Tuesday, February 24, 2009

Governing the Financial Crisis through Crime

CNBC's Rick Santelli rant against President Obama's bailout last Thursday, has apparently resonated with many Americans. According to Brian Stelter's reporting in the NYTimes Santelli appearing live from the Chicago Board of Trade said:

“The government is promoting bad behavior,” he said, and later implied comparisons to Cuba and asked the traders around them whether they wanted to pay their neighbors’ delinquent mortgages. When the traders started to boo, Mr. Santelli said, “President Obama, are you listening?”


The "bad behavior" line is part of a larger set of conservative talking points that have been in use since the fall aimed at framing the catastrophic levels of mortgage foreclosures as the result of irresponsible and fraudulent behavior by borrowers that took on mortgages they could not possibly afford. There were implications that government linked corporations Freddie Mack and Fannie Mae were some how complicit in this fraud as an effort to promote home ownership among the poor and minorities.

Three quick points should be made about this line of attack on the economic recovery strategy. First, there is plenty of crime running around in the financial crisis, most of it among the business classes mortgage brokers and lenders and investment banks. There is little doubt that the financialization of our economy requires not only more regulation, but some criminal law enforcement against those who abuse their positions of trust in a system rife with conflicts of interest. Second, the conservative critique ignores this massive fraud to focus on those participants in the mortgage crisis who look the most like much politicized and racialized notions of street crime, i.e., the poor and minorities. Third, it is really this cultural formation, one linking the poor, minorities, and the role of personal immorality in their disadvantages that the "bad behavior" line is really aimed at reviving for one reason. It was just this soured view of the poor and government that helped halt the war on poverty in the 1960s and shift us toward the war on crime that has dominated our political imagination ever since and which the new financial crisis now threatens to dislocate (in a way the war on terror never could because it built on the war on crime).

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