all these legal cases, and ending the pooling of staff resources by all these agencies. The expectations and pressure points for activists to push on getting legal action goes away completely. The DOJ goes from being slow and reluctant on big bank financial fraud cases to being completely hostile to them. The Consumer Financial Protection Bureau (CFPB), the single most aggressive regulatory agency in government, which has already filed numerous actions and new regulations against financial abuse, is completely dismantled. Senate chairmen like Carl Levin, who have been doing strong oversight against Wall Street, are no longer committee chairs. And the Senate goes from their budget conference committees pushing for more money for regulators to joining the House in appropriating a lot less.
All momentum for filing new cases against fraudulent bankers goes away, as do most of the investigatory resources, and the big banks once again have their complete run of the store with quite literally no cop on the beat.
But here's another scenario, a little dream of mine. In addition to the president being reelected, and the RMBS task force and CFPB continuing, we get some new Senators as well: Elizabeth Warren sitting on the Finance committee, and being able to grill the big bankers in hearings on a regular basis; Sherrod Brown, co-author of the legislation to break up the biggest banks and re-institute Glass-Steagall, returns despite being the number one target of Karl Rove; Tammy Baldwin, who fought as a House member against Glass-Steagall's repeal and brings it up in nearly every stump speech, comes into the Senate; former Byron Dorgan (who was the big banks' number one opponent in the Senate before he retired) staffer Heidi Heitkamp comes to the Senate to continue Dorgan's tough-on-Wall-Street legacy; one of the strongest opponents of big money in politics, Chris Murphy, is the new Senator from CT. And the Wall Street big money boys, having bet heavily on Mitt Romney and the opponents of all these new Senators, forced to reckon with the fact that all their gold could not buy them this election.
I have just been reading Jeff Connaughton's new book Why Wall Street Always Wins. With a title and subject like that, it is rather grim. But the story it tells of how worried and flustered the denizens of Wall Street got when just one Senator, Ted Kaufman, came at them hard is a reminder that if we could actually get a half dozen Senators with the courage and the fortitude to take on Wall Street, it could make a huge difference. And if we combined that political pressure with a legal strategy that kept weaving its web of cases against the big banks, kept subpoenaing and deposing them, kept building the legal pressure? Who knows, we might actually finally bring justice to some of these bank executives who blatantly violated the law thinking their political power would forever keep them safe.
My PAC is working to help all 5 of those tough-on-Wall Street Senate candidates, help me put them over the top. Elections do matter. Winning them doesn't guarantee anything, but it does give an opportunity for good things to happen.