Gretchen Morgenson: Wall Street Really Does Enjoy A Different Set of Rules Than The Rest of Us

Tyler Durden's picture


Gretchen Morgenson: Wall Street Really Does Enjoy A Different Set of Rules Than The Rest of Us

Gretchen Morgenson has earned a Pulitzer-winning career from exposing abuse and conflicts of interest on Wall Street. In this interview, she confirms that there is indeed a second set of rules that our elite financial institutions enjoy, largely unfettered by the constraints that apply to the rest of us.

Consequences for failure and fraud are very different under this second set of rules - in fact, they're practically rewarded.
 Accountability, by all prudent measures, has become non-existent. The extraordinary measures the country deployed to deal with the great contraction in 2008 only served to exacerbate these imbalances.

What's sorely needed now is a national dialogue on whether we're willing to allow this to continue. What benefits are we receiving by enabling these elite to enjoy such different standards? What type of system and rules might work better for our interests?

Sadly, beyond the disorganized OWS outrage that has waned in visibility, there is no real cogent, organized public debate focused on this right now. A big reason is that Washington is actively avoiding such a dialogue. It was fundamentally complicit in creating the underlying factors resulting in the '08 collapse and it doesn't want brighter light helping the public understand that more clearly.

As a populace we have a decision to make: are we going to get more engaged and start articulating the reform we want to see? For if not, we're making a passive decision to allow the wealth gap to widen further.

In the meantime, Gretchen sees a lot of instability in financial markets that have been allowed to balloon further even though the underlying causes of the '08 crash haven't been resolved. She cautions investors to avoid risk (despite the Fed's encouragements), pay down debt, and have a defensive plan in place should the markets suffer another serious correction in the near future.

On The Two Sets of Rules

Honestly, the transfer of wealth that has been created, that has been taken from the saver -- and from the taxpayer, do not forget -- to “mend the financial system” or to keep it from falling off the cliff, is extraordinary.


When you talked about savers, these are the people as you point out that really had nothing to do with the crisis. They were in fact, doing the right thing, not buying more house than they could afford, putting away money for college education, etc. They are the ones who are really paying the price now.


I think that has led to a very angry populace but also a sense that there are two sets of rules in the country. That one set applies to big and powerful institutions that when they go awry are rescued quickly. Then there is another set of rules for the rest of us who do what we are asked to do, do what we are supposed to do, and really then become victims of the situation. It is very unfortunate and I think it is, as you say, corrosive. 

On The Lack Of Accountability

The idea that forging signatures, that notarizing very important legal documents really improperly in thousands of cases -- maybe millions -- the idea that that is somehow is going to be allowed to go on with just sort of a penalty of some kind or a fine and not prosecuted in the criminal courts, I think it is amazing. It is really counter to what we have all been led to believe was the course of action in such a case.


You have many small people, small fry mortgage fraudsters who are in jail. I mean we are talking about the people who were straw buyers for homes who defrauded banks. They are in jail for a reason: because they perpetrated a fraud. These banks whose employees were forging signatures should also have been prosecuted with vigor and they were not. They were simply allowed to negotiate their way out of trouble and negotiate their way with shareholders money. They are not paying it out of their own executives' pockets; they are paying it out of the shareholders' pockets. There really is no accountability here whatsoever.


There were 1,100 criminal referrals in the S&L crisis and there were 839 convictions. That is a sizable number and far, far, far more than we have seen. I mean I think I can name one senior level person at a mortgage company who is in jail at the moment 

 On The Need For A National Dialogue

I am shocked that it has not led to a really honest dialogue already, this crisis, because it was so large and so devastating and it hurt so many people that I thought 'Wow, this is really it. This is going to force the issue to be brought in to the open, to be discussed intelligently and to be resolved'. It just has not been.


I mean I lay it at the feet of Washington because I think they were crucially involved in the crisis in the years leading up to it. There is a reason why they do not want to deal with it. There is a reason why they do not want vigorous investigations because it could very well lead back to an understanding that they were major contributors to the crisis.


You have this weird disconnect where the populace at large, many people are angry and concerned and discussing and dialoguing as you say on the Internet and in coffee shops. Washington: it just rings hollow for them. They just do not want to address it. This is the failure I spoke of earlier about how no dealing with Fannie Mae and Freddie Mac. No resolution for the big banks that are too big to fail. It is a deep, I think, dysfunction in Washington that may be a result of their understanding of how deeply involved they were in laying the groundwork for the crisis. 

On Remaining Market Risk


The resolution to this crisis was supposed to be the Dodd-Frank Legislation of 2010. Unfortunately, it was I think not even close to what was needed to proscribe this kind of thing from happening. Again I think that first of all, Dodd-Frank did absolutely nothing about Fannie Mae and Freddie Mac. It was completely silent on those mortgage companies who were very central to the problems and are in to the taxpayer for $183 billion dollars. The fact that it was silent on that issue is very, very important to remember. We have no resolution in place, no suggestion of one for either of those companies.


The second thing that I think is a big failing of Dodd-Frank is that it did nothing about too big to fail institutions.
That’s the powerful, politically interconnected financial institutions are not allowed to fail when they get in to trouble. If it had been me, I would have liked to have seen something that cuts these institutions down to a more manageable size and yet we did not force that on them at all. In fact, if you take a look at the assets at the top ten banks in the United States they are bigger; they are larger than they were before the crisis.


Those are two elements that I think have absolutely not been dealt with that leave us really vulnerable to another episode like this in the future. 


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lolmao500's picture


Gretchen Morgenson: Wall Street Really Does Enjoy A Different Set of Rules Than The Rest of Us

No really???? Thanks much captain obvious.

WestVillageIdiot's picture

One walk through the Financial District and you will understand that they also have their own private police force.  It is called The NYPD. 

markmotive's picture

Welcome to the party Gretchen.

Here are 7 ways we've been silently screwed over:

GetZeeGold's picture



The masses are becoming we have no choice.


We're declaring Muppet Law.


The Big Ching-aso's picture



If the pen is a sword this is a 1" pocket knife.   But it still cuts.

disabledvet's picture

More like "phuck it" law. Are there any enforcement provisions left?

Shocker's picture

Different rules for different groups. As the little guy struggles, the other are making more money.



LawsofPhysics's picture

Good for them, being a veteran I'd like to think that I have access to a much larger and better connected force of brothers and sisters in arms.  Fuck New York.  Why people continue to rule out the possibility of a military-style coup in the U.S. is beyond me.

UP Forester's picture

Same old shit that nobody can smell.


"It'll never happen here."

Crab Cake's picture

The nypd do not hqve us out manned or outgunned. They will pass as leaves before the wind when they attempt to stop a determined foe.

Big Slick's picture

Thumbs down to the comments on how obvious the headline is.  Though the average ZH reader knows this, it apparently has NOT resonated with the public-at-large, and thus needs to be repeated... not repressed.


fiddy pence haff pound's picture

repeated in as many creative forms as is possible, until sth changes

this nightmare scenario which is unfolding now.

those who think this stuff is too obvious owe us a workable solution to that

problem. Let's see hoe clever they are.

amadeusb4's picture

Repeated on Fast Money, YES. Repressed on ZH, also yes. Your own post came to this conclusion so why with the admonishing?


goldfish1's picture

The nypd do not hqve us out manned or outgunned.

Masses will bring out the crowd control weapons. Individual are less easy to herd. 

max2205's picture

Big Duh

The fact the republican race never demands jail time for banksters
Tells me the fix is still in

WestVillageIdiot's picture

Obama, Holder, Reed and Pelosi are Republicans?  I never knew.

TheFourthStooge-ing's picture

They're all just one corrupt party. They pretend to be two parties because it cultivates the illusion of choice among voters.


Big Slick's picture

Agreed.  Partition of the sort propogated by Max2205 obscures the fact that this is a systemic problem among all the current parties and not the responsibility of 'Republican' or 'Democrat.' 

I would imagine the next page in the partisan playbook would be to move on to the next vapid point and not acknowledge the inconvenient truth posed by West Village Idiot (nice point).




WestVillageIdiot's picture

What was I partitioning?  I was replying to the post above mine that was doing that.  It was that poster that was trying to turn this into  a Republican or Democrat problem.  I was trying to point out that they all suck, suck the big one, from top to bottom.

WonderDawg's picture

Reread his post, WVI, he was supporting your point.

eatthebanksters's picture

I wrote the following comment (more or less) after reading another recent article on ZH...What everyone needs to consider is why the politicians are doing nothing with respect to the big banks.  The financial industry has grown so concentrated that a few very large companies control enough money to basically sway any electoral outcome.  Yes, they have the power do donate untold millions (and possibly more) as a group to campaign coffers, unions and/or SuperPAC's and by doing so influence election outcomes.  Don't think the politicians don't know this.  The bankers also know that whenever there is a split congress or congress and exectuive branch, the banks will rule.  The only thing the financial industry fears is a Congress and White house that is all owned by one party.  During a period where the government is run by split parties, the banks keep the pols in line by letting them know that if the pols go against them, they will support the other party.  Hence, neither party goes after the Big Banks.  When you have one party controlling both houses of Congress and the White house, it give the pols a two year period to implement financial reform.  Obama, Pelosi and Reid had this chance right after the big debacle and obviously failed.  There are two questions going forward into the 2012 elections:  Can the Republican Pary win it all?  If they do WILL THEY DO SOMETHING TO BREAK UP TEH TBTF BANKS AND THEIR CORRUPTING INFLUENCE?  I guess time will tell, but I'd like to see one journalist start asking the candidates about where they stand on this issue. 

WonderDawg's picture

So you still think we have two parties, eh? Quaint, but false. We have one party with two different colors, both colors owned by the banksters. Make no mistake, a dem costs the banks the same as a repub, and they buy them both, thus why neither party does jack shit. They are owned. Supporting the myth that there are still two parties only perpetuates the problem.

Wake up.

rayduh4life's picture

When everyone is guilty, no  one is. 

Goldilocks's picture

...some are waaaay more special (guilty) tho!!!

LongSoupLine's picture

Make that "three"...even the formation of the "tea party" was a distraction to the lemmings.  Give the restless/outraged public the illusion of a third party of the people...genius.

Crab Cake's picture

It makes me happy that someone is calling it like it is, but I since a certain naivete. The light isnt brighter, and justice not done, bc the rot leads right to the very top. Corruption, open and blatant, is the rule not the exception now. This deep corruption leads to some very dark places. If both parties, and their politicos, are taking their marching orders from corps/bankers and the like how can the people be represented? Can this be a Republic if the people arent represented? Is not representation, or lack there of, just cause for revolution?

Having been here a while now it never ceases to amaze me how slow things move; I guess until they dont. The reason a false flag, and ww3, is coming is because slowly people will start to understand, and those in power will do anything to stop this realization from fully developing.

The truth is there is no just reason to be beholden to police who dont enforce the law equally, to pay taxes to a government in which you are not represented, or not to revolt
against a federal government that has destroyed the founding document and compact with the people upon which its power is based.

We have an opportunity, a small window, to act against burgeoning tyranny; right now. Most of you are too tied up in the system or too afraid, but the window is open right now ever so briefly.

t_kAyk's picture

I agree.  It's always nice to hear someone "calling it like it is", but how much longer can we rely on words alone?  The time to say no and disconnect from the system has come and gone, action is required now more than ever.  The kind of progress or revolution that we frequently discuss here on ZH is not welcome in this environment, therefor it will not only be slowed to a crawl, it will be poisoned at any given chance so that it is paralyzed and eventually dies. 

I believe in the power of ideas, but the only thing that TPTB understand is action. 

"Resolve to serve no more, and you are at once freed. I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer; then you will behold him, like a great Colossus whose pedestal has been pulled away, fall of his own weight and break into pieces."  ~ Boetie

Crab Cake's picture

Agreed. We need action, and I dont mean out of work college kids and hippies living in parks. A peaceful armed march to DC to demand a constitutional convention. A public petition refusing to pay taxes until demands are met would be good too. A nationwide workstrike. It would not take large percentages of the population to cause a real ruckus if any of these were chosen. Im willing to face death and imprisonment. Ive had it, and Id rather die on my feet. Im mad as hell and Im not going to take it anymore.

dark pools of soros's picture

it will and always be about control of money. so we are programmed that only the banks are safe with your money..

  the news reminds everyone to be scared and suspect their neighbors.. to amplify everyone's vices so they act against each other for their own gain.. 

it does sound corny, but if peoples' dopamine only worked with true love of thy neighbor and not with the easy shorcuts of a million vices, evil would fade away

Caviar Emptor's picture

When powerful groups begin to lose their status and their source of wealth is threatened, they react by going on the offense. And yes, unreasonable things can happen. That was the basic story of many toppled governments, including the death of Weimar in the 1930s. 

Gully Foyle's picture

Militant: Dig it, dope peddler. We're out here building a new nation for black people. It's time for you to start payin some dues, nigga!
Youngblood Priest: I ain't givin' you shit! I'll tell you what you do, you go get you a gun and all those black folks you keep doin' so much talkin' about get guns, and come back ready to go down, then I'll be right down front killin' whitey. But until you can do that, you go sing your marching songs some place else. Now we're through talkin'.

[Black Dynamite walks into the militant group's hideout]
Black Dynamite: Excuse me, brothers.
Militant #3: [Gets up] The militants turn, startled. This is private. How'd you get in here?
Black Dynamite: I walked in.
Militant 2: So you one of them sneaky brothers, huh? Or maybe you an undercover pig. Or maybe you just a federal hitman.
Black Dynamite: If I was, you cats would already be dead. Now let me speak to the man in charge.
Militant #3: Sarcastically, I'm in charge.
[Exchanges hi-fives with the other militant]
Black Dynamite: If you were in charge, the people might as well surrender to whitey right now, because your survival skills ain't worth a damn.
Saheed: Black Dynamite.
[Walks into the room]
Saheed: It's been a long time, my brother.
Black Dynamite: [Exchanging hi-fives with Saheed] What it is, Saheed?
Militant 2: You know this Uncle Tom?
Black Dynamite: Listen sucka, I'm blacker than the ace of spades and more militant than you and your whole damn army put together. While you out there, chanting at rallies and brow-beating politicians, I'm taking out any money-fronting sucka on a humble that gets in my way. So I tell you what, when your so called revolution starts, you call me, and I'll be right down front showing you how it's done. But until then, you need to SHUT the FUCK UP when grown folks is talking.
Militant 2: I'm sorry.
Saheed: Yeah, we heard about what went down at the Hip Pocket. That was righteous.
Black Dynamite: That was personal, brother.
Saheed: Personal or not, you saved a lot of brothers and sisters. You need our help,
[pounds chest with right fist]
Saheed: we're here.
Black Dynamite: I can dig it.
[Black Dynamite pulls the bullet casing from his pocket]
Black Dynamite: What can you tell me about this?
[Saheed takes the casing, sniffs the inside for gunpowder and licks the outer casing]
Saheed: I ain't seen one of these in a while.
[Black Dynamite and Saheed walk out of the room]
Militant 2: [Whispers] I was gonna fuck him up.

Goldilocks's picture

"What fresh hell is this?"

chubbar's picture

NO, we don't need a fucking constitutional convention! We need to enforce the completely ignored constitution we have right now! Why the hell would you open the constitution for revision knowing that every politician, save a handful, is completely owned by the bankers??? You think that would turn out well? Christ, start thinking before spouting that nonsense. TPTB would LOVE a fricking CC just so they could grandfather in all the unconstutional shit they've been doing the past decades! We need to demand that our politicians comply with the oath they took when they were placed in office or get them the hell out of there.

Lednbrass's picture

Agreed, the one we have is excellent if anyone paid attention to it anymore. A new one would never work, there is little to no common ground on what we want moving forward. If we arent going to use whqat we have it makes more sense to split up into 3 or 4 regions and allow each to rewrite their own.

Offtheradar's picture

Russell Crowe: "The time for talk and half measures is over."  Enough said.

Think for yourself's picture

"THE METROPOLIS IS A TERRAIN OF CONSTANT LOW-INTENSITY CONFLICT, in which the taking of Basra, Mogadishu, or Nablus mark points of culmination. For a long time, the city was a place for the military to avoid, or if anything, to besiege; but the metropolis is perfectly compatible with war. Armed conflict is only a moment in its constant reconfiguration. The battles led by the powers resemble a kind of never-ending police work in black holes of the metropolis, "whether in Burkina Faso, in the South Bronx, in Kamagasaki, in Chiapas or La Courneuve." No longer undertaken in view of victory or peace, or even the re-establishment of order, such "interventions" continue a security operation that is always already at work. War is no longer a distinct event in time, but instead diffracts into a series of micro-operations, by both military and police, to ensure security."

- The Coming Insurrection, randomly selected passage

Don't be mistaken. Even if it is not obvious on the surface, it has been a while that the merger of the Military-Industrial Complex and the Paramilitary-Counterterrorism complex have merged their operations in a single goal of ensuring the security of CoG. The insurrection has been going on for a long time, and if you make the mistake of thinking it is not then of course you might get discouraged. But that might just be because you're not thinking straight.

The nature of the security state prohibits the masses from overorganizing. Organizing is good to get motivated, informed and moving, but once you get moving you need to eliminate as many factors that make you dependent on the masses as possible. Of course you won't be hearing about lone wolf insurrectionists.
I cannot recommend reading this book too highly: 
 The Coming Insurrection 

Neo1's picture

Returning to real money is the best revenge against the Wall Street Banksters.

The real reason you pay an income tax, is for the privilege of using a private currency.

Also known As A:  Federal Reserve Note

Demand from your bank or brokerage, lawful money and the tax goes away, with a tax exemption on lawful money, all of your money is yours.

Tax Exemption:

Web search these three different phrases:

Redeemed in Lawful money  or

Redeemed in Lawful money Pursuant to Title 12 USC §411  or

deposited for credit on account or exchanged for

non-negotiable federal reserve notes of face value  

Sequitur's picture

Away with you, witch. This is God's work. Thine is not to question . . . .

ArkansasAngie's picture

I'm sorry the sarcasm hits me wrong. I am pissed and I want it his crap to stop. I'm willing to do my part. I will vote. I will write.

I've got a fine selection of pitchforks for sale

Global Hunter's picture

if you get any bids for your pitchfork(s), settle the trade in silver, ammo or canned goods :) 

Crab Cake's picture

You want change? Its going to take more than you bloviating and selling farm goods. Our founders risked life and fortune, how about you?

JustObserving's picture

The SEC and the CFTC and Congress are owned by Wall Street.  The only rule that Wall Street follows is "Make Much More Money than the Muppets"

WestVillageIdiot's picture

The anarchists aren't at Zuccotti Park.  They are 2 blocks east. 

LawsofPhysics's picture

Timing is everything and all things that cannot be sustained, won't.  Same as it ever was.  How long can this go on, place your bets in the "assets" you hold.

carguym14's picture

Well,maybe if we didn't constantly re-elect the same c0cksuckers over and over Washington might listen.

Maybe if Ron Paul was the rule and not the exception.

Maybe if Jane Seymour was sitting on my lap...........

HD's picture

Jane Seymour is 61...with respect, it's time for a new fantasy.