Robert Rubin was the smartest guy in a room full of guys who thought they were the smartest guy in the room. When Bill Clinton appointed him Treasury Security, Rubin explained to the president how the U.S. economy could get a quick shot of prosperity at the same time Wall Street got a huge burst of profits, in a way that also guaranteed that the Clintons could always use New York City as their political and personal ATM.
President Clinton bought in (or was bought out, if you prefer). Wall Street was unleashed, a process that climaxed with the trashing of Glass-Steagall in 1999, a move that in essence put taxpayers on the hook if Wall Street greed and excess went really, really awry. Wall Street reciprocated by giving big to the Democratic Party (a deal is a deal). Barack Obama bought into the same deal after the 2008 market crash and played his part in the arrangement by appointing Wall Street enabler Tim Geithner to be his Treasury Secretary.
There was still something missing, however — at least from Wall Street’s perspective. A legal thing.
Sure, Wall Street was free to “innovate” in ways that made huge fortunes for the folks at the top of the The Street heap. But if this “innovation” was so egregious and flagrantly dishonest that Main Street howled loud enough, there was still the danger that the biggest innovators might go to the slammer. And what’s the point of sucking a billion or two from an infinitely corruptible system if you have to a spend a year or two in a federal lock-up, even a minimum security one with a pool and tennis courts?
Enter the Marc Rich solution to this conundrum.
Rich, who just died at the age of 78, was a commodities trader. He fled to Switzerland in 1983 to get away from federal indictments charging him with 50 counts of wire fraud, racketeering, illegally trading with Iran, and evading more than $40 million in income taxes.
Rich’s wife gave generously to the Democratic party while hubby enjoyed his time in the Alps until 1999. The day before leaving office that year Bill Clinton pardoned Rich, allowing him to return to this land of commodities trading opportunity a free man.
What was really interesting in this pardon — at least to those who closely monitor the decline in this country’s public integrity — was the reason President Clinton gave for the pardon. It was stated that Rich could be pardoned because he shouldn’t have been charged with criminal violations at all, but with civil ones. You know, civil offenses. Like wire fraud, racketeering, illegal trading with a country under U.S. embargo, and tax evasion.
Fast forward to the present. In the wake of the 2008 financial disaster, Wall Street’s greed and arrogance operating in a milieu of trashed government regulation has brought extreme misery to huge numbers of people in this country and around the world. Nonetheless, not a single high level Wall Street miscreant has gone to jail for his part in massive fraudulent schemes. And the reason? Our Department of Justice has made it clear it does not consider such deeds criminal in nature. After the Rich pardon, they are merely deemed civil infractions to be excused with fines paid with money made in the frauds.
Summing up: Bobbie (Rubin) and Billy (Clinton) concocted Wall Street-friendly schemes that among other things neutralized the Democratic Party as a traditional buffer against Wall Street predation, a role that had traditionally only been played by Republicans. And Richie (Marc) Rich’s pardon provided a template, a mechanism, that perpetually excuses even the worst Wall Street slime from criminal punishments.
(Coming very soon from Michael Silverstein: The Devil’s Dictionary Of Wall Street.)