29-05-2012, 08:18 PM
AMY GOODMAN: With election season heating up here in the United States, the economy remains a crucial focus of the presidential campaign. Earlier this month, the Justice Department opened a criminal probe into a $3 billion trading loss in risky derivatives at financial giant JPMorgan Chase, the nation's largest bank.
Meanwhile, investors have launched a class action lawsuit against Facebook, Morgan Stanley and other banks that underwrote the tech giant's public offering, claiming the companies misstated facts and concealed relevant information about Facebook's financial prospects. Plaintiffs say they have lost more than $2.5 billion as Facebook shares plunged in the days after the company went public. Another lawsuit has reportedly been filed in California. Regulators, including the Securities and Exchange Commission, say they plan to probe issues relating to the offering. Salvatore Graziano, an attorney for a plaintiff, said investors were misled.
SALVATORE GRAZIANO: When you go public, when you raise money in the market, you are required to disclose material information. Here, what apparently happened, what's being discussed, is that there was information put in the prospectus which was vague. And then, separately, people at Facebook, allegedly, were talking to Morgan Stanley and the other underwriters, giving them more information, adverse information. And that's what these cases are about.
AMY GOODMAN: Well, our next guest asks why so little has changed in the banking industry in the nearly four years after the global economic collapse of 2008. Academy-Award winning director Charles Ferguson first examined the network of academic, financial and political players who contributed to the nation's financial crisis in his documentary Inside Job. Charles Ferguson now has a new book out called Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. It's based on newly released court filings that reveal how major players contributed to the financial crisis.
Charles Ferguson, welcome to Democracy Now! JPMorgan Chase, the missing $3 billion, Facebooktalk about these latest developments in the context of a predator nation.
CHARLES FERGUSON: I think that they're an indication, a symptom, of the fact that the financial sector in the United States remains out of control and is not sufficiently regulated, and also not sufficientlyindeed, almost not at allsubject to criminal prosecution when it violates the law. So, I think that we unfortunately can expect to see a continuation of this kind of behavior.
AMY GOODMAN: Talk aboutwhat is so fascinating in Predator Nation is looking at the academic part of the network that you talk about misleading us, the ivory tower.
CHARLES FERGUSON: Yes, this is a problem that I think many Americans remain unaware of. I was quite struck when my film was released that most people who saw the film and spoke with me afterwards commented that the section on the economics discipline was the most surprising and shocking to them. What has happened is that over the same period of time, roughly the last 30 years, that money has become so much more important in American politics, it has also become more important in American academia. And the same interest groups, companies, industries, that began contributing to political campaigns and building up lobbying organizations and engaging in revolving-door hiring in the political sphere also began doing the same thing in American academia, to the point that now there is actually an industry, an industry that's probably a couple of billion dollars a year, of selling academic expertise for people who have public policy or legal or law enforcement problems.
AMY GOODMAN: Charles, let's go to a clip of Inside Job that deals with this, the links between academics at elite institutions in the U.S. and the financial industry. Here you talk to economics professors at Columbia as well as at Harvard.
CHARLES FERGUSON: Over the last decade, the financial services industries made about $5 billion worth of political contributions in the United States. That's kind of a lot of money. That doesn't bother you?
MARTIN FELDSTEIN: No.
MATT DAMON: Martin Feldstein is a professor at Harvard and one of the world's most prominent economists. As President Reagan's chief economic adviser, he was a major architect of deregulation. And from 1988 until 2009, he was on the board of directors of both AIG and AIG Financial Products, which paid him millions of dollars.
CHARLES FERGUSON: You have any regrets about having been on AIG's board?
MARTIN FELDSTEIN: I have no comments. No, I have no regrets about being on AIG's board.
CHARLES FERGUSON: None?
MARTIN FELDSTEIN: That I can say. Absolutely not. Absolutely not.
CHARLES FERGUSON: OK. You have any regrets about AIG's decisions?
MARTIN FELDSTEIN: I cannot say anything more about AIG.
GLENN HUBBARD: I've taught at Northwestern and Chicago, Harvard and Columbia.
MATT DAMON: Glenn Hubbard is the dean of Columbia Business School and was the chairman of the Council of Economic Advisers under George W. Bush.
CHARLES FERGUSON: Do you think the financial services industry has too much political power in the United States?
GLENN HUBBARD: I don't think so, no. I certainlyyou certainly wouldn't get that impression by the drubbing that they regularly get in Washington.
MATT DAMON: Many prominent academics quietly make fortunes while helping the financial industry shape public debate and government policy. The Analysis Group, Charles River Associates, Compass Lexecon, and the Law and Economics Consulting Group manage a multi-billion-dollar industry that provides academic experts for hire. Two bankers who use these services were Ralph Cioffi and Matthew Tannin, Bear Stearns hedge fund managers prosecuted for securities fraud. After hiring the Analysis Group, both were acquitted. Glenn Hubbard was paid $100,000 to testify in their defense.
CHARLES FERGUSON: Do you think that the economics discipline has a conflict of interest problem?
GLENN HUBBARD: I'm not sure I know what you mean.
CHARLES FERGUSON: Do you think that a significant fraction of the economics discipline, number of economists, have financial conflicts of interests that in some way might call into question or color
GLENN HUBBARD: Oh, I see what you're saying. I doubt it. You know, most academic economists, you know, aren't wealthy business people.
MATT DAMON: Hubbard makes $250,000 a year as a board member of MetLife and was formerly on the board of Capmark, a major commercial mortgage lender during the bubble, which went bankrupt in 2009. He has also advised Nomura Securities, KKR Financial Corporation and many other financial firms.
AMY GOODMAN: That was a clip of the Oscar-winning documentary Inside Job, narrated by the actor Matt Damon. Our guest is Charles Ferguson, who's followed up this film with Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. Now, can you talk about how these academics, who also become pundits on television, which is a lot of how people come to understand the issues, missed the financial crisis of 2008, certainly didn't predict it, but they were profiting from it, Charles Ferguson? And bring in Larry Summers when you're talking about all of this, who was formerly the president of Harvard.
CHARLES FERGUSON: Yes. Unfortunately, Larry Summers, who I've known slightly for a very long time, is kind of Exhibit A with regard to this phenomenon. So, there is nowthe revolving door is now a kind of three-way or triangular affair involving academia, politics and policy positions, and major industries, and financial services is probably the most important of them. Slightly behind would be energy and telecommunications.
Larry Summers, first as an academic and then as a senior government officialby this point, he's held almost every senior policy position in economicsargued strongly for and participated in a very serious way in the deregulation of the American financial services industry. After he left the Clinton administration, where he eventually became secretary of the Treasury, he became president of Harvard. And even while serving as president of Harvard, he began making large numbers of speeches to financial organizations for very high rates of pay. And also, he began consulting for hedge funds. After he was forced out as president of Harvard, he increased his consulting activities, earning $5 million a year for one day a week of work at a hedge fund called D.E. Shaw, and making over a million dollars a year giving speeches to financial organizations. And at the same time, he continued to participate in policy debates. And most famously, in 2005, he was president at the Jackson Hole conference, which is the most important annual conference of central bankers in the world. And at that conference, Raghu Rajan, who was thenhe's a very famous economist who was then the chief economist of the IMFdelivered a paper in which he warned about the growth of risk in the financial services industry and the potential for a catastrophic economic meltdown as a result of increased risk taking in finance. And Summers, at the end of Rajan's presentation, stood up and very, very brutally criticized him and dismissed all of his concerns.
So, there have been many other examples of other people who have engaged in similar behavior. Glenn Hubbard is certainly one. Glenn Hubbard is now a senior economic adviser to the Romney campaign. It's unfortunately become a completely bipartisan issue. Economists who support both political parties have very strong financial ties to the financial services industry and have continued to support deregulation.
AMY GOODMAN: Now, you make a really critical point when you won the Oscar at the 83rd Annual Academy Awards. You won it for Inside Job. In your acceptance speech, you drew applause after calling for the jailing of financial executives.
CHARLES FERGUSON: Forgive me. I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that's wrong.
AMY GOODMAN: What crimes were committed, Charles Ferguson? What should executives be put in jail for?
CHARLES FERGUSON: It's a very long list. Certainly at the top of the list would be securities fraud, accounting fraud and Sarbanes-Oxley violations. Securities fraud is precisely what the name implies. If you sell a security, but you lie about it or you omit material information, that's a crime. And we now know that a very high fraction of the securities that were constructed and sold during the housing bubble and that led to the financial crisis were in fact sold fraudulently, that the mortgage lenders and the investment banks that created, structured and sold them did not tell the truth when they were doing so. And those were very, very significant lies and misrepresentations. And late in the bubble, a number of banks and investment banks began not only selling fraudulent securities, but creating and selling securities for the purpose of betting against them, by profiting on their failure. And that also involved a great deal of dishonesty. And there has not been a single criminal prosecution with regard to that conduct.
And following that would be accounting fraud. We now know that many of the lenders and investment banks were dishonest about their own financial positions, concealed the potential size of their losses. The housing bubble was, in effect, a Ponzi scheme, and like all Ponzi schemes, it eventually had to end. And when it ended, of course, we saw the result in the 2008 crisis. And many people, it's now clear, knew that it was going to end that way and knew that their own financialtheir own firms', their own companies' financial positions were going to be catastrophically affected and lied about it to the public.
And then, third, the Sarbanes-Oxley law requires the CEOs and chief financial officers of banks, all public companies, to certify their financial reports and also the adequacy of their own internal financial controls. And we now have extensive evidence that the senior managements of a number of the banks and investment banks were extremely, explicitly warned that their financial controls were inadequate and that their accounting was fraudulent, and yet they continued to certify their financial reports. And there has, again, not been a single criminal prosecution for such violations.
AMY GOODMAN: Charles Ferguson, the Obama administration has rationalized its failure to prosecute any senior financial executives by saying their behavior wasn't actually illegal. This is a clip of President Obama speaking at a White House news conference in October.
PRESIDENT BARACK OBAMA: Well, first on the issue ofon the issue of prosecutions on Wall Street, one of the biggest problems about the collapse of Lehman's and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn't necessarily illegal, it was just immoral or inappropriate or reckless. That's exactly why we needed to pass Dodd-Frank, to prohibit some of these practices. You know, the financial sector is very creative, and they are always looking for ways to make money. That's their job. And if there are loopholes and rules that can be bent and arbitrage to be had, they will take advantage of it. So, you know, without commenting on particular prosecutionsobviously, that's not my job, that's the attorney general's jobyou know, I think part of people's frustrations, part of my frustration, was a lot of practices that should not have been allowed weren't necessarily against the law, but they had a huge destructive impact.
AMY GOODMAN: Charles Ferguson, your response to President Obama?
CHARLES FERGUSON: President Obama is wrong. And at this point, it's very difficult for me to to believe that he doesn't know that he's wrong. We now have publicly available evidence, through a combination of lawsuits, government investigations and whistleblowers, that there was extensive and highly illegal conduct in the housing bubble and the financial crisis.
AMY GOODMAN: Explain further.
CHARLES FERGUSON: Well, as I mentioned a couple of minutes ago, you know, we now know that there was extensive securities fraud. We know that there was extensive accounting fraud. We know that there were extensive Sarbanes-Oxley violations.
To give just one example among many, in May of 2008, a man by the name of Matthew Lee, who was a senior vice president at Lehman Brothers, hand-delivered to four senior Lehman executives, including the chief financial officer, a memo, which I quote in my book, which is available on the webif you Google "Matthew Lee Lehman," you will find itin which he says, "I feel that it is my ethical and legal responsibility to point out to you that there are billions of dollars of unjustified assets on our balance sheet." And he goes on to say, in some detail, in this memo that his concerns are very serious and that he feels that he absolutely must bring them to the attention of senior Lehman executives. He also says that he had been a loyal Lehman employees since 1994, which he had been. And that's justthat's one example. The CFO and CEO of Lehman continued to certify Lehman's financial statements and the adequacy of its internal financial controls up until a few days before Lehman went bankrupt. They have not been prosecuted. Neither has anybody else. And there's a great deal of now publicly available information, from depositions in lawsuits, subpoenas, etc., that makes it extremely clear that there is overwhelming evidence of massive criminal behavior. And there has not been a single criminal prosecution.
AMY GOODMAN: Charles, you write that a predator elite has taken over this country. How have they done it?
CHARLES FERGUSON: Well, luckily, I think it's too strong to say that they've taken over the country, but they certainly have taken over significant portions of economic policy and of the political system, and also, unfortunately, major portions of the economics discipline. And I think that this has its roots in the late 1970s and the early 1980s, when America first began to encounter economic difficulties and when deregulation first started in earnest in the Reagan administration. And since that time, we've seen a steady and dramatic growth in the use of money to influence politics and also academia. The cost of running for president now, and also the cost of running for the Senate or the House, has gone up by a factor of 20 since the late 1970s. This is now many billions of dollars every election cycle. And when you combine that with other similar trends over the last 30 yearsthe growing divergence between public sector and government salaries, the growing use of revolving-door hiring, the growth of the lobbying sector, all of which have exploded over the same periodyou get to a situation in which the public sector and the public interest are outspent by very specific private interests, especially in the financial sector, by literally probably 50 or a hundred to one.
AMY GOODMAN: You write not only about the corruption, the law breaking, a predator elite, but you also talk about how to take the country back. And interestingly, you say that the rogue financial sector is seriously dangerous to the economy of America right now. How do you challenge this? How do you take the country back?
CHARLES FERGUSON: Well, a lot of hard work. And I think that at this point it's going to have to come from below, from the American people. I think that it's going to have to resemble a movement somewhat like, say, the environmental movement or the civil rights movement, the women's movement, in the sense that it's not going to come from the highest levels of the policy system, and it's not going to come from the highest levels of electoral politics, because, to a great extent, they have been captured and neutralized by the financial sector and other narrow, financially powerful interest groups.
AMY GOODMAN: And the significance of Occupy arising under President Obama?
CHARLES FERGUSON: Well, I hope that it's the first step in what will have to be probably a long and difficult process of forcing our leaders to pay attention and to change.
AMY GOODMAN: Finally, Charles Ferguson, you write, "The United States, so long [the] beacon of opportunity for," as you say, "the ambitious poor, has become one of the world's most unequal [...] societies." We have 15 seconds.
CHARLES FERGUSON: Unfortunately, true. The American Dream is dying as we watch it. And now you're better off being born poor in Asia or Europe than in the United States.
Meanwhile, investors have launched a class action lawsuit against Facebook, Morgan Stanley and other banks that underwrote the tech giant's public offering, claiming the companies misstated facts and concealed relevant information about Facebook's financial prospects. Plaintiffs say they have lost more than $2.5 billion as Facebook shares plunged in the days after the company went public. Another lawsuit has reportedly been filed in California. Regulators, including the Securities and Exchange Commission, say they plan to probe issues relating to the offering. Salvatore Graziano, an attorney for a plaintiff, said investors were misled.
SALVATORE GRAZIANO: When you go public, when you raise money in the market, you are required to disclose material information. Here, what apparently happened, what's being discussed, is that there was information put in the prospectus which was vague. And then, separately, people at Facebook, allegedly, were talking to Morgan Stanley and the other underwriters, giving them more information, adverse information. And that's what these cases are about.
AMY GOODMAN: Well, our next guest asks why so little has changed in the banking industry in the nearly four years after the global economic collapse of 2008. Academy-Award winning director Charles Ferguson first examined the network of academic, financial and political players who contributed to the nation's financial crisis in his documentary Inside Job. Charles Ferguson now has a new book out called Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. It's based on newly released court filings that reveal how major players contributed to the financial crisis.
Charles Ferguson, welcome to Democracy Now! JPMorgan Chase, the missing $3 billion, Facebooktalk about these latest developments in the context of a predator nation.
CHARLES FERGUSON: I think that they're an indication, a symptom, of the fact that the financial sector in the United States remains out of control and is not sufficiently regulated, and also not sufficientlyindeed, almost not at allsubject to criminal prosecution when it violates the law. So, I think that we unfortunately can expect to see a continuation of this kind of behavior.
AMY GOODMAN: Talk aboutwhat is so fascinating in Predator Nation is looking at the academic part of the network that you talk about misleading us, the ivory tower.
CHARLES FERGUSON: Yes, this is a problem that I think many Americans remain unaware of. I was quite struck when my film was released that most people who saw the film and spoke with me afterwards commented that the section on the economics discipline was the most surprising and shocking to them. What has happened is that over the same period of time, roughly the last 30 years, that money has become so much more important in American politics, it has also become more important in American academia. And the same interest groups, companies, industries, that began contributing to political campaigns and building up lobbying organizations and engaging in revolving-door hiring in the political sphere also began doing the same thing in American academia, to the point that now there is actually an industry, an industry that's probably a couple of billion dollars a year, of selling academic expertise for people who have public policy or legal or law enforcement problems.
AMY GOODMAN: Charles, let's go to a clip of Inside Job that deals with this, the links between academics at elite institutions in the U.S. and the financial industry. Here you talk to economics professors at Columbia as well as at Harvard.
CHARLES FERGUSON: Over the last decade, the financial services industries made about $5 billion worth of political contributions in the United States. That's kind of a lot of money. That doesn't bother you?
MARTIN FELDSTEIN: No.
MATT DAMON: Martin Feldstein is a professor at Harvard and one of the world's most prominent economists. As President Reagan's chief economic adviser, he was a major architect of deregulation. And from 1988 until 2009, he was on the board of directors of both AIG and AIG Financial Products, which paid him millions of dollars.
CHARLES FERGUSON: You have any regrets about having been on AIG's board?
MARTIN FELDSTEIN: I have no comments. No, I have no regrets about being on AIG's board.
CHARLES FERGUSON: None?
MARTIN FELDSTEIN: That I can say. Absolutely not. Absolutely not.
CHARLES FERGUSON: OK. You have any regrets about AIG's decisions?
MARTIN FELDSTEIN: I cannot say anything more about AIG.
GLENN HUBBARD: I've taught at Northwestern and Chicago, Harvard and Columbia.
MATT DAMON: Glenn Hubbard is the dean of Columbia Business School and was the chairman of the Council of Economic Advisers under George W. Bush.
CHARLES FERGUSON: Do you think the financial services industry has too much political power in the United States?
GLENN HUBBARD: I don't think so, no. I certainlyyou certainly wouldn't get that impression by the drubbing that they regularly get in Washington.
MATT DAMON: Many prominent academics quietly make fortunes while helping the financial industry shape public debate and government policy. The Analysis Group, Charles River Associates, Compass Lexecon, and the Law and Economics Consulting Group manage a multi-billion-dollar industry that provides academic experts for hire. Two bankers who use these services were Ralph Cioffi and Matthew Tannin, Bear Stearns hedge fund managers prosecuted for securities fraud. After hiring the Analysis Group, both were acquitted. Glenn Hubbard was paid $100,000 to testify in their defense.
CHARLES FERGUSON: Do you think that the economics discipline has a conflict of interest problem?
GLENN HUBBARD: I'm not sure I know what you mean.
CHARLES FERGUSON: Do you think that a significant fraction of the economics discipline, number of economists, have financial conflicts of interests that in some way might call into question or color
GLENN HUBBARD: Oh, I see what you're saying. I doubt it. You know, most academic economists, you know, aren't wealthy business people.
MATT DAMON: Hubbard makes $250,000 a year as a board member of MetLife and was formerly on the board of Capmark, a major commercial mortgage lender during the bubble, which went bankrupt in 2009. He has also advised Nomura Securities, KKR Financial Corporation and many other financial firms.
AMY GOODMAN: That was a clip of the Oscar-winning documentary Inside Job, narrated by the actor Matt Damon. Our guest is Charles Ferguson, who's followed up this film with Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. Now, can you talk about how these academics, who also become pundits on television, which is a lot of how people come to understand the issues, missed the financial crisis of 2008, certainly didn't predict it, but they were profiting from it, Charles Ferguson? And bring in Larry Summers when you're talking about all of this, who was formerly the president of Harvard.
CHARLES FERGUSON: Yes. Unfortunately, Larry Summers, who I've known slightly for a very long time, is kind of Exhibit A with regard to this phenomenon. So, there is nowthe revolving door is now a kind of three-way or triangular affair involving academia, politics and policy positions, and major industries, and financial services is probably the most important of them. Slightly behind would be energy and telecommunications.
Larry Summers, first as an academic and then as a senior government officialby this point, he's held almost every senior policy position in economicsargued strongly for and participated in a very serious way in the deregulation of the American financial services industry. After he left the Clinton administration, where he eventually became secretary of the Treasury, he became president of Harvard. And even while serving as president of Harvard, he began making large numbers of speeches to financial organizations for very high rates of pay. And also, he began consulting for hedge funds. After he was forced out as president of Harvard, he increased his consulting activities, earning $5 million a year for one day a week of work at a hedge fund called D.E. Shaw, and making over a million dollars a year giving speeches to financial organizations. And at the same time, he continued to participate in policy debates. And most famously, in 2005, he was president at the Jackson Hole conference, which is the most important annual conference of central bankers in the world. And at that conference, Raghu Rajan, who was thenhe's a very famous economist who was then the chief economist of the IMFdelivered a paper in which he warned about the growth of risk in the financial services industry and the potential for a catastrophic economic meltdown as a result of increased risk taking in finance. And Summers, at the end of Rajan's presentation, stood up and very, very brutally criticized him and dismissed all of his concerns.
So, there have been many other examples of other people who have engaged in similar behavior. Glenn Hubbard is certainly one. Glenn Hubbard is now a senior economic adviser to the Romney campaign. It's unfortunately become a completely bipartisan issue. Economists who support both political parties have very strong financial ties to the financial services industry and have continued to support deregulation.
AMY GOODMAN: Now, you make a really critical point when you won the Oscar at the 83rd Annual Academy Awards. You won it for Inside Job. In your acceptance speech, you drew applause after calling for the jailing of financial executives.
CHARLES FERGUSON: Forgive me. I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that's wrong.
AMY GOODMAN: What crimes were committed, Charles Ferguson? What should executives be put in jail for?
CHARLES FERGUSON: It's a very long list. Certainly at the top of the list would be securities fraud, accounting fraud and Sarbanes-Oxley violations. Securities fraud is precisely what the name implies. If you sell a security, but you lie about it or you omit material information, that's a crime. And we now know that a very high fraction of the securities that were constructed and sold during the housing bubble and that led to the financial crisis were in fact sold fraudulently, that the mortgage lenders and the investment banks that created, structured and sold them did not tell the truth when they were doing so. And those were very, very significant lies and misrepresentations. And late in the bubble, a number of banks and investment banks began not only selling fraudulent securities, but creating and selling securities for the purpose of betting against them, by profiting on their failure. And that also involved a great deal of dishonesty. And there has not been a single criminal prosecution with regard to that conduct.
And following that would be accounting fraud. We now know that many of the lenders and investment banks were dishonest about their own financial positions, concealed the potential size of their losses. The housing bubble was, in effect, a Ponzi scheme, and like all Ponzi schemes, it eventually had to end. And when it ended, of course, we saw the result in the 2008 crisis. And many people, it's now clear, knew that it was going to end that way and knew that their own financialtheir own firms', their own companies' financial positions were going to be catastrophically affected and lied about it to the public.
And then, third, the Sarbanes-Oxley law requires the CEOs and chief financial officers of banks, all public companies, to certify their financial reports and also the adequacy of their own internal financial controls. And we now have extensive evidence that the senior managements of a number of the banks and investment banks were extremely, explicitly warned that their financial controls were inadequate and that their accounting was fraudulent, and yet they continued to certify their financial reports. And there has, again, not been a single criminal prosecution for such violations.
AMY GOODMAN: Charles Ferguson, the Obama administration has rationalized its failure to prosecute any senior financial executives by saying their behavior wasn't actually illegal. This is a clip of President Obama speaking at a White House news conference in October.
PRESIDENT BARACK OBAMA: Well, first on the issue ofon the issue of prosecutions on Wall Street, one of the biggest problems about the collapse of Lehman's and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn't necessarily illegal, it was just immoral or inappropriate or reckless. That's exactly why we needed to pass Dodd-Frank, to prohibit some of these practices. You know, the financial sector is very creative, and they are always looking for ways to make money. That's their job. And if there are loopholes and rules that can be bent and arbitrage to be had, they will take advantage of it. So, you know, without commenting on particular prosecutionsobviously, that's not my job, that's the attorney general's jobyou know, I think part of people's frustrations, part of my frustration, was a lot of practices that should not have been allowed weren't necessarily against the law, but they had a huge destructive impact.
AMY GOODMAN: Charles Ferguson, your response to President Obama?
CHARLES FERGUSON: President Obama is wrong. And at this point, it's very difficult for me to to believe that he doesn't know that he's wrong. We now have publicly available evidence, through a combination of lawsuits, government investigations and whistleblowers, that there was extensive and highly illegal conduct in the housing bubble and the financial crisis.
AMY GOODMAN: Explain further.
CHARLES FERGUSON: Well, as I mentioned a couple of minutes ago, you know, we now know that there was extensive securities fraud. We know that there was extensive accounting fraud. We know that there were extensive Sarbanes-Oxley violations.
To give just one example among many, in May of 2008, a man by the name of Matthew Lee, who was a senior vice president at Lehman Brothers, hand-delivered to four senior Lehman executives, including the chief financial officer, a memo, which I quote in my book, which is available on the webif you Google "Matthew Lee Lehman," you will find itin which he says, "I feel that it is my ethical and legal responsibility to point out to you that there are billions of dollars of unjustified assets on our balance sheet." And he goes on to say, in some detail, in this memo that his concerns are very serious and that he feels that he absolutely must bring them to the attention of senior Lehman executives. He also says that he had been a loyal Lehman employees since 1994, which he had been. And that's justthat's one example. The CFO and CEO of Lehman continued to certify Lehman's financial statements and the adequacy of its internal financial controls up until a few days before Lehman went bankrupt. They have not been prosecuted. Neither has anybody else. And there's a great deal of now publicly available information, from depositions in lawsuits, subpoenas, etc., that makes it extremely clear that there is overwhelming evidence of massive criminal behavior. And there has not been a single criminal prosecution.
AMY GOODMAN: Charles, you write that a predator elite has taken over this country. How have they done it?
CHARLES FERGUSON: Well, luckily, I think it's too strong to say that they've taken over the country, but they certainly have taken over significant portions of economic policy and of the political system, and also, unfortunately, major portions of the economics discipline. And I think that this has its roots in the late 1970s and the early 1980s, when America first began to encounter economic difficulties and when deregulation first started in earnest in the Reagan administration. And since that time, we've seen a steady and dramatic growth in the use of money to influence politics and also academia. The cost of running for president now, and also the cost of running for the Senate or the House, has gone up by a factor of 20 since the late 1970s. This is now many billions of dollars every election cycle. And when you combine that with other similar trends over the last 30 yearsthe growing divergence between public sector and government salaries, the growing use of revolving-door hiring, the growth of the lobbying sector, all of which have exploded over the same periodyou get to a situation in which the public sector and the public interest are outspent by very specific private interests, especially in the financial sector, by literally probably 50 or a hundred to one.
AMY GOODMAN: You write not only about the corruption, the law breaking, a predator elite, but you also talk about how to take the country back. And interestingly, you say that the rogue financial sector is seriously dangerous to the economy of America right now. How do you challenge this? How do you take the country back?
CHARLES FERGUSON: Well, a lot of hard work. And I think that at this point it's going to have to come from below, from the American people. I think that it's going to have to resemble a movement somewhat like, say, the environmental movement or the civil rights movement, the women's movement, in the sense that it's not going to come from the highest levels of the policy system, and it's not going to come from the highest levels of electoral politics, because, to a great extent, they have been captured and neutralized by the financial sector and other narrow, financially powerful interest groups.
AMY GOODMAN: And the significance of Occupy arising under President Obama?
CHARLES FERGUSON: Well, I hope that it's the first step in what will have to be probably a long and difficult process of forcing our leaders to pay attention and to change.
AMY GOODMAN: Finally, Charles Ferguson, you write, "The United States, so long [the] beacon of opportunity for," as you say, "the ambitious poor, has become one of the world's most unequal [...] societies." We have 15 seconds.
CHARLES FERGUSON: Unfortunately, true. The American Dream is dying as we watch it. And now you're better off being born poor in Asia or Europe than in the United States.
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
