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May 2, 2013

Sachs: Banking Abuses ‘Can’t Get More in Your Face’

Jeff Sachs is interviewed by Paul Vigna of the WSJ's MoneyBeat:
Jeffrey Sachs: Banking Abuses ‘Can’t Get More in Your Face’, by Paul Vigna: ....When I really started to ... keep track of the number of lawsuits, and the number of settlements, and it’s amazing actually how many there are, of course. Libor, Abacus, other financial fraud scandals, money laundering, insider trading. The list is actually extraordinary. The frequency of new cases, new settlements, new SEC charges, is stunning. ...
Why the lack of prosecution?
The legal defenses are very powerful, the lobbying is very powerful, the government in general is completely squeezed even if it would like to regulate. But we also have a revolving door of senior regulatory officials, congressional staff, congressmen and senators. Everyone’s in on this. ...
What will it take to change the system?
I think that the public is utterly disgusted, of course, and that is a major start. There’s going to be a massive backlash..., what one does feel is that the extent of abuse, the stench of it, is reaching such a high level that we’re not in an equilibrium, political or social, right now. This is explosive stuff (scandals like Abacus and insider trading). It’s unbelievable. So far it hasn’t stopped the practice, but it can’t get more in your face than this actually.
I think in the end the question will be ... whether a political movement not based on mega-donations can win political control. I believe that it can actually. Some movement like the populist movement or the progressive era of the past is going to rise and say ‘we don’t need contributions, we’re not taking them, and if you the American people want a way out of this that doesn’t involve politicians bought for big money, we’re the ones.”
But short of that I don’t see a way out. ...

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