Tuesday, May 4, 2010

Where are the prosecutions?

Economist James K. Galbraith tells the truth about the financial meltdown:

"I think it’s fair to say that so far, what we’re looking at here is a failure of the rule of law."

To be specific:

"...the crucial act of denial in the banking sector, in my view, is that it has not come to grips with the extent of fraud, abuse, and failures of documentation that underlay the crisis in the first place. We know from the evidence that we’ve seenso far that there were massively fraudulent practices in mortgage origination—that these practices were abetted by the underwriters and by the ratings agencies, which declined and even refused to look at the underlying loan documentation. And I think the failure to confront that problem—which was covered over by the “stress tests” and the revision of market-to-market accounting rules—remains an unresolved issue."

Read the whole thing here. Long, but worth it.