Now take the vampire aspect: vampires draw the lifeblood from their living victims sometimes making the victims act like vampires also. Vampires are often charismatic and sophisticated--qualities that Goldman attributes to itself. But vampires are evil and malevolent in their actions. Occasionally they become like zombies or the living dead (until revived by bailouts!). The only way to destroy a vampire is to thrust a wooden stake through its heart. Vampires cannot be coddled and supported and forgiven for their vile actions. Vampires live necessarily in the dark and love the opacity that darkness provides and the secrecy it gives for their nefarious activities.
But, you say, no one wants to put a stake in the heart of this bank because it will kill the bank! No one wants to hive off some of those tentacles that cause grave harm to victims because it will maim the creature, but saving the "creature" will ruin its surroundings and its victims. What can be done?
The Government Has It Bass-Ackwards: Failing to Prosecute Criminal Fraud by the Big Banks is Killing--NOT Saving--the Economy
By Naked Capitalism and WashingtonsBlog
Cross posted from Washington’s Blog
U.S. Attorney General Eric Holder said today:
I am concerned that the size of some of these institutions [banks] becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economyAs we’ve repeatedly noted, this is wholly untrue.
If the big banks were important to the economy, would so many prominent economists, financial experts and bankers be calling for them to be broken up?
If the big banks generated prosperity for the economy, would they have to be virtually 100% subsidized to keep them afloat?
If the big banks were helpful for an economic recovery, would they be prolonging our economic instability?
In fact, failing to prosecute criminal fraud has been destabilizing the economy since at least 2007 … and will cause huge crashes in the future.
After all, the main driver of economic growth is a strong rule of law.
Nobel prize winning economist Joseph Stiglitz says that we have to prosecute fraud or else the economy won’t recover:
The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future.
I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That’s the point. There were victims all over the world.
Economists focus on the whole notion of incentives. People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.
Indeed, professor of law and economics (and chief S&L prosecutor) William Black notes that we’ve known of this dynamic for “hundreds of years”. And see this, this, this and this.