In last week’s post, I shared the op-ed that I co-authored with Allen West, President and CEO of the National Center for Policy Analysis (NCPA), We Must Learn From the 2008 Crash or Repeat It …Soon.
In the op-ed we pointed out that several recent indicators were somewhat alarming: the recent stock market roller coaster, the Fed’s policy of near-zero interest rates which are leading to more inflation of assets, the rise of household debt, and other factors, each of which seem to be leading us to another crash.
We talked about how lobbyists are politicking Capitol Hill, gutting regulations meant to control the large banks; how the big banks are getting bigger, and the smaller community banks are fast disappearing. Perhaps the most ominous factor we discussed is the lack of prosecutions of the very financial institutions which got us into this mess in 2008.
Evidence of this is rampant. Yet, I was struck by the irony of how many are writing about this, how many are talking about the lack of prosecutions. However, little is being done to correct this situation.
Have the capacity to steal and you get away with it. No wait…you are rewarded!
An article last week in Counterpunch points out many of the penalties Citigroup has paid; from the $700 million the U.S. Consumer Financial Protection Bureau ordered Citi to pay to consumers because of the bank’s illegal credit card practices; to the $180 million they paid to satisfy the Securities and Exchange Commission (SEC) and more.
So the curiosity is, Citigroup officials did not admit any wrong doing. If that’s the case why did they pay up? The SEC wrote an eight page order in which it recited all of the things Citigroup didn’t admit it had done.
Are you confused yet?
Among the things Citigroup did not admit are:
- That it led investors to believe that the funds in which they were investing were better than the bonds Citigroup did not admit it encouraged investors to sell in order to buy the securities Citigroup did not admit it was offering to those investors.
- They did not admit it continued to misrepresent the quality of the investments it did not admit it was selling even as the funds’ performance significantly declined and the risk of investor losses increased.
- It did not admit that it failed to adopt and implement policies and procedures to prevent misrepresentations which it did not admit that it made to investors.
And the list goes on, throughout all eight pages of the order. Most heinous is that at no time have any employees been named who were involved in all the things Citi did not admit it had done.
Double talk? Legalese? I’m not sure what is being said here. I am sure that a Congressional investigation, which I originally called for in March, is critical so we can expose and put an end to the rewards of no prosecution that we are bestowing on those financial institutions that are lying, cheating and stealing. The NCPA Financial Crisis Initiative is one way to get to the truth.
I had mentioned that there are two central questions of 2008 this initiative is researching in more depth:
- What were the major causes of the financial crisis?
- What policies can and should be implemented to prevent a reoccurrence?
Among other key areas the Initiative is paying special attention to is how the lack of ethics and transparency contributed to the 2008 financial meltdown. Through this Initiative, we are asking: if there is no alleged wrongdoing involved, if there are no punishments meted out for the alleged wrong doing, if no-one is guilty; are we redefining ethics for the 21st century?
It would appear the law supports this, both in Congress and the Department of Justice. Are we allowing them to rewrite the moral code? And, sanctioning it by our silence?
One of my colleagues on the NCPA Financial Crisis Initiative task force is Marianne M. Jennings, JD., Professor Emeritus at Arizona State University. Ms. Jennings has spent her life asking how formerly ethical people and companies descend into moral meltdowns. She claims we can spot moral meltdowns before they happen. Her research has led her to seven key factors that indicate ethical collapse. I’ve talked briefly about a few of these in past posts and will say more about each in future posts, but in Citigroup’s case there were several factors that led to a moral meltdown.
One was the pressure to maintain numbers at all costs. There was a brutally competitive culture that dictated we bring in the numbers, regardless. Make the sale, make your bonus. We also lived with other factors referenced by Ms. Jennings: fear and silence. Those of us who attempted to speak up and call out what was not right were ostracized, isolated and stripped of our responsibilities. And, so we eventually blew the whistle.
I believe that if we continue obscuring the facts, if Congress and the D.O.J. continue rewarding malfeasance, if our major financial institutions, who used to be bastions of honesty and community spirit continue down the path they are on, they will establish a new normal and this country is headed for the brink.
I can only hope and keep working towards discovery, solutions, and a stop to encouraging outright theft and lies. The NCPA Initiative is one such step in the right direction.
[tweetthis url=”http://bit.ly/1JZlMdZ”]Are we redefining #ethics for the 21st century? ~ @RichardMBowen #tbtf #mortgagemeltdown #citigroup #2008[/tweetthis]
Related Posts
What Were the Major Causes of the 2008 Financial Crisis?
What Caused the 2008 Financial Crisis? Interview by NCPA
Ethical Behavior Pays Off
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
