Pruning Shears

No Associated Press content was harmed in the writing of this post

Washington has generally been an accountability-free zone, most glaringly in the case of war crimes. George Bush, Dick Cheney, David Addington, John Yoo, and all the other high level architects of our torture program have been allowed to freely violate international law, our treaty obligations and the most basic human rights - all without having to face a single consequence.

To take just one figure - Bush - and one torture technique - waterboarding - he lied about it (“The US does not torture. I have not authorized it and I will not”), then vetoed legislation attempting to ban it. Then, when the coast was clear and it was obvious he would never be in legal jeopardy over his role in making the US a state sponsor of torture, he bragged about what he had done.

Barack Obama started his presidency by firmly declaring his intent to look forward, a sentiment that on its face sounds farsighted and magnanimous (except maybe to the torture victims and their families). The problem is, an unwillingness to pursue justice allows injustice to flourish. What may - may - have begun as a desire to turn the page and defuse tension morphed into an endorsement of the legal framework, quickly followed by an embrace (via) of the torture regime itself. Since it is hard to segregate such an odious policy it should not be surprising that Obama’s human rights record is becoming a whole catalogue of failures.

An unwillingness to investigate credible allegations of wrongdoing gives an implicit blessing to the lawbreaking in question. It says those laws are essentially trivial and not to be enforced. It makes the violated laws in question archaic - curiosities that have remained on the books because no one thought to remove them once their time had passed. The Convention Against Torture is now like one of those old laws prohibiting spitting on the Sabbath.

Maybe the corrosion of the national soul is too metaphysical for the ruling class, and we now take a more pragmatic approach towards abstract issues like morality and ethics. Fair enough. This week there was a very practical lesson in the value of looking back. McClatchy’s Greg Gordon reported on the role of Goldman Sachs in bringing down AIG, and it turns out they benefited by betting on their insurer’s demise:

Goldman responded to AIG’s refusal to meet all its demands for $10 billion in collateral by placing $2.5 billion in hedges — most of them bets on an AIG bankruptcy.

Sylvain Raynes, an expert on structured securities of the types that AIG insured, said it’s “implausible that Goldman can say ‘I had no idea that AIG was in dire straits or in weak financial condition.’”

AIG was also in the news because of a New York Times piece (via) outlining how the insurance giant had to forfeit its right to sue the investment banks it did business with in order to receive government assistance. This is a curious(!) restriction, and as Story and Morgenson note is a marked contrast with the bargaining federal negotiators use in similar situations. Washington, ever solicitous of Wall Street’s tender sensibilities, has declined to investigate much of anything related to the meltdown of 2008.

What is the inevitable result? Simon Johnson outlined it in a superb pair of posts. Goldman Sachs not only escaped unscathed from the financial crisis, but profited handsomely and even increased its market share. Given that incentive, Goldman is now doing exactly as expected - engaging in exactly the same kind of risky behavior. As Johnson points out, it is not Goldman’s job to be a good corporate citizen or abide by some vague sense of fair play. It is Goldman’s job to make money for its executives and shareholders. Since it is immune from consequences and guaranteed by the US taxpayer how else would you expect it to behave? (Yes, I know about the SEC’s action against Goldman. Get back to me when Blankfein does a perp walk.)

Meanwhile, JP Morgan is finding other uses for its newfound impunity. If CEO Jamie Dimon succeeds in spreading his company’s interests throughout dozens of countries he can ensure it will never be the object of a government resolution authority (or even conservatorship). Now that we know its officers will never face legal jeopardy for anything it does, provided it is “essential” enough, the goal is to ramp up all the characteristics that make it so. Again, its obligations are to its executives and shareholders, not to the public at large. The laws that theoretically apply to it and the other megabanks are quaint. That is how things work when all we do is look forward.

My friend Libby Spencer is having a hell of a time lately. If you can throw a few bucks her way please do.