WE NEED BETTER, NOT MORE, INFORMATION

By Roberto Savio Reprint | | Print |

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ROME, Jun 21 2011 (IPS) - Not long ago we were convinced that the more information we had the more aware we would be as citizen and the more likely to make informed decisions at the polls. Today it seems the more information we have, the more questions we have. Ultimately, rather then feeling more secure, we feel more uncertain.

A few examples. How many remember when Julian Assange declared shortly before his arrest that Wikileaks was going to release the full documentation of how an important American bank had committed fraudulent practices that led it to the verge of bankruptcy, from which only state intervention rescued it. The US government is about to wrap up its second bank rescue operation, after the 750 billion bailout by the Bush administration. An estimated 2.3 trillion dollars has been invested worldwide to save the financial sector.

Months have passed and there hasn’t been a peep about this story. Without a doubt, documentation of the financial system’s responsibility for a crisis that has affected hundreds of millions of people globally (the International Labour Organisation calculates it has pushed more than 40 million people into poverty) is more damaging for governments than the gossip from American embassies. We ask ourselves: what ever happened with that?

We now know a lot about the fraudulent and completely unprofessional practices that led to the financial crisis. A number of banks paid significant penalties to avoid criminal trials that they were sure to lose. And yet the major US banks paid out in its traditional end-of-the-year bonuses an astounding 20 billion dollars as if nothing had happened.

When a sector commits criminal acts that force part of humanity into misery and drive the rich countries into a suicidal race to fight fiscal deficits (not social deficits), one might think that those responsible would be punished. And yet as of today criminal charges have been filed against only one Wall Street player -only one: Fabrice Tourre, a young Frenchman and a lowly vice president at Goldman Sachs. which paid a 550 million dollar fine to avoid going to court. Tourre is accused of having “created a deceitful system of selling mortgages”. He ran a section of Goldman Sachs under Jonathan Egon, who was the inventor of the fraudulent scheme. Tourre’s defence showed that he was one of the least important members of a team of at least 15 people. The company transferred Tourre to London last year where he is on paid vacation and is making no statements. A question arises inevitably: What is the logic of this story?

But this question can be seen as a product of the strategy of the financiers and their lobbies to convince the public of their complete innocence. They argue that the Great Recession that we are still suffering through was not caused by their fraudulent practices but by market fluctuations that simply contributed to the formation of a bubble. According to them, there were but a handful of instances of wildly excessive speculation, like that of Bernie Madoff, who deliberately swindled his clients out of 40 billion dollars and was rightly condemned to over two hundred years in prison. They would have us conclude that the financial system is solid, healthy, efficient, and responsible.

Perusal of the Madoff case unearths a disgraceful fact: the entity with jurisdiction over such crimes, the Security Investor Protection Corporation, hired the law firm of Baker and Hostetler, to liquidate Madoff’s properties and use the proceeds to compensate his victims. This effort has produced thus far 318 million dollars and Judge Burton Lifland just granted the lawyers a fee of 43.2 million dollars just for the period from October 2010 to January 2011. The liquidator, Irving Picard, earned 713,799 dollars for the same period. What kind of justice is served when sums like these are subtracted from the funds intended for the victims?

Unfortunately there is no answer, or at least no credible relevant information available in the media, to a question like this, which is one of many regarding the behaviour of bankers and the oversight entities who brought about the economic catastrophe of these years.

The real problem is that citizens have less and less trust in the institutions and tend to suspect that the many illogical or incomprehensible developments are part of a plot.

The conclusion is this: we don’t need more information but better and more trustworthy information. This would give us all more peace of mind. (END/COPYRIGHT IPS)

(*) Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency.