Alan Grayson: “President Obama let these crooks off the hook”February 9, 2011
Rep. Alan Grayson served Florida’s 8th Congressional District from 2009-2011.
Dylan regards Rep. Grayson as one of “the most vocal and aggressive critics of the crony capitalism, corporate communism, and large institutional interests perpetuating their existence at the expense of an increasingly large percentage of the American people.”
We caught up with Rep. Grayson and asked him about the his take on Obama’s handling of Egypt, the potential financial consequences of America’s overextended foreign policy and military, the Federal Reserve audit, and the Financial Crisis Inquiry Commission.
DYLAN: Welcome to Episode #28 of Radio Free Dylan. We are joined today by Representative Alan Grayson, former Representative of Florida's Eighth Congressional District, serving from '09 to 2011 and one of the most vocal and aggressive critics of the crony capitalism, corporate communism, call it what you want but basically large institutional interests perpetuating their existence at the expense of an increasingly large percentage of the American people, there appears to be a political theme around the world where the wealthy use their money to purchase political protection from the government in order to become wealthier in the process, instead of generating wealth by creating value for other human beings, you generate wealthy by extracting that either directly or indirectly from the vast majority of your countrymen -- and Congressman Grayson it is a pleasure to have you here.
REP. GRAYSON: Thanks very much for having me.
DYLAN: I want to get to Federal Reserve audit, the Financial Crisis Inquiry Commission, foreclosure and fraud. But before we do that, what is your perspective on American foreign policy in the Middle East -- specifically its exclusive support of all sorts of oppressive dictators with secret police, abusing and picking people up, running mafia style economies where you’ve gotta be a member of the party in order to get a business permit? At the same time claiming to be an advocate of democracy in the Middle East -- I call it "democracy hypocrisy," and I am of course referring to Egypt.
REP. GRAYSON: Well I'm in favor of a four-letter foreign policy -- MYOB, mind your own business. I think that covers just about any interaction that we need to have with other countries. This idea that we can micromanage our foreign relations, and micromanage the lives of other independent people, I thought that went out with colonialism.
DYLAN: How then do you get there? In other words if you look at American foreign policy right now as defined by George Bush and Donald Rumsfeld in the hours and weeks following 9/11 and everything really having been derived from that grand architecture, how do we even begin a path toward a new foreign policy whether it is your version or anything else?
REP. GRAYSON: Well we begin that task by bringing our troops home. We don’t need to occupy two other countries 8000 miles from our shores, and it has cost an amazing tremendous amount of harm both in dollars and in blood. There was a study that was done a couple of years ago of troops returning to the United States from Iraq. The study found that 15% of all the troops come back from Iraq with permanent brain damage. I am not talking about headaches, I am talking about things that you can see on a CAT scan -- and it is permanent. Now we’ve had almost two million Americans serve in Afghanistan, in Iraq. It means, if you do the math, that we’ve heard about a quarter of a million young Americans permanently scared for life for brain damage -- and for what? And why do we need to spend four trillion dollars pursuing the war in Iraq? How is that necessary? We are a country now with a net worth about 50 trillion dollars. We spend 8% of all the wealth accumulated over the course of two centuries. And we dropped into the sands of Mesopotamia. It just doesn’t make any sense. We have to bring the troops home -- and we have to mind our own business.
DYLAN: What do you see as the greatest political barrier to moving in that direction?
REP. GRAYSON: I think the greatest political barrier is the fact that the right wing keeps throwing up "leaders," so called "leaders" to prove, I think they have to prove their manhood by invading and lording it those foreign people. And that was basically what was happening with George W Bush. He know that he was AWOL from service for over a year, and he felt that he could somehow cover that up and make up for it by invading two other countries.
DYLAN: And what would you suggest is the best political tactic to fight a dynamic like the one you’ve just described, where you have a phenomenally insecure political faction that is looking to prove its relevance by murdering innocents far away from it, with other people’s money and gun and children?
REP. GRAYSON: I think just talking about the truth, I think that the truth shall set us free. If we keep pointing out the unbelievable harm, not just to the people whose company we occupy but also to us. The unbelievable harm that they suffer and we suffer, who knows, maybe later that will become unacceptable.
DYLAN: As the truth comes out -- how do you suggest the American people and the American government reconcile the realization that their tax dollars, forget the wars for a second or at least set them aside -- I shouldn’t suggest that you forget them, but set them aside for the moment -- and the American people are being forced to confront the fact that their tax dollars have been, are and will continue to be used to finance oppressive dictators who deprive their people of democracy in a way that it is not that unlike Saddam Hussein where secret police, spies and beatings in the lumberyard for anybody who is picked up. Except how do we invade one country who abuses it's people while we bankroll other countries that do the same thing just because their foreign policy is different?
REP. GRAYSON: Well listen what it all comes down to is there is a military industrial complex that has been dictating our foreign policy for two generations. Is it really any surprise when you take the largest army contractor, the president of the largest army contractor and you make him Vice President? Is it really any surprise that you end up in two wars?
DYLAN: But that doesn’t address the overall implications for crumbling US foreign policy, as our own allies exhibit the same behavior as our enemies.
REP. GRAYSON: Well, I think actually our allies have been trying to restrain people like George W. Bush now for as long as they’ve seen this conduct on our part. It was a close question whether even Britain would join us in the war in Iraq. Virtually nobody else did. We ended up with 100,000 American troops -- they were at one point 150,000 American troops -- a small number of British troops and something like 800 troops from Poland. So I think our allies have been trying to restrain this impulse that the military industrial complex has to line their own pockets by occupying one foreign country after another and engaging in endless war to this point to no avail. I mean it is safe to say that our European allies and our allies of the Far East would be far happier if we weren’t destroying ourselves through this endless military spending which reached almost a trillion dollars last year. A trillion dollars in one year. We have roughly 6, 7% of our total income last year devoted to military spending. They would be much happier if the US government were more restrained and the military spending was not so much that it actually almost equaled the rest of the world combined. We spent five times as much as China; we spent 10 times as much as Russia. The only people even come close to us in military spending are actually our allies. So what’s the point? Are we fighting to invade France and England next? Why are we doing this?
DYLAN: Take a momentary break. We will return with former representative of Florida, Congressman Allan Grayson out of the eighth congressional district. If you want to talk about lining your pockets, stick around because there is no better way to line your pockets than to run a bank particularly when you can take all your bad loans to the Federal Reserve when things go awry. We will be back after this.
DYLAN: We are back with representative Alan Grayson, former representative of Florida’s Eighth Congressional District serving from '09 to 2011. I want to switch gears to something that you did A tremendous amount of work on, and admirably so -- I want to try to get a handle on the rampant theft that is the guts of the America's finance and try to establish even a remote sense of fairness in terms of a massive tax payer subsidized system, that in fact does not serve its purpose -- banking -- as a pretty simple function and one that we don't have very good version of, unless you are in charge of the bank. What were you proudest of in your first term serving this country when it came to dealing with the financial system?
REP. GRAYSON: Well first exposing the utter incompetence of many of the people in charge. My five minute examination of Elizabeth Coleman, the Inspector General of the Fed, where I asked her, the Fed handed out a trillion dollars in the last 18 months, "who got it?" And the answer was "I don’t know." That video has become the most watched congressional video in history. 3.4 million people have downloaded and seen, it and according to YouTube, they’ve watched the whole thing and I think watching in horror, to understand that our government is so out of control and specifically the Federal Reserve is so out of control that these unelected officials could hand out a trillion dollars and not even know who got the money. And I think that after that it became clear and that examination and other related examinations, we had a series of oversight in 2009. I t created a tremendous support that allowed us to finally break through and after almost 100 years, conduct the first independent audit of the Federal Reserve thanks to my alliance with Dr. Ron Paul where he lined up all the Republicans and I lined up two thirds of the Democrats and we were able to finally push this through in the face of tremendous resistance from the Fed and frankly from the Obama administration as well.
Tim Geithner said when it was time to finish the bill on financial reform, he told people that his highest priority was to make sure – and this is the bill that was supposed to save America -- to keep us from having a bail out -- make sure that we didn’t have a total collapse of the economic system.
He said that his highest priority was to make sure that there was no auditing of the Fed! (laughs) So, in the fact of that kind of resistance, we were able to win and win big. I mean we have now the first independent audit and nothing really bad has happened so far. People were saying well if you audit the Fed, the economy will collapse. Hasn’t happened yet and I think that people are going to realize the Fed should be a responsible government body just like every other government body. We need to look behind the curtain and find out exactly what’s going on.
DYLAN: What do you think Tim Geithner is so afraid would be found?
REP. GRAYSON: I don’t know but I am sure that Tim Geithner didn’t want the Fed audited because Tim Geithner didn’t want Tim Geithner audited, he worked for the New York Fed, led the New York Fed for years before he became Treasury Secretary -- and frankly it sounded a bit self serving to me that he said that.
DYLAN: And what do you and not just you but I'll add Dr. Ron Paul to it -- what do the two of you think was so important about auditing the Fed?
REP. GRAYSON: Well, what I think we are going to find is something that we’ve already have a little taste of here and there, which is that the Fed has made an enormous deals with entities like Citibank on terms that were completely unfair to the taxpayers. We got a little shred of information about that because one of those deals happened to be one involving the treasury, it has to be a released to us and we found that the Fed had assumed $238 billion dollars of liability from Citibank on mortgage back securities in exchange for nothing. I think we are going to find more deals like that and people are going to scratch their heads and say why are we doing this? Why are we allowing our money to be used in the secret bailouts of three or four or five or six institutions without people even finding out about it except for the fact that we pass this legislation to help to find out. The fed has been out of control now for quite a while and helping its friends at the expense of the rest of us.
DYLAN: And why are we doing that? Why are we – why have we accepted a system in your opinion that allows a relatively anonymous, highly secretive group of people to provide infinite access of money to people who not only create no apparent value but creates lots of apparent loss?
REP. GRAYSON: Because the banking system and the bankers, the people in charge of the system have created this meme that the Fed can do no wrong and it has to remain independent of everybody and everything. It is almost as if they believe that the Chairman of the Fed is the Wizard of Oz and it’s not true. I mean the Fed has the authority to create money but it should not have the authority to make the kind of deals that we’ve been seeing where they create massive liability off the books of their favorites while small community banks and small businesses suffer and get nothing. At one point we demonstrated that they had – lent so much money to the Central Bank in New Zealand that it corresponds to $4,000 for every single person in New Zealand. Wouldn't it be nice if the Feds can extend that kind of credit to Americans?
DYLAN: The Financial Crisis Inquiry Commission spent $8 million investigating the largest financial crisis in America since the crash and the Great Depression in the late 20s and the early 30s, the results of that $8 million investigation were not published until after the Bank Reform Act was passed, which struck me as peculiar that you would conduct an investigation with a very modest budget -- which I will get back to in a second -- and then not release the investigation until after you’ve decided what the new laws are. Is that typical where you will investigate and audit and get all the information but you make the law before you get the information and then you put the report after, is that typical?
REP. GRAYSON: Well no, and I think it is a sign of something that is very sad it is the politicization of everything. One of the more interesting things about that report is the minority, the so called "minority views," the dissenting views in that report -- that probably held up report past the point when it was actual, would have been able to contribute to legislative effort that we all engaged in. I don’t know how anybody can look at the crash of 2008 and decide that what we really need is more deregulation. But if you read the minority view, that’s exactly what the right wing members of this commission kept pushing, and it’s delusional. We’ve known since the 16th century that you can’t have a banking system without regulation, it collapses! It booms and then it busts almost immediately. If you don’t believe me, ask the bankers of Venice. But, and yet we have this free market fundamentalism that has placed its minions all through the government, all through journalism, all through everywhere in life that people actually can form opinions and make decisions, and the result of that we cant come up with something like this, a post-mortem of the greatest financial disaster of the past 60 years without that becoming politicized as well.
DYLAN: Is it because – do the free marketeers, the advocators of sort of thing in your analysis because I am sure it is unknowable, but, do they advocate for no rules for banking which is entirely predicated on rules because -- I am not selling obviously an airplane or a hamburger and haircut or a newspaper or teaching a class or anything -- all I am doing if I'm a banker is creating risk and so if the business is I get to get rid of all my risk by transferring it to the Fed or Fannie, Freddie whoever it is, obviously I am going to do that until I blow the place to smithereens. And banking, if you understand banking at all, is a distinctively different business undertaking than every other free enterprise business in the world. It is a facilitator of enterprise. It is not an enterprise. Do those people in your opinion not – are they incapable of making that distinction? Do they not care? It has confused me as a journalist where I thought everyone understood, if you played Monopoly, the banker is not a player on the board for a reason. How do you explain the failure to make any of that distinction to between banking and the rest of all industry in the business?
REP. GRAYSON: I think that these people have been blinded by ideology. They’ve bought this whole idea that any regulation is bad regulation, hook, line and sinker without realizing that you can’t even have banks unless you have a regulatory system. There has to be reserve requirements, there has to be audits like every other business to start with they have to have a fair set of books then if it’s a public company get reported to the shareholders. And yet they think -- that the only rule that they actually believe in is caveat emptor, and the only law that they believe in is the law of the jungle. You can't have a banking system or any other financial system or for that matter any other economy when everybody is at war with everybody else and there are no rules. It’s not possible.
DYLAN: Couple of last questions and then I will let you go. One thing that came out in the FCIC report and Bill Greider did a great job of highlighting this -- was the explicit introduction of known to be fraudulent mortgages. They have been audited by Clayton Holdings which is one of the bigger auditing firms if not the biggest auditing firms of these documents. They were knowingly and knowingly insofar as they had been reviewed by Clayton Holdings, then installed inside of investments and sold to pension funds, et cetera et cetera, where then the banks would go out and buy insurance on that that obviously paid a lot of money when the government stepped in to bail out AIG who was one of the big insurers.
How is it that after the Great Depression, there were blue sky laws that said it is illegal to sell a worthless piece of paper as if it is stock in the company if its just Alan Grayson and Dylan Ratigan have gone downtown with a piece of paper with their names on it and they are selling it for money even though there is actually no business. We created laws to prevent people from doing that sort of thing. And yet we found here that mortgages that have been deemed by some official authority -- an auditor in this case -- as nonconforming, will not get paid back, noncompliant with illegal investment standards for you, American pension fund, for you American mortgage buyer, Fannie Freddie etcetera, and then the FCIC comes out, shows that these fraudulent mortgages were being packaged and sold by Goldman, Deutsche, Morgan, the list goes on and yet, we have yet to see a single meaningful fraud investigation. I mean these guys makes Bernie Madoff look like Romper Room.
REP. GRAYSON: Well that’s right, and what it comes down to is they have been protected by one thing and one thing only which is prosecutor discretion. There is no doubt in a situation like that that people committed crimes, but in order to prosecute them for that you need to have a prosecutor who is willing to do it. And that is something that seems to have eluded us in the past, I guess, three years now. I am not only blaming the Obama administration, if the Bush administration had its head on straight they would have prevented a lot of these things from happening to start with.
But the President Obama administration said at the beginning, we are going to look forward and not back and therefore in the process of making that decision basically let these crooks off the hook.
DYLAN: And what does that sort of decision make, I call Obama the "turn the page president" whether it is war crimes, banking crimes or anything else, is there a point where the decision not to prosecute blatant crimes that are destructive to society really starts to breach the public trust with the government just because the President doesn’t really want to deal with the mess?
REP. GRAYSON: It's actually worst than that. The same people who were committing fraud and crimes at Bear Stearns, they are now committing fraud and crimes at Bank of America, at Goldman Sachs and other institutions, because it turns out that crime does pay. It turns out that if you steal a large amount of money that leads to the collapse of your institutions, there's jobs for you somewhere else.
And the old saying is those who forget history is going to repeated; well those who don’t punish the wrongdoers are doomed to repeat it as well. And that is the real problem; the problem is not only that it offends your sense of justice or my sense of justice to see people who destroyed enormous amount of wealth, staggering amounts of wealth, 15% of our entire national net worth in 18 months. The people who did that -- it annoys me and annoys you that these people get off the hook but worse than that it scares me and it probably scares you too because we know it can happen again.
And you know, last time we had a margin of error, okay -- last time most people in this country were not broke. This time it is different. This time, people are already at the edge. They're already hanging at the edge of the cliff. So if we have we another economic downturn because the same crazies are doing the same things that they were doing, at different institutions under a different name -- it is all over.
DYLAN: I couldn’t agree with you more. I guess the other thing that does strike me though is at a time when -- and I don’t care what size the government is -- big, small, I think it's a moronic argument -- but we know we need an effective government, an effective at administrating and advocating basic simple rules of fairness and one that can win the trust of the vast majority of the population to honorably, or at least attempt honorably, to administrate its simple rules of fairness and there are certain things that only the government can do. Like make banking law. We can go down that list.
And to the extent to which the meme that the government cannot be trusted to do anything is reinforced to do anything, originating with Reagan -- wow much does it cripple our ability as a country to transition through an immense period of transition? The likes of which again we haven’t seen -- I mean think again obviously the Hoover Dam, the Eisenhower road project, those major undertakings in this country. Do you honestly think Congressman that you could win the confidence of any meaningful coalition for any major public investments for any public kind in this country? Am I wrong to think that the imbedded distrust of the government whether it is the Blackwater boondoggles or the banking giveaways or the wars that that corrodes the basic trust in the government to do anything good or even that works?
DYLAN: Well you are right, I know a little bit behind in my reading and I happen to pick up a magazine from the time of the GM bailout. And I read through it and I was very surprised and sort of disheartened to see that the gist of what people were saying in supposedly neutral mainstream media at that time was how awful it would be to have the government in charge of GM and Chrysler because they are going to make silly cars that nobody would want to buy. And bear in mind, this is at the tail end of an experience that had gone on for what -- 30 years or more that Michael Moore has documented and detailed -- where the US orderly essentially committed suicide or for long extended period of time.
So you would think that after experience people would be saying, gee, maybe big business doesn’t know everything, maybe big business isn’t always right but instead we got that little song playing in our head that Reagan put there saying "the government is always wrong, government is always wrong." So people were attacking the government investment in GM to save those tens of thousands or even hundreds of thousands jobs in the United States rather than attacking the cause of that, which is a fact that those people in charge in GM were incompetent and the same thing is true of people at Bear Stearns and the same thing is true of the people at Enron. Either incompetent or dishonest or both. When you see that happening in one organization after another after another all through corporate America, you wonder why people incessantly attack the government. When banks were collapsing left and right, the mail was still being delivered on time. What does that tell you?
DYLAN: Last question, whether you are serving in the United States Congress or not, you are a well-versed and well-educated man, you are a young man and you are a man of immense passion, and a very strong point of view and capacity to deliver impactful blows in the advocacy or the things that you believe most passionately in. Which is an extraordinary long way of my asking you, what are you going to do next to keep having an impact on American culture, American policy and the future of America’s development and eternal quest for fairness?
REP. GRAYSON: I don’t know but I will tell you that one of my personal heroes is Howard Dean because Howard Dean came within a few inches of the Presidency, and didn’t make it in a way that must have had some serious effects on his point of view of the kind of person he was and what he meant to the world. And after he lost and had gotten knocked down, he dusts himself up, picks himself up and gave the Democratic Party through his work with the DNC a majority in the House and in the Senate and ultimately the White House. So maybe there is no second act in America life or maybe there is, we will just have to see.
DYLAN: Well it will be a loss to the public discourse in this country not to be hearing your voice in some meaningful and consequential form, and I am honored to be able to have the opportunity have this conversation with you, and look forward to hearing and seeing your next act may be Congressman.
REP. GRAYSON: Thanks -- you’ve done so much with your show to show people the truth and that’s a hard thing to come by these days.
DYLAN: Thank you Congressman.
REP. GRAYSON: So, God bless you for that.
DYLAN: Thank you so much we are pushing for the same team one way or the other. Representative Allan Grayson, former representative of Florida’s Eighth Congressional District serving 09 through 11. His next act still to come.
So before I let you go, I think its important to observe what we just learned in that conversation. Or at least we are able to get that much more of a focus on and I really want to just hammer this one point. Whether it is for political convenience, whether because he believes it’s the right way to be, or whether it is because he doesn’t know what else to do, the "turn the page" concept of the Presidency that Barack Obama brought into the room in the context of massive theft and massive torture and war crime over the previous eight years, or whether it is the ongoing decision to continue to push beyond whatever the news of the day may be into some sort of false forward narrative on the belief that accountability for multi-trillion dollar theft torture, murder or anything else like that in some ways does not require the investment, the judicial investment, the prosecutorial investment to deal with it because it is inconvenient to Barack Obama, and its not what he wants to do, is a doomed strategy in my opinion.
How long this will go, I do not know. But the peril from a behavioral-economic stand point of going with a "turn the page" concept for a group of people that continue to be deprived of resources and suffer the consequences of a pattern of unfairness in our tax code, banking system, health care system, educational system and trade policies is one that does not end well.
Let us all hope that as we all have our own awakenings about our own values and the way that we deal with our world, that this President and his advisers come to similar awakenings before it is worse than it is now.
I don’t ever believe it will be too late. But boy, I sure wish we could get on with the business of fixing things instead of being in the business of pretending things are fine if we can just move along and go with the president. It is a coward’s way out -- and this is not a cowardly country. We will talk to you next time.