By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
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By CP Staff
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Even more comical: Lanny Breuer was named head of the Justice Department's criminal division. He'd previously chaired the white-collar defense unit at Covington. Prosecutions on Wall Street slammed to a halt.
Black estimates that at the height of the mortgage crisis, two million fraudulent loans were being written each year, largely through lenders inflating buyers' incomes. But not a single major figure was ever prosecuted. Had those 1,000 savings-and-loan criminals from the 1980s practiced their larceny under Bush II or Obama, they would have been given million-dollar bonuses and retired to beach homes in the Hamptons.
It was under these pleasant skies that oil speculators launched their attack on America. In 2008, when their assault became evident, even some Republicans called for investigations. But that quickly ended when Obama became president. Senate Minority Leader Mitch McConnell, not one for subtlety, announced that his party's Mission One was sabotaging Obama.
Democrats managed to pass the Dodd-Frank Act in 2010. One of its goals was to hand the oil market back to actual users and allow the feds to crack down on excess speculation. Kennedy believes this alone would have reduced the price of gas by $1 a gallon.
But after Congress announced its great triumph over Wall Street, it quietly teamed with bankers to gut the law. The Commodity Futures Trading Commission, which was supposed to spearhead the crackdown, saw its budget slashed. Speculators filed suit, essentially arguing that they had the inalienable right to violate the country.
The financial industry would eventually spend $100 million to stave off regulation, buying congressmen, setting up fake public interest groups, and funding academics to produce laughable studies.
Two years after Dodd-Frank passed, the feds have yet to touch a single hair on a speculator's head.
The propaganda campaign has worked. "What they've really won is the intellectual struggle," says Black. "People can't conceive of a world without these massive institutions, and can't believe they're a negative influence."
Take the Tea Party movement. Its followers are largely concentrated in the red states, statistically the nation's poorest and the most easily damaged by high gas prices. Yet their greatest benefactors, the Koch brothers, have boasted of being among the top five speculators in the world.
So while the Tea Partiers rally against regulation and government interference, the Kochs steal $14 from them every time they fill up their Fords.
"This is all part of the same formula of lower taxes and less regulation," says Kennedy. "That formula wins elections and ruins the country."
As gas prices neared $4 this spring, Republicans reprised their Great Campaign of Idiocy from 2008. Once again the environmentalists and liberals were to blame, this time for blocking construction of the Keystone Pipeline, a massive project that would allow the shipping of oil from Canada to Texas.
Presidential aspirants Newt Gingrich and Michele Bachmann claimed they'd lower gas prices to $2 if elected, presumably by magic. Congressman Paul Ryan of Wisconsin, considered the party's brightest financial mind, proposed cutting the Commodity Futures Trading Commission's staff by two-thirds, just in case they might decide to grab coffee in the general vicinity of Wall Street. Mitch McConnell said he'd be happy to address speculation — but only if Democrats agreed to allow drilling on environmentally sensitive lands.
"They believe nothing was wrong with the markets in 2008," says Mark Cooper of the Consumer Federation.
Obama, meanwhile, was doing an inverse impression of Teddy Roosevelt. Instead of walking softly and carrying a big stick, he brayed noisily and brandished a twig.
When gas prices approached $4 in April 2011, the president announced the creation of the Oil and Gas Price Fraud Working Group. This was Obama's grand plan to finally strike a blow against our enemies within.
But while the announcement came with fireworks, these new crime fighters would meet just a few times over the next year. Malevolence uncovered: zero.
"Anybody who looks at the non-activity of that working group knows that the only fraud was in naming it," says Kelleher. "I think their non-record speaks for itself."
Some senators like Sherrod Brown of Ohio and Bernie Sanders of Vermont have pushed earnestly for the feds to step in. But Republicans say they'll block any move against Wall Street — with swing-state Democrats there to serve the appetizers.
"There's a free-market philosophy that continues to exist," says Mark Williams, a former Federal Reserve examiner now at Boston University. "If you're a trader, you should have the right to trade. But if the greater community is harmed, you shouldn't have that right. We still live in a democracy, right?"
Michael Greenberger is among the few who believe a reprieve is in store. He's a law professor at the University of Maryland and a former director at the Commodity Futures Trading Commission. He believes Wall Street's relentless ineptitude may finally do it in.
Two months ago, JP Morgan was the latest to set itself aflame. One of its traders managed to gamble away $2 billion in just a few weeks. The damage is expected to reach $7 billion by the time the cinders go out.
"The JP Morgan episode really struck at the nerve of the American psyche about banks and what kind of damage they can do," says Greenberger. "These people who are doing nothing productive for the economy are walking away and, even in failure, collecting millions and millions of dollars."