Alan Grayson On Mortgage Fraud (Lack Of) Accountability: "President Obama... Let These Crooks Off The Hook"
Now that Alan Grayson is no longer in Congress, Fed hearings have certainly lost that certain dose of panache which only a man, wearing a dollar sign tie, and cross examining the Fed's General Counsel which grinning like a diabolical Tasmanian Devil, would bring to the table. We managed to catch up with Grayson during today's session of Radio Free Dylan, in which the traditionally opinionated Fed critic had some very choice words about the President. In essence, the former Florida Democrat said that it is none other than the President, who is the reason there have been no prosecutions on banks: " I am not only blaming the Obama administration, if the Bush
administration had its head on straight they would have prevented a lot
of these things from happening to start with. But the President Obama administration said at the beginning, we are
going to look forward and not back and therefore in the process of
making that decision basically let these crooks off the hook." But that's ok - see the SEC, which incidentally has to give a person by person org chart and job description of its 3,500 porn addicts before it receive one additional penny of funding, is about to catch one or two criminal masterminds who bought some NYX calls after the information of today's merger, which was so badly leaked that virtually everyone knew about the deal ahead of the announcement, are about to spend some time in prison. In the meantime, all those who knowingly and willfully committed crimes in the great housing pump and dump (up to and including misrepresenting underwriting documents), are about to get away scott-free. Thank you Mr. President. That's some might fine change you got there.
More choice selections from the Ratigan-Taz interview.
On the complete lack of prosecutions and Obama's responsibility:
DYLAN: Couple of last questions and then I will let you go. One thing that came out in the FCIC report and Bill Greider did a great job of highlighting this — was the explicit introduction of known to be fraudulent mortgages. They have been audited by Clayton Holdings which is one of the bigger auditing firms if not the biggest auditing firms of these documents. They were knowingly and knowingly insofar as they had been reviewed by Clayton Holdings, then installed inside of investments and sold to pension funds, et cetera et cetera, where then the banks would go out and buy insurance on that that obviously paid a lot of money when the government stepped in to bail out AIG who was one of the big insurers.
How is it that after the Great Depression, there were blue sky laws that said it is illegal to sell a worthless piece of paper as if it is stock in the company if its just Alan Grayson and Dylan Ratigan have gone downtown with a piece of paper with their names on it and they are selling it for money even though there is actually no business. We created laws to prevent people from doing that sort of thing. And yet we found here that mortgages that have been deemed by some official authority — an auditor in this case — as nonconforming, will not get paid back, noncompliant with illegal investment standards for you, American pension fund, for you American mortgage buyer, Fannie Freddie etcetera, and then the FCIC comes out, shows that these fraudulent mortgages were being packaged and sold by Goldman, Deutsche, Morgan, the list goes on and yet, we have yet to see a single meaningful fraud investigation. I mean these guys makes Bernie Madoff look like Romper Room.
REP. GRAYSON: Well that’s right, and what it comes down to is they have been protected by one thing and one thing only which is prosecutor discretion. There is no doubt in a situation like that that people committed crimes, but in order to prosecute them for that you need to have a prosecutor who is willing to do it. And that is something that seems to have eluded us in the past, I guess, three years now. I am not only blaming the Obama administration, if the Bush administration had its head on straight they would have prevented a lot of these things from happening to start with.
But the President Obama administration said at the beginning, we are going to look forward and not back and therefore in the process of making that decision basically let these crooks off the hook.
DYLAN: And what does that sort of decision make, I call Obama the “turn the page president” whether it is war crimes, banking crimes or anything else, is there a point where the decision not to prosecute blatant crimes that are destructive to society really starts to breach the public trust with the government just because the President doesn’t really want to deal with the mess?
REP. GRAYSON: It’s actually worst than that. The same people who were committing fraud and crimes at Bear Stearns, they are now committing fraud and crimes at Bank of America, at Goldman Sachs and other institutions, because it turns out that crime does pay. It turns out that if you steal a large amount of money that leads to the collapse of your institutions, there’s jobs for you somewhere else.
On the auditing the Fed process, for which Grayson, alongside Paul, had a major contribution in getting at least some partial disclosure from Bernanke:
Tim Geithner said when it was time to finish the bill on financial reform, he told people that his highest priority was to make sure – and this is the bill that was supposed to save America — to keep us from having a bail out — make sure that we didn’t have a total collapse of the economic system.
He said that his highest priority was to make sure that there was no auditing of the Fed! (laughs) So, in the fact of that kind of resistance, we were able to win and win big. I mean we have now the first independent audit and nothing really bad has happened so far. People were saying well if you audit the Fed, the economy will collapse. Hasn’t happened yet and I think that people are going to realize the Fed should be a responsible government body just like every other government body. We need to look behind the curtain and find out exactly what’s going on.
DYLAN: What do you think Tim Geithner is so afraid would be found?
REP. GRAYSON: I don’t know but I am sure that Tim Geithner didn’t want the Fed audited because Tim Geithner didn’t want Tim Geithner audited, he worked for the New York Fed, led the New York Fed for years before he became Treasury Secretary — and frankly it sounded a bit self serving to me that he said that.
DYLAN: And what do you and not just you but I’ll add Dr. Ron Paul to it — what do the two of you think was so important about auditing the Fed?
REP. GRAYSON: Well, what I think we are going to find is something that we’ve already have a little taste of here and there, which is that the Fed has made an enormous deals with entities like Citibank on terms that were completely unfair to the taxpayers. We got a little shred of information about that because one of those deals happened to be one involving the treasury, it has to be a released to us and we found that the Fed had assumed $238 billion dollars of liability from Citibank on mortgage back securities in exchange for nothing. I think we are going to find more deals like that and people are going to scratch their heads and say why are we doing this? Why are we allowing our money to be used in the secret bailouts of three or four or five or six institutions without people even finding out about it except for the fact that we pass this legislation to help to find out. The fed has been out of control now for quite a while and helping its friends at the expense of the rest of us.
DYLAN: And why are we doing that? Why are we – why have we accepted a system in your opinion that allows a relatively anonymous, highly secretive group of people to provide infinite access of money to people who not only create no apparent value but creates lots of apparent loss?
REP. GRAYSON: Because the banking system and the bankers, the people in charge of the system have created this meme that the Fed can do no wrong and it has to remain independent of everybody and everything. It is almost as if they believe that the Chairman of the Fed is the Wizard of Oz and it’s not true. I mean the Fed has the authority to create money but it should not have the authority to make the kind of deals that we’ve been seeing where they create massive liability off the books of their favorites while small community banks and small businesses suffer and get nothing. At one point we demonstrated that they had – lent so much money to the Central Bank in New Zealand that it corresponds to $4,000 for every single person in New Zealand. Wouldn’t it be nice if the Feds can extend that kind of credit to Americans?
And on Grayson's next steps:
DYLAN: Last question, whether you are serving in the United States Congress or not, you are a well-versed and well-educated man, you are a young man and you are a man of immense passion, and a very strong point of view and capacity to deliver impactful blows in the advocacy or the things that you believe most passionately in. Which is an extraordinary long way of my asking you, what are you going to do next to keep having an impact on American culture, American policy and the future of America’s development and eternal quest for fairness?
REP. GRAYSON: I don’t know but I will tell you that one of my personal heroes is Howard Dean because Howard Dean came within a few inches of the Presidency, and didn’t make it in a way that must have had some serious effects on his point of view of the kind of person he was and what he meant to the world. And after he lost and had gotten knocked down, he dusts himself up, picks himself up and gave the Democratic Party through his work with the DNC a majority in the House and in the Senate and ultimately the White House. So maybe there is no second act in America life or maybe there is, we will just have to see.
Full interview can be heard here.
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