The Department of Justice refused requests to interview Breuer and Holder. Asked whether Raines will be indicted, a DOJ spokesperson wouldn't comment.

Another sign that Obama's administration has been slow to act is that Angelo Mozilo, Countrywide's chief during the heyday of predatory home loans, hasn't faced charges. Mozilo's case was merely channeled to the SEC for civil sanctions.

The SEC accused Mozilo and two top aides of selling $140 million in stock based on inside knowledge of the riskiness of credit that Countrywide extended; the firm told investors the loans were secure. A Mozilo email called one subprime loan "the most dangerous product in existence."

Financial criminologist Bill Black
Financial criminologist Bill Black
Joseph Cassano, AIG's most toxic asset
Keith Waldgrave/SOLO Syndication
Joseph Cassano, AIG's most toxic asset

You would think AIG's Joseph Cassano would also be prosecuted for securities fraud. As boss of AIG Financial Products, Cassano made ungodly amounts of money by selling credit default swaps. In fact, the AIG arm sold so many of these swaps it lost track. But it's clear the total was greater than the value of AIG, which was one of the world's largest companies. The deals choked AIG nearly to death, triggered the financial crisis of September 2008, and led to the biggest bailout of all: $182 billion to keep AIG afloat as an 80 percent government-owned company. A grand jury was reportedly convened to look at Cassano. The Department of Justice won't confirm or deny the existence of a probe.

The only real prosecution related to the subprime crisis came during the Bush era. Two Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, are accused of securities fraud for not telling investors in 2007 about the shaky nature of their fund — it was based on subprime mortgages — before it collapsed. While the act was typical of the times, the two are far from the top rungs of Wall Street. There seems to be little else going on in the justice process. Elite white-collar defense lawyers report no clamor for their counsel from major financial managers. Regulators talk of no demand for their services or evidence from prosecutors. As they say in the trade, there's no "buzz."


Bill Black looks more like a lumberjack than a scholar, criminologist, and bureaucrat. In 2005, he authored The Best Way to Rob a Bank Is to Own One, the definitive history of the S&L debacle as well as an insider's report. He is a legend among regulators, who faced down U.S. House Speaker Jim Wright and the "Keating Five" senators (including McCain), who fought to protect that corrupt industry, and also overcame stiff resistance from within the Reagan administration and from Keating. Wright, who later resigned in disgrace over ethics charges, called Black a "red-bearded son of a bitch." Keating hired detectives to get dirt on Black. When that failed, the thrift magnate told his Washington lobbyists to "kill him dead." Keating ended up doing hard time.

Black always has a big smile and a ready joke, but he burns with the intensity of an Old Testament prophet, especially against "control fraud," the lawlessness that emanates from the top of legitimate businesses; it causes bigger financial losses than all other forms of property crime combined, he claims. Corporations practice control fraud through crooked accounting and perverse compensation systems, using bonus formulas that lead executives to loot their companies rather than serve them.

Now an associate professor of law and economics at the University of Missouri-Kansas City, Black has continued the fight against fraud and for regulatory controls. He is a consultant for a gamut of agencies, from the FBI, where he trained agents in white-collar forensics, to the World Bank.

In 2007, the Office of Federal Housing Enterprise Oversight hired him to investigate the problems at Fannie Mae. His 70-page report plainly outlined how Raines and his lieutenants used "fraudulent accounting" and "perverse incentives." It claims they took "unsafe and unsound risks" that "collectively caused Fannie to violate the law and deceive its investors and regulators."

Almost two years before the financial crisis broke in late 2008, Black, the FBI, and others outlined the structural problems that would wreck the economy, but Washington did nothing and continued to exercise "regulatory forbearance." In fact, the crisis did not have to happen, and there was certainly no need for Washington's panicky response to it in fall 2008.

Black vents particular ire at Geithner, who, as New York Fed chair, fiddled while Wall Street imploded; Henry Paulson (and Geithner again), who, as Treasury secretary, refused to enforce a key banking law; and Alan Greenspan and Ben Bernanke, who, as Fed chairs, were supposed to regulate banks, especially the renegade mortgage units. The two Fed chairs closed their eyes to excess and continued to blow easy money into the bubble.

Toward the end of the Clinton administration, Washington caved to the financial lobby and passed laws that promoted risk. The old conservative banking model gave way to the sleek megabank casino, which was fine with the Fed. Bernanke, then a Fed regional governor, spoke in 2004 of the new "Great Moderation," which the industry took to signal a period of ultra-lax regulation.

That lack of oversight is what led Americans last year to lose 18 percent of their wealth — more than $11 trillion. The best way to retrieve at least a significant portion of this is through prosecution, followed by forfeiture. It's what we do when we catch money launderers and Ponzi schemers such as Madoff. It's retributive justice. It fills a social need as well as an economic one.

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