The Story of the Only Bank Prosecuted Following the 2008 Economic Meltdown
Special to The Hawai‘i Herald
In 2008, America careened on the precipice of an economic meltdown that ultimately resulted in a $22 trillion loss to the American economy. The crisis had been fueled by a long era of cheap credit and free market deregulation that had ushered in a perfect storm of financial manipulation, outright fraud and predatory abuse that would have made the robber barons of the 19th century’s Gilded Age blush at its unabashed greed and brazenness. Virtually every major financial institution and big bank in the country was engaged in a feeding frenzy of issuing spurious home loans to unqualified borrowers and then selling those loans to unwary investors — but only after concealing their actual worth. In three years, over $4 trillion in fraudulent loans were issued, and when they defaulted — which they were guaranteed to do — the home foreclosure rate exploded by 555 percent by 2010.
The architects of this Hobbesian nightmare included Morgan Stanley, Citicorp, JP Morgan Chase and Goldman Sachs — institutions whose breadth and reach were so vast and pervasive that prosecuting them would have wrecked the global financial system and sent the world spiraling down into another Great Depression.