“Nobody from Wall Street goes to prison. Nobody. No one”
Obama, Wall Street & the elite 1 percent
Barack Obama’s presidency begins with the fallout from the 2008 credit crisis. A $700bn bailout plan saves the banks from collapse.
The US struggles in the wake of a financial crisis that exposes the deep ties between government and systemic corporate greed.
The Obama administration fails to prosecute any leading figure for the crisis and offers little or no support for thousands of Americans who lose their homes.
Whistle-blowers, Edward Snowden & the Espionage Act
In 2013, former National Security Agency contractor Edward Snowden leaks documents revealing an increased domestic surveillance programme. Like other whistle-blowers before him, Snowden is charged under the Espionage Act.
Journalist Chris Hedges challenges the legality of the 2012 National Defense Authorisation Act that would have enabled the indefinite military detention of US citizens without trial.
Obama, Wall Street & the elite 1 percent
“The problem is not left or right. The problem is that whoever is in the White House has very little room to move.”
“Because of what we did on this day, in this election, at this defining moment, change has come to America.”
“Obama was exciting because he was eloquent, he was African American. He was an intellectual and professor, and that was important, too. He seemed like the harbinger of something really new.”
“It didn't occur to anyone that one of the reasons that Obama could even get this far was that he had to be totally, totally immersed in and protected by a very big, cartel of rich people who thought, here's what we can do.”
“Obama spent two years, only two years, in the Senate. His voting record, which is the only thing that should have counted, was one corporate giveaway after another.”
“Obama got in, and he's the pawn of globalised interests. The problem is not left or right. The problem is that whoever’s in the White House has very little room to move.”
Barrack Obama's presidency would begin with the fallout from the 2008 credit crash
Crash course: What was the financial crisis of 2008?
- The Global Financial Crisis of 2007-2008 is considered by many economists to have been the worst financial disaster since the Great Depression - (1929-1939).
- In 2007, a depreciation in the subprime mortgage market in the US led to an international crisis and the collapse of the investment bank, Lehman Brothers, in 2008.
- The collapse was exacerbated by excessive risk-taking by big banks, such as Lehman Brothers, and this magnified the global impact.
- To prevent a collapse of the world’s financial system, government bailouts and other fiscal policies were instituted to prevent further collapse.
- Despite efforts, a massive economic downturn, referred to as the Great Recession, followed. Housing prices fell by almost 32 percent, and by 2009 - two years after the crisis began - unemployment was still above nine percent.
A crisis that had begun with an unfettered banking sector issuing loans to people ill-equipped to make repayments, and then trading those toxic debts, took America's financial foundations to the brink.
President Obama faced a choice – save the banks that caused the problem, or support the American people suffering the consequences.
“Ron Suskind writes a book about the crisis and he recounts a meeting, right after Obama takes office in 2009, with all of the leading bankers. And Obama tells them, “I'm all that stands between you and the pitchforks,” and he makes it very clear that he is not going to go after Wall Street and he doesn't. He brings in his brain trust, which includes Lawrence Summers, Clinton's former Treasury Secretary, who along with Robert Rubin and a few others orchestrated this meltdown.”
In 1999, Robert Rubin and Lawrence Summers, successive Secretaries of the Treasury in the Clinton administration, and both with long-standing connections to Wall Street banks, led the repeal of the Glass-Steagall Act.
The act had, in the wake of the 1929 Wall Street Crash, forced banks to keep their investment and commercial activities separate - stopping them betting with the deposits of ordinary citizens.
The 1993 Glass-Steagall Act
- The Glass-Steagall Act, also known as the Banking Act of 1933, is a law that prevented banks from using depositors' funds for high-risk investments, such as the stock market.
- It was enacted by the federal government as an emergency response to the failure of nearly 5,000 banks during the Great Depression.
- The legislation was replaced in 1999 by the Gramm-Leach-Bliley Act, after investment bankers successfully lobbied against what they perceived to be the over-regulation of the industry.
- The ability to gamble on high-risk investments meant banks soon became too big to fail.
- During the 2007-2008 financial crisis, a $700bn government bailout was needed to avoid another depression.
When it came to fixing the problems of the 2008 crash, brought about by banks gambling with the mortgages of millions of Americans, President Obama turned to the very men who had helped make that gamble possible.
Barack Obama made sure the $700bn bailout plan, enacted by his predecessor George W. Bush, was pushed through to save the banks threatened by a collapse of their own making.
Washington was in thrall to Wall Street.
Even the Securities and Exchange Commission (SEC) was skewed in ‘big money’s’ favour.
What is the Securities & Exchange Commission (SEC)?
- The Securities and Exchange Commission (SEC) is a federal agency responsible for regulating the securities industry and for enforcing federal securities law.
- It is tasked with protecting the public against fraudulent and manipulative activities in financial and securities markets.
Proposed in 1929 by lawyer Ferdinand Pecora, the SEC was to implement controls to safeguard the people from the excesses and corruptions of the finance industry.
In 2009, President Obama tasked the SEC with investigating how the banks had run amok with such devastating effect.
His appointments would lay bare the compromise and conflict running through US governance.
“What Pecora said is, if we ever loosen those controls, if we loosen them and let it back out of its cage, it'll do the same thing all over again because it is in its DNA. It's in the bank's DNA to run amok, if you let them run amok.”
“He brings in Mary Schapiro, who is at the heart of Wall Street. Her credentials for being among Wall Street elite are unimpeachable. She's 100 percent pure blueblood Wall Street. And then she hires Khuzami to head enforcement.”
Robert Khuzami had been general counsel for Deutsche Bank in the US, helping the German giant unleash the toxic financial instruments that helped create the 2008 crisis.
By the following year, Khuzami was leading an investigation into the crisis at the Securities and Exchange Commission.
“Today’s action is about holding individuals accountable …”
“If you wanted to pick someone who would have to go soft on Wall Street, you couldn't do any better than Robert Khuzami, because if he put together a list of the top 10 people for him to pursue, he would have to be on that list.”
“We still have another office to fill, and that office is the cop, the actual cop of Wall Street. The US Attorney for the Southern District of New York. So, Preet Bharara is selected for that role. Now, Preet Bharara is the former right-hand man for Senator Schumer, the tax man for the senate finance committee to fund senate races, that's him. So, he's owned by Wall Street. So, any progress against Wall Street is dead on arrival. According to the senate investigations committee, the financial fraud crimes of the crisis cost the US $21 trillion. Nobody from Wall Street goes to prison. Nobody. No one.”
With Khuzami in place, the team to tackle the corruptions of high finance would have one more appointment before it was complete.
When it came to checking and punishing the wrongs of corporate power, far from bringing change to America, President Obama maintained business as usual.
The good of the few still came before the good of the many.
The US was struggling in the wake of a financial crisis that exposed the deep ties between government and systemic corporate greed, leaving the American people to suffer the costs.
“The economic situation creates a huge amount of insecurity, a very large sense that America is no longer working for the American people as a whole.”
“We saw how it was rigged with the crash in that the people who caused the problem got bailed out to the tune of billions and billions and billions, where the ordinary homeowner, no help for them whatsoever. And that fuelled so much anger. It fuelled anger on the right and the left."
On the left, the Occupy movement looked to challenge Wall Street’s might and America’s income inequality, turning the fact of wealth concentration in an elite one percent of the population into a mobilising battle cry.
For the right, the backlash against government policies would find form in a new entity cut from familiar cloth.
“The Tea Party really was a right-wing formation that opposed the idea that the government should step in and spend this kind of money to bail out people who didn't deserve to be bailed out. There are other elements of the Tea Party that were clearly steeped in, what I would describe as, racial resentment.”
“It's older white people who feel that they're the ones getting shafted. These people sort of see themselves as standing in line waiting, and suffering a lot from the recession. But then, some people cut in line in front of them, completely illegitimately in their view.”
“It became about immigrants, it became about Muslims, it became about liberals. But it was a movement that realised that its own political establishment in the Republican Party sold it out.”
Black Lives Matter movement
- The hashtag #BlackLivesMatter was created in 2012 after a Florida court acquitted former neighbourhood volunteer George Zimmerman of the murder of 17-year-old teenager Trayvon Martin.
- But having gained global recognition and support, has #BlackLivesMatter become a fully-fledged movement?
Whistle-blowers, Edward Snowden & the Espionage Act
“They want to use the military as a mechanism of last resort, and now legally they can”
In 2013, former National Security Agency contractor Edward Snowden showed that the establishment had sold out the American people en masse
Snowden revealed how the security services were again snooping on US citizens.
By accessing telephone records and compelling communications companies to release their user data, the American deep state was continuing its programme of domestic surveillance.
Snowden’s revelations saw him charged under the Espionage Act.
“Every totalitarian state has a secret police, or a surveillance society. The state, you know, watches the privacy of citizens. You start to target whistle-blowers.”
Profile: Edward Snowden
- Edward Snowden is a former National Security Agency (NSA) subcontractor who made headlines in 2013, when he leaked sensitive information about US surveillance activities around the world.
- The documents he disclosed revealed numerous top secret surveillance programmes, many run by the NSA and the Five Eyes Intelligence Alliance (US, UK, Australia, New Zealand and Canada), with the cooperation of telecommunication companies and European governments.
- Snowden was subsequently charged by the US government with violations under the Espionage Act.
- In order to avoid prosecution, Snowden found asylum in Russia and continues to speak out against his case and government mass surveillance - "I'm neither traitor nor hero. I'm an American," he told Reuters in 2013.
“This isn’t about me … this is about us!”
What is the United States’ Espionage Act?
- Shortly after entering World War I, the United States passed the Espionage Act of 1917.
- The federal law is intended to prohibit interference with military operations, recruitment, insubordination and the aiding of enemies during wartime.
Originally enacted to punish dissenters and spies during World War I, only three people had ever been prosecuted using the 1917 statute prior to President Obama taking office.
By the time he would leave the White House, the Espionage Act would be invoked against a further eight US citizens, accused of leaking classified information.
“He's used the Espionage Act to shut down whistle-blowers, he signed into law Section 10-21 of the National Defense Authorisation Act, which overturns the 1878 Posse Comitatus Act, which prohibited the US Military from carrying out domestic policing, and I sued him in federal court over this. It's called 'Hedges v. Obama'.”
2012 National Defense Authorisation Act (NDAA)
- The National Defense Authorisation Act (NDAA) is an annual statute that, among other things, specifies the budget and expenditures of the US Department of Defense.
- However, Section 1021 of Obama’s 2012 NDAA bill allowed for the “indefinite detention of American citizens without due process at the discretion of the president”.
- The indefinite detention clause was broadly denounced both nationally and internationally as a violation of constitutional principles and the United States Bill of Rights.
- While it has since been removed, it remains one of the most controversial elements of President Obama's foreign policy while in office.
Court case: Hedges vs. Obama
- In January 2012, Christopher Hedges, a former Middle East bureau chief for the New York Times, filed a lawsuit against the Obama administration and members of Congress challenging provisions set in the 2012 National Defense Authorisation Act (NDAA).
- Hedges criticised Section 1021 of the legislation for enabling the US government to indefinitely detain those who “are part of or substantially support al-Qaeda, the Taliban or associated forces engaged in hostilities against the United States”.
- Hedges and his co-plaintiffs, who included Noam Chomsky and Pentagon Papers whistle-blower Daniel Ellsberg, contend that the legislation armed the military with the ability to imprison journalists, activists and human rights workers indefinitely on the basis of vague allegations.
- Hedges himself contended that, as a foreign correspondent, he had previously interviewed leading members of al-Qaeda.
- The case was won by Hedges at the district court level with Section 1021 struck down and labelled unconstitutional by the court.
“I was in the courtroom in downtown New York, and I heard, with my own ears, Obama's lawyers say to Judge Forest, “Does this mean that you, the President, can arrest a reporter for interviewing a member of al-Qaeda?”, right, just interviewing, which is what reporters are supposed to do. The lawyer said, “Yes, we can arrest Chris Hedges. We can hold him forever without charge or trial.”"
“In essence, it allows the US government to carry out extraordinary rendition on the streets of American cities and these people have no legal recourse. They understand the increasingly deadly effects of climate change, they understand the blowback of the economic stagnation will create. I think they have to have on the radar another financial meltdown – we allowed Wall Street to go back and do what they did before. And they don't trust the police to protect them, they want to be able to use the military as a mechanism. We've already militarised our police forces. They wanna use the military as a mechanism of last resort, and now legally they can.”
Web Extra: Whistleblower Gary Aguirre
- Lawyer Gary Aguirre joined the Securities and Exchange Commission (SEC) in 2004 “as a believer … expecting it to be somewhat like the agency that it was created to be. It was supposed to keep an eye on Wall Street and Wall Street banks”.
- But he soon found out that Wall Street had its own rules and the SEC was enforcing them.
- When he tried to investigate John Mack, future CEO of Morgan Stanley, for insider trading ... he was fired.
- “It was not the cop on the corner of Wall Street. It was the cop on the corner of Wall Street that was compromised by the Mafia,” he says.
Whistleblower Thomas Drake
Charged with espionage in 2010 for having leaked unclassified information about NSA mass surveillance programmes to the press in the wake of 9/11, Thomas Drake tells us how he won a legal and moral battle against the national security state.
“Clinton introduces new federal death penalty statutes and by all these means he communicates with certain elements of the electorate that for 20 years had been largely alienated from the Democratic Party.”
With neither candidate able to establish a lead, the Presidential election would be decided by whoever won the state of Florida.
“The Governor Jeb Bush, whose brother George W. Bush was running for president, had hired a firm to scrub the voter rolls. The goal was to remove felons who, under Florida law, even once you've served your term for a felony, you still do not have your voting rights restored in Florida, and subsequent investigation showed very clearly that several thousand of the people who had been scrubbed, were wrongly scrubbed. These voters who were expunged were overwhelmingly African-American. African-Americans, of course, vote 90 per cent plus for the Democratic Party.”
A first count of votes gave George W. Bush a marginal victory, automatically triggering a machine recount.
A second manual recount would see the Bush team appeal to the Supreme Court to stop the recount process, eventually handing victory to George W. Bush.
“Many people believe he stole the election through the political power - number one, of his brother, who was the governor of Florida. And then, the fact that he had a Supreme Court which handed the election to him.”
Within a year of George W. Bush taking office, the United States would be rocked by the attacks of September 11th, 2001.
What happened on September 11 2001?
- On the morning of September 11, 2001, four domestic passenger airliners were simultaneously hijacked by 19 al-Qaeda members, with the sole intention of crashing them into major US landmarks. 8:46am - American Airlines Flight 11 crashed into the North Tower of the Word Trade Center complex in New York City.
- 9:03am - United Airlines Flight 175 crashed into the South Tower of the World Trade Center complex.
- 9:37am - American Airlines Flight 77 crashed into the western facade of the Pentagon in Arlington County, Virginia, leading to a partial collapse of the building.
- 10:07am - United Airlines Flight 93 crashed into a field in Stonycreek Township near Shanksville, Pennsylvania, after its passengers attempted to overcome the hijackers and retake control of the plane.
- The attacks killed nearly 3,000 people, while injuring more than 6,000 others.
A president who had assumed power under a cloud of uncertainty, now found new poise and new purpose.
“Freedom and fear are at war. The advance of human freedom now depends on us. We will not tire, we will not falter, and we will not fail.”
George W. Bush
Stellar Wind and "the enemy within"
“It's not only not trusting institutions, and not trusting the government, but also not trusting the person next door.”
As the US government promised a more vigilant defensce against any further attacks on American soil, vigilance would extend to domestic surveillance.
The Bush administration granted new powers for US security services to spy on US citizens.
Thomas Drake was a senior executive with the National Security Agency (NSA) at the time of the September 11 attacks.
“9/11 was used as an excuse to justify an extraordinary expansion of secret power under the mantel of national security.”
“What the government did right after 9/11 was licence unto itself the ability to create a National Security law, exempting itself from the constraints of the Constitution and literally all statutes that governed its activities up to that point. In the deepest of secrecy, and with the approval of the White House, the NSA employed a program called Stellar Wind. Stellar Wind was the masked Domestic Surveillance Program.”
Stellar Wind is the codename for what was officially known as the President’s Surveillance Program. It will involve the mining of data, telephone, email and internet activity, as well as the financial transactions of American people by the American government.
What was Stellar Wind?
- Stellar Wind or Stellarwind is the codename of information collected under the President's Surveillance Program (PSP).
- Under the programme, the NSA was authorised to monitor Americans' telephone calls and internet metadata without court-approved warrants.
- The secret programme's controversial activities required data mining a large database of telephone conversations, email communications and financial transactions.
“So you're willing to set aside the very form of governance that makes the American experience unique – that gave rise to the American Dream: life, liberty and the pursuit of happiness. We're going to turn our country inside out. We're gonna make everything suspicious, or possibly suspicious, because we have to, for the sake of national security."
“You have big appeals to fear. And there's a whole other dimension to this – it's not only not trusting institutions, and not trusting the government, but also not trusting the person next door.”
“In addition to that, you had the Patriot Act. You had more and more laws that give the executive more and more power. You invoke a terrifying internal and external threat like “the global war on terror”. It's a thing, terrorism is a thing, but it's a crime. It's a set of crimes. There are laws to deal with it. You don't need to close down a civil society to deal with them.”
New legislation and new bodies such as the Patriot Act and the Department of Homeland Security, while set up to protect America, were, according to critics, compromising the civil liberties of the American people.
What is the USA PATRIOT Act?
- On October 26, 2001, the USA PATRIOT Act was signed into law by President George W. Bush.
- USA PATRIOT is an acronym for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act.
- Since its inception, several legal challenges have been brought against the controversial act. Federal courts have also challenged the constitutionality of a number of provisions.
- On May 26, 2011, President Barack Obama signed the PATRIOT Sunsets Extension Act of 2011, a four-year extension that renewed three key elements of the legislation: roving wiretaps, searches of business records, and conducting surveillance of so-called "lone wolves".
What is the US Department of Homeland Security?
- The United States Department of Homeland Security (DHS) is a cabinet department of the United States federal government with responsibilities in public security.
- Signed into law by President George W. Bush in 2002, the department was established in direct response to the September 11 attacks, to improve domestic security coordination and communication.
“The continuing threat of terrorism, the threat of mass murder on our own soil, will be met with a unified, effective response.”
George W. Bush
“Even one percent insecurity is too much.”
In late 2001, Xenia Wickett is charged with launching the Bush administration’s Office of Homeland Security Affairs.
“The idea that anything was too much, that we needed to protect ourselves 100 percent, and of course, this was impossible. But that sentiment really defined, in many respects, how Homeland Security was thought of at the beginning.”
The ‘war on terror’, racial politics & a loss of faith in the establishment
President Bush would seek retribution for the attacks on the US homeland by executing a so-called ‘war on terror’.
The invasions of Afghanistan and Iraq would alienate sections of the Muslim world.
Despite attempts to claim otherwise, many Muslims, including American Muslims, would see the ‘war on terror’ as a war on them.
America’s racial politics took on a new form, as the devastation wrought by Hurricane Katrina across southern states in August 2005 would expose stubborn divisions of old.
And point to a president out of touch with the people.
“The demonisation of Muslims after 9/11 is certainly one of the most important political stories of this era. They were already a kind of ‘demon figure’ in American political culture – the entire foreign policy that George W Bush ended up prosecuting, I think, only reinforced the demonisation of Islam and of Muslims, including in the United States.”
“He was already unpopular, and then Katrina hit, and the response to it … well, first of all, the visual images of the utter destruction of New Orleans, the loss of life and what seemed to be the utterly incompetent response by the federal government.”
“It exposed stunning indifference to the fate of people there because they were poor; because they were black.”
“Katrina fed a larger narrative: That this is a government, this was an administration that didn't really care about ordinary people, that didn't have the time to focus on immediate needs domestically because it was so busy prosecuting what, by then, were unpopular wars overseas.”
Hurricane Katrina, August 2005
- Hurricane Katrina hit the Gulf Coast on August 29, 2005.
- It remains one of the deadliest hurricanes to have ever hit the US with an estimated more than 1,800 people killed during the hurricane and its aftermath.
- Katrina also caused one of the largest displacements of people in US history, with an estimated 1.5 million people in Louisiana, Mississippi and Alabama leaving their homes.
- Massive flooding left approximately 80 percent of New Orleans under water.
- The Bush administration was heavily criticised for its slow response to meeting the emergency needs of the people affected by the disaster.
In 2000, George W. Bush had come to power having lost the popular vote.
Eight years later, an unpopular president who had been marked by unpopular policies, would leave office just as a calamitous financial meltdown sent shockwaves throughout the United States.
America needed hope and called for change.
Those calls would be answered by an unlikely new leader.
Watch the Part 2