As Joe Nocera reminds us today in the Times, “Not a single top executive at any of the firms that nearly brought down the financial system has spent so much as a day in jail. . . .What is also true, and which is every bit as corrosive to our belief in the rule of law, is that the Justice Department has instead taken after the smallest of small fry — and then trumpeted those prosecutions as proof of how tough it is on mortgage fraud. It is a shameful way for the government to act.” Nocera goes on to point out that “the last time the federal government went after corporate crooks” was when the Justice Department vigorously prosecuted the executives of Enron, WorldCom and Tyco. “Amazing, isn’t it?” Nocera asks. “George W. Bush has turned out to be tougher on corporate crooks than Barack Obama.” Yes, amazing indeed.

Whatever explanation is eventually offered for this administration’s failure to prosecute high executives–and one very much wants to know what Tim Geithner or Larry Summers or for that matter Eric Holder, the sherpa of the Marc Rich pardon contributed to this discussion–this much is clear: if President Obama loses this election, the failure to hold financial titans legally, financially and morally responsible for this financial meltdown will be the factor that will have cost him re-election. His failure to channel voter anger in 2009 and 2010 cost him an enormous amount of political support and opened the door to the Tea Party movement. And now his failure to find people to blame for our predicament means that he has left himself wide open for the voters to put the blame on him. Even when mounting heads on pikes ameliorates not an ounce of suffering, it comforts the common people to see evidence that king is working on the problem.

It’s an odd strategy that the president has chosen. Obama’s team is trying to sully Mitt Romney through Bain, although Bain, for any and all the vulture capitalist sins it may have committed, is not at all connected to our current predicament. Meanwhile, Jamie Dimon loses another couple billion in a risky bet, and he still sits on the board of the New York Federal Reserve.

It’s a hard thing to swallow, but we need to face it: the president has shown himself to possess the courage to order Navy Seals to kill Osama bin Laden and to use drones to obliterate suspected terrorists, but he hasn’t shown that he has the courage to look in the eyes of the bankers and financiers who are his cultural peers and who have contributed to his campaigns, and to tell them “We are coming after Too Big To Fail, and we are coming after you.”


Just in time for tax season comes the report in yesterday’s New York Times that the top 25 hedge fund investors earned a collective $25.3 billion (with a B) in 2009. This includes seven who earned more than $1 billion, one of whom, David Tepper of Pittsburgh (pictured), earned a record $4 billion. “We bet on the country’s revival,” Tepper told the Times, “Those who keep their heads while others are panicking usually do well.”A perfect blend of patriotic and self-satisfied.

Let’s see if I’ve got this sequence straight: Government deregulates the financial industry, allowing banks to take on more and more debt until the the pile collapses of its own weight. Hedge fund operators, notably John Paulson, fourth on the list, earner of $2.3 billion (up from $2 billion the year before), who made a lot of money shorting the stock of the weak banks, but exacerbating the liquidity problems of the entire system. Then with the entire system verging on collapse, the government comes in, and using public money through the Troubled Assets Relief Program (TARP) and especially PPIP, the Public Private Investment Program in which the government set up risk-free opportunities for investors, and rescues the banks and saves the economy. In other words, the government used its money to rescue the system, to the enormous profit of a small group of hedge fund managers.

It’s a funny old world: government laxity allows one group of pirates to make fabulous fortunes slicing and dicing debt in an outrageous form of financial alchemy, and when that group of pirates gets too greedy for its own good, the government steps in a saves the big casino for another group of pirates, hedge fund operators who make their money, not by investing, not by building, not by sustaining the economy, but by gambling on short term market movements and playing bookie for the highest of high rollers.

So here’s a question for President Obama and our representatives in Congress: why does a man who makes $4 billion get taxed at 35%, the same rate as that same person who makes $373,650? There was a time when the highest tax rate was set at 90%. On the face of it, 90% sounds outrageous, but it applied to a mere handful of people, Rockefellers and so on, who earned massive amounts of money. Why can’t the government, which helped create the mess and which then created the conditions for this fantastical profits, claw the money back, and set a 90% tax on everything earned above, say $250 million?

A little more than a year ago, the country got up in arms because some executives at AIG were paid bonuses that they legally and properly owned. They had the bad luck to get caught up in a rising tide of emotion. Where is the outrage over these windfall billionaires? There was a time, centuries ago, when governments sent troops against the scavengers who made off with the goods that came ashore when ships ran aground in storms. This time, the government helped create the storm, and has helped deliver the goods to the scavengers. Where is the outrage?