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Danny Schechter on the financial crisis and Wall Street as a crime narrative

Danny Schechter, "The News Dissector," is a former network TV producer, radio newscaster, and edits He has written nine books on media themes. His latest, 'Plunder', was inspired by his latest film, In Debt We Trust: America Before The Bubble Bursts


PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Washington. Danny Schechter "the News Dissector" has a new film out. It's called Plunder: The Crime of Our Time. And it opens with the demonstration of activists going to the home of John Mack, who at the time was the president of Morgan Stanley. Here's a look at that.

JAY: Now joining us is Danny Schechter. He's, as I said, the director of the film Plunder. Thanks for joining us.


JAY: So the title of the film is Plunder: The Crime of Our Time. The demonstrators went to the home of Mack and singled him out. So talk a bit about this question of why is this the crime of our time, and if it is, what's being done about the criminals.

SCHECHTER: Well, you know, the idea of a crime narrative to explain the financial crisis is something which is slowly coming into media view. It's been sort of denied. It's been ridiculed. It's been—until a number of things began to happen. First, the FBI found that there had been an epidemic of mortgage fraud in America, that the subprime loans were actually being sold fraudulently and in a criminal way, and there have been a lot of people arrested and convicted of that and of related bank frauds.

ROBERT MUELLER, FBI DIRECTOR: Through this operation, more than 400 defendants have been charged, and we have obtained 173 convictions in crimes that accounted for more than $1 billion in estimated losses.

SCHECHTER: Secondly, Senator Kaufman recently went on the floor of the Senate and talked about fraud as being at the very foundation of the financial crisis, the first senator to say so. The Justice Department has asked for criminal complaint or investigation in its early stages against Goldman Sachs after the SEC filed, you know, a civil complaint against Goldman Sachs. And so there's been an upswing of interest in, you know, the alleged criminality or lack of criminality of the key Wall Street players. Were they doing all of this intentionally or not? My argument in my film is they were doing it intentionally, but it wasn't just the finance industry. It was finance in, basically, complicity with real estate and insurance, the fire economy, as it's known. And together, these different players in these industries worked together to defraud the American people and to lose trillions of dollars that have vanished as a result of the financial crisis.

JAY: Now, the issue of whether it's criminal or fraud, to some extent the charging of Goldman Sachs, whether that charge ever amounts to a conviction or not, is still a big question. A lot of people have come out and said maybe it was wrong, but it wasn't criminal. Even Bill Clinton said that the other day. But the issue of the structural underpinnings of all of this, even if they convict a few people, what gives rise to such parasitism is at the very roots of how the economy's organized. And does the criminal narrative to some extent take people's eyes off the structural problem?

SCHECHTER: Well, I don't think so, because if we're going to reach the American people with concerns about this financial crisis and fight back, we have to speak to the gut, to the gut sense of people who feel that they've lost their homes, they've lost their jobs, they've lost their hopes because they've been robbed, basically. And a gut issue is what's missing, certainly in the progressive response, which sounds like, you know, a Berkeley economics seminar, you know, where people talk about credit default swaps and derivatives and all this other stuff, which leads people to—their eyes to glaze over. They can't really follow it. So we need to deal with people's guts and a sense of economic fairness and economic justice.

JAY: But the FBI is not going to solve this.

SCHECHTER: No, the FBI won't solve it. Putting some CEOs in jail won't solve it. But it—.

JAY: So what will solve it, if you're talking to ordinary people?

SCHECHTER: It will—no, but if—I wouldn't dismiss it, though, because people have a desperate desire to see that the people who caused this situation, the destruction of their jobs, the destruction of their homes, the destruction of our economy, have to pay a price. They have to be held accountable, or there can be no faith in government or even in the economy.

JAY: But maybe there shouldn't be. Maybe there shouldn't be faith.

SCHECHTER: Well, you know, there is a lot of disenchantment, disillusion, anger, outrage, and the rest of it. Americans want to see, as Reuters reported recently, big guys with stakes in their head, you know, essentially. This is the attitude of people. They want to see payback. And I think we have to demand a fraud investigation. I think we have to challenge all this crime. It's interesting. Alan Greenspan said there was no fraud. Now he's saying it was extensive fraud, there needed to be more enforcement. The reason the laws are the way they are is that they were changed by the lobbying of the financial services industry. They spent millions of dollars to deregulate, to decriminalize the whole environment, to, you know, basically decrease the size of the enforcement agencies. This was done deliberately to create a situation so that they couldn't be prosecuted the way bankers were prosecuted after the S&L [savings and loan] crisis with over 1,500 going to prison.

JAY: But that happened, and all of this happens after that. In other words—and I'm not arguing against convicting these people or—I think what they did was criminal, but the idea of an economy based on deliberately created bubbles that you know is going to burst and you're going to make money on the upside, you're going to sell short before the burst to make money on the burst, that's happened over and over again, not just in real estate.

SCHECHTER: It is true. You need structural reform here, not these tinkering-around little rule changes that are being proposed by the Obama administration. That's the appearance of financial reform, not the reality of financial reform. And all the compromises which are part of the whole congressional process will guarantee that this will happen again. In fact, it seems to be happening in the aftermath of what's happened in Greece and in Europe—people are talking about a second recession, if not something worse. So, you know, we're not out of the woods yet by any means.

JAY: Okay. So for ordinary people, they're going to have to vote this time, and there's congressional elections coming up [inaudible] presidential election. And if something's going to change, people are going to have to start voting for people that want to stop a bubble economy. So what would be a set of criteria you might say, if you're going to choose a candidate, here are some of the things they'd better stand for, or else it's not real?

SCHECHTER: Well, unfortunately, the libertarians and the right seem to have appropriated the gut issues. And, you know, they've convinced their public, their constituencies, that the government is to blame for everything. And the government certainly has been complicit, because the government has been in a sense captured by these financial interests and taken over, by and large, with all the money that's been poured into political campaign and all the corruption that's there. So we have to try to do something about that and we have to support candidates who are willing to raise these issues and call for not only accountability but fundamental change.

JAY: But what are two or three things that you think need to be called for, that you would ask somebody running, "Are you for this or not?"

SCHECHTER: Well, I mean, for one thing, you know, accountability is a very critical issue. But also, you know, we need to change and control, you know, hedge funds, which are unregulated right now and a part of a shadow banking system. We need to bring them under the scrutiny, you know, of the government. We need to limit the use of derivative products, which, you know, allow so much flexibility for these financial, you know, buccaneers to be successful. Moreover, we need a full investigation of who profited from this whole financial crisis. That has yet to happen. We still don't know who's making all the money and who—we know who isn't, you know, and that's mostly the working people, you know, of our country. We need jobs, we need, you know, economic security for people. That's not going to happen unless there are these structural changes.

JAY: And the structural change they're talking about after spending trillions in increasing the size of the deficit and now creating the idea that the deficit is the big problem facing us, and now they're going to talk about a value-added tax so they can actually get ordinary people paying the cost of the crisis.

SCHECHTER: Well, I think you're going to see that happening, because, you know, the states are bankrupt. Many states are bankrupt right now. There's been a tremendous shredding of the social safety net, cutbacks in education, cutbacks in social services. So money has to come from somewhere, and they're going to try to soak the people to provide it through a new form of taxation. I think that's—.

JAY: And at the same time they want to get rid of the inheritance tax.

SCHECHTER: I think that's obvious. On the other hand, we have to make Wall Street pay, if you will. We have to demand, you know, that they be held accountable. And I don't mean just being put in jail, but actually with financial taxes on financial transactions, you know, that would be helpful. That would generate a lot of money. Basically, we have to rearrange the way things are going. The way they're going is that they're enriching the rich, and they're leading to more stratification, more class divide, more anger on the part of ordinary people. We've got to reverse that, and we need, you know, politicians who will stand up for these principles. And so far they're very few and far between.

JAY: Thanks for joining us, Danny.

SCHECHTER: Thank you.

JAY: And thank you for joining us on The Real News Network. And you can find out more about Plunder the film at—tell us.



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