Common wisdom holds that the near collapse 0f 2008 snuck up on us, and that nobody saw it coming. Common wisdom is wrong. Lots of people saw it coming, and I was one of them, so it didn’t take rocket science to figure it out. In 2007 I was discussing how Republicans realized they were on the way out, and they were setting the US up for an economics crisis, so they could blame their successor, and present themselves as the solution. I was wrong about the timing. I expected it to come in the first quarter of 2009, but it did in the last quarter of 2008. I was also wrong about the scope. I did not expect it to be this severe. Republicans are now changing their lies and often saying that Obama is responsible, so I consider it imperative to clear the air so there can be no doubt that this is a Republican Recession.

American Public Media’s "Marketplace" had a recent segment focused on why it has taken so long to bring criminal prosecutions related to the financial crisis. Reporters observed that at the beginning of the crisis, the Obama administration wanted to calm the financial industry rather than impose accountability. They speculated, along with Tea Party and Occupy Wall Street participants, many of whom have been calling for prosecutions, that Obama’s creation of a new group to prosecute mortgage fraud led by New York Attorney General Eric T. Schneiderman was likely to be politically motivated. And they indicated that financial crimes are complex and prosecutors need time to develop their cases. But here’s what they didn’t say: A major reason the prosecutions don’t exist is that President George W. Bush took the cops off the beat. Think about street crime. Imagine, for example, a protection racket in which gangs extort payment from fearful shopkeepers. Prosecutors rarely initiate criminal prosecutions; indeed, they may not even know that the crime is occurring. The police pound the beats that keep them aware of the increase in crime, respond to complaints, investigate, determine that a crime may have occurred that warrants attention, create a file and send it to the prosecutor’s office. In routine cases, the prosecution proceeds on the basis of the police report alone. In more complex cases, the prosecutor may supplement the police investigation. But prosecutors rarely initiate cases. Even when a task force is appointed to target crime in a particular sector, it typically involves prosecutors working with the police. The prosecutors simply don’t have the skills or the manpower to detect crime, conduct investigations and make the record necessary to prosecute. So where were the police in the current financial crisis? The FBI did investigate and warned in 2004 that an epidemic of mortgage fraud was underway. The Bush administration took the FBI’s white-collar experts, however, and reassigned them to terrorism cases . The inquiries under way in 2004 – and the public cries of alarms that accompanied them – largely disappeared. The cops were literally yanked off the beat. In the early part of the increase in subprime lending, state attorneys general were bringing cases, and calling attention to predatory lending practices. Financial conglomerates complained to the Bush administration. In 2003, the Office of the Controller of the Currency (OCC) relied on a clause from the 1863 National Bank Act to preempt all state predatory lending laws. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks … [emphasis added]

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