Life meets art as DOJ confirms the film's central thesis by pronouncing the rule of law dead in HSBC case.
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Guest post by John Titus, writer and producer of Bailout.
After the TARP bailout in October 2008, it was only a matter of time before the U.S. made express policy out of was obvious from that act of corporate welfare, namely, that the government had jettisoned principles of fair play and was being run by criminal bankers.
That time arrived this week with the Justice Department’s announcement that HSBC’s money-laundering crimes will go unprosecuted.
Strangely, this sad development coincides with the arrival of the one and only documentary predicting exactly this outcome. Indeed, Bailout's central lament, illustrated throughout the film, is that the rule of law has been murdered at the hands of a bankrupt kleptocracy.
By explaining unpunished crimes and demonstrating their effects, Bailout differs from previous financial crisis documentaries in several key respects.
First, it explains exactly how a series of criminal frauds—particularly that fraud on the court known as robo-signing (which renders most foreclosures void as a matter of law)—caused the financial crisis and made it a lot worse than it had to be.
Second, Bailout takes a hard look at the harm these frauds have caused both to specific victims and to America generally. Anyone who parrots the banksters and their puppet-in-chief by saying that the financial crisis didn’t involve crimes is in for a fat dose of reality.
Third, Bailout attacks TARP as a sham rather than accepting the Wall Street canard that Main Street needed TARP, as other documentaries (most notably, Capitalism: A Love Story and Inside Job) have done without exception.
Embedded in the TARP myth are two absolutely cancerous lies. First is the wholly unsupported claim that the "system" would have collapsed but for TARP. Second is the notion that freedom and liberty should be sacrificed to achieve perceived economic security.
Both lies manifested themselves in the Justice Department's announcement that HSBC's money-laundering empire would occasion no prosecutions, which formally eradicates the rule of law.
Perhaps because the film condemns, in no uncertain terms, the kleptocracy that the U.S. government has become, Bailout has received uniformly stellar reviews (see this, this, this, this, and this) and has enjoyed high ratings from the public in limited release. 
It's Official: The U.S. Is Now A Kleptocracy
The formal coronation of the criminal banking class occurred with the Department of Justice's announcement that even though HSBC “enabled Mexican drug cartels to move money illegally through its American subsidiaries” and—at the urging of one bank executive—“continue[d] working with the Saudi Al Rajhi bank, which has supported Al Qaeda,” the bank would not be criminally prosecuted because… government officials said so.
Actually, what DOJ said—that prosecuting HSBC would “destabilize the global financial system”—is far more dangerous than arbitrary fiat. By officially immunizing massive financial crimes from prosecution, the DOJ has ensured that criminals remain in charge of an admittedly shaky financial system.
(The imposition of “record” fines is intended dissuade a wowed public from posing questions like: why on earth won’t HSBC simply commit more crimes to pay the fine? After all, the DOJ’s $1.9 billion fine is trivial next to its admission that HSBC excluded “hundreds of billions of dollars” from audits and “failed to monitor over $200 trillion in wire transfers between 2006 and 2009 from countries that HSBC’s U.S. unit deemed to be ‘standard’ or ‘medium’ risk.”)
What is noteworthy about the HSBC case is that the DOJ is so candid in stating that the rule of law does not apply to criminals working in a big bank, and the transparently pitiful excuse for why that is the case: according to the DOJ's enforcement chief, Lanny Breuer, criminal prosecution would cause “a systemic effect on the economy."
This is precisely the same intellectually bankrupt and false claim that gave rise to TARP.
Talk of financial “instability” and “systemic risk” has been incessant ever since Hank Paulson lied to Congress by saying that Armageddon would be at hand unless the public forked over $700 billion to purchase toxic assets from Paulson’s alma mater (Goldman Sachs) and other banks in Goldman’s too-big-to-fail fraternity.
As it turned out, none of the $700 billion TARP “rescue” package—zero—was used to purchase bad assets, and yet the U.S. avoided the Armageddon that Paulson said would visit the U.S. if such assets were not purchased.
Paulson’s TARP threat, in other words, was a bold-faced lie. But the media let him get away with it, and Paulson used the TARP money to directly recapitalize the big banks so they could acquire other banks and get even bigger—after they paid themselves bonuses of course.
Watching Paulson use the oldest trick in the book (bait and switch) to get away with biggest sham in history, Tim Geithner took the lie to new heights. When AIG failed, for instance, Geithner ordered that public monies be used to pay AIG’s counterparties 100 cents on the dollar.
Geithner was either so brazen or so lazy that he boiled down the formulation of his constituent kleptocracy to a single word.
"Systemic" Nonsense Talk Is Born
Geithner never provided a real reason for bailing out AIG's counterparties (or any other bank, especially Citigroup, for that matter). Instead, he hid behind the claim—without evidence or explanation—that AIG’s counterparties posed “systemic risk.”
Geithner himself has repeatedly exposed that claim as empty.
First, despite his lead role in bailing out AIG bailout, which amounted to well over $30 billion for foreign banks alone, “Geithner could not answer why not making counterparties like Goldman Sachs' 100% whole on its AIG trades posed systemic risk to the nation.”
Second, Neil Barofsky relays a conversation with Geithner that reveals the phrase “systemic risk” as exactly the kind of bluff pseudoscience that the financial media and politicians would find intimidating.
On page 222 of Barofsky’s book Bailout, Geithner candidly admits: “You won’t be able to make a judgment about what’s systemic and what’s not until you know the nature of the shock.”
Bailout explores the consequences of this kleptocratic lawlessness by juxtaposing its winners and losers:
- Winners are the money center financial institutions, which make fraudulent loans, which initiate fraudulent lawsuits using evidence that’s systematically forged, and which sell fraudulent securities (backed by assets they know to be fraudulently valued, or not backed by anything at all).
- Winners are the money center banks, which get laws passed to allow them to engage in accounting fraud and to bypass the insurable interest rule and flout capital requirements by selling sham insurance (called credit default swaps).
- Winners are the money center banks, which tell enormous lies (like TARP) without a shred of evidence in order to reward themselves with unlimited bailouts from the government they own.
- Losers are ordinary Americans fraudulently evicted from their homes, pensioners and investors fraudulently bilked out of their retirement savings through worthless mortgage-backed securities.
- Losers are the shareholders forced to pay the fines for the crimes committed by their company’s executives, and the savers forced to suffer lower interest rates so that the pre-selected winners can enjoy further government subsidies of their ongoing crimes.
- Losers are ordinary Americans who are bloating the rolls of food stamp users and the ranks of those “not in the labor force” (to mask the true unemployment rate, now approaching 20%) to record levels, whose jobs were shipped overseas under the rubric of “free trade” advanced by that parasite known as the financial class.
These outrages will continue to grow, preventing any real economic recovery, until people cope with the fact that the so-called "global financial crisis" is nothing of the sort. It is rather a legal crisis resulting from a coup d'etat by bankers--exactly what our founders warned against.
John Titus has practiced law in federal courts for more than 15 years.
*****
Starring Dylan Ratigan, Chris Whalen, Yves Smith, Chris Hedges, Karl Denninger, and yours truly, DB from the Daily Bail:
Watch an Excellent Trailer for BAILOUT
It's finally here:
