Is the Obama administration finally getting ready to lower the boom on Wall Street? Perhaps.
I have been upset that Obama let the management of the monster financial firms off the hook after the meltdown of 2008. He had a chance right after the collapse and government bailout of these firms, while Wall Street was weakened, to depose the management as a condition of their rescue, prosecute unethical behavior, and break them up so that they were no longer too-big-to-fail. But he didn't, and I was disappointed in him and his administration.
But, Matthew Iglesias makes the suggestion that the newly appointed head of the Security and Exchange Commission (SEC), Mary Jo White, is a pretty tough cookie and was a former prosecutor in Manhattan. In fairness, she was also a defense attorney, so we can't really predict her predilections, but there is reason for optimism for those of us who think Wall Street still needs to have their immense powers trimmed. It could be that the SEC is finally going to go after some real prosecutions on Wall Street.
Also, we just received the news that the government is suing Standard and Poors rating agency for their allegedly criminal negligence in giving high evaluations and ratings to the toxic investments that were at the heart of the financial collapse in 2008. Bravo, I say.
So, these two facts may be showing us that Obama might finally be getting tough with the financial industry. I think there may be a couple of reasons for this.
First, Obama very clearly chose to rescue Wall Street and the financial system when he first came into office four years ago. I agree that saving the system was necessary to preventing nation wide and world wide financial collapse and economic catastrophe, and therefore was the number one priority. I believe that he decided that rescuing Wall Street was more important than prosecuting criminal activity, and more important than breaking up the banks.
Second, four years have passed and America's financial system has weathered the terrible storms that it created out of their recklessness and greed. And Obama may be concluding that civil, and even criminal, prosecutions of these behemoths will no longer destabilize the financial industry or the economy. Wall Street may well be stable enough to be able to withstand the next steps needed bring balance and soundness to the country's financial system.
So, civil and criminal prosecutions of the giants of Wall Street would likely be a positive step making our system healthier and less risky (by quashing the hyper-aggressive risk taking culture that apparently still runs these too-big-to-fail institutions), rather than threatening instability and collapse.
In addition to prosecutions, Obama could finally break up the too-big-to-fail, too-big-to-regulate, too-big-to-prosecute, too-big-to-manage dinosaurs.
This could finally be the death blow to the persistent Wall Street culture of high stakes risk taking that threatens us all with financial disaster.
Maybe Obama has been waiting for the financial industry to regain its footing enough to move to the next stage in reforming the financial system - prosecution and breaking up of the giant banks.
