I am not suggesting that Morgenson and Rosner pull their punches. To
the contrary, the authors deliver enough knockouts to be contenders with
Taibbi as world champions in exposing the reckless fraud that the US
financial sector and its regulators now epitomize.

The financial crisis, which is very much still with us, did not result
from accident or miscalculation; neither did it result because of a flaw
in Alan Greenspan's theory, as he told Congress when a feeble effort was
made to hold him accountable. It was the intentional result of people
motivated by short-term profits who wanted to get theirs and get out.

As Reckless Endangerment shows, fraud characterized every stage of the
process from the fraudulent borrower incomes and credit scores that
mortgage issuers gave to unqualified buyers, through the securitization
of the mortgages and their triple-A investment grade ratings by the
rating agencies (Standard & Poor's especially, but also Moody's and
Fitch) to the investment banks that sold what the banks knew was junk to
investors around the world as investment grade securities. Indeed,
Goldman Sachs was simultaneously betting against the mortgage
derivatives that it was selling to clients.

Investment banks, such as Goldman Sachs, which once considered it a
matter of honor to represent the interests of customers, took advantage
of the trust that had been built up in the past to commit fraud against
customers in order to advance the banks' short-term profits and the
out-sized multi-million dollar managerial bonuses that these fraudulent
profits produced.

Morgenson and Rosner provide a number of unique accounts of how those
benefitting from fraud were able to defeat laws that were passed that
would have held them to account. For example, the state of Georgia
passed perfect legislation that held predatory lending to account.
William J Brennan Junior and Georgia Governor Roy E Barnes got the
Georgia Fair Lending Act through the state legislature. It was a model
for other states. As the federal regulators had thrown in the towel,
the state laws would have prevent the worst part of the financial
crisis, it not prevented the crisis altogether.

The Georgia law only lasted a few months, because the rating agencies
saw that their enormous profits from issuing fraudulent investment grade
ratings were threatened by the law. The corrupt rating agencies
mischaracterized the consumer protection act as a jihad by regulators.
Standard & Poor's declared that it would no longer allow Georgia
mortgages to be placed in mortgage securities that it rated.

In other words, Georgia mortgages could no longer be securitized. This
announcement banned Georgia mortgage lenders from securitization. Thus,
the law was overturned, and fraud ran wild.

These kind of mafia strong-armed tactics in order to protect at all
costs the short-term mega-bonuses that drove the totally fraudulent
system have never been held accountable or punished. Totally innocent
people are held indefinitely and tortured by the US government for no
other reason than to convince the gullible public that they are
endangered by terrorists, but those who wiped out the home ownership and
retirement pensions of millions of Americans now hold high and honorable
positions on corporate boards and US regulatory agencies.

Federal regulatory agencies totally failed. Brooksley Born tried to use
her statutory authority to regulate over-the-counter derivatives, but
she was blocked by the Federal Reserve chairman, the US Treasure
secretary, and the SEC chairman and forced to resign. As University of
Chicago Nobel economist George Stigler predicted, regulatory agencies
are captured by those who are intended to be regulated. This was the case.

Regulators turned a blind eye to obvious criminal fraud, and were
rewarded with lucrative positions in the financial community. The same
for the US senators and representatives who repealed Glass-Steagal and
other financial regulations.

For example, former US senator Phil Gramm who spearheaded the repeal of
the Glass-Steagall Act, which separated commercial from investment
banking, the repeal of which set up the financial crisis, was rewarded
by being made vice chairman of the mega-bank UBS, a Swiss global
financial services company.

What Taibbi, Morgenson and Rosner make clear is that while monster
criminals continue to collect their multi-million dollar annual incomes,
depressed single mothers, deserted by the men who fathered their child,
are sent to prison for having small quantities of illegal drugs to boost
their depressed spirits, and their children are put out to adoption.

This is "justice" in America where there is "freedom and democracy".

_____

Paul Craig Roberts was an editor of the Wall Street Journal and an
Assistant Secretary of the US Treasury. His latest book, How The
Economy Was Lost (2010), has just been published by CounterPunch/AK
Press. He can be reached at: PaulCraigRoberts@yahoo.com.