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3 Oct, 2010 07:01

“Wall Street crooks and Washington politicians sleep in one bed” – insider

US author Yves Smith spoke with RT about the cover-ups that went on leading up to and during the economic crisis, the real secrets of the crooks on Wall Street, and the doom and gloom of the future of America's economy.

Yves Smith of nakedcapitalism.com and author of “Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism” told RT that there seems to be a big disconnect between sentiment in Washington and New York and the rest of the country.

“Something like over 60% of the policy makers in Washington think the country is on the right track. Over 70% in America as a whole think it is on the wrong track,” she said.

She believes normal investors would have removed failed bank managers.

“Normally, a private investor and most governments, when they rescue a bank, would get rid of the management, get rid of the board, install new people – that didn’t happen,” Smith said.

Banks and companies were very clever in their dishonesty in terms of finding ways to do things that were incredibly misleading, Yves Smith said.

“There was a lot of bonus gaming. One activity that happened on a wide-spread basis was that traders figured out a way to hedge their risks [by means of] collateralized debt obligations. And the way those worked was that, if they took these particular collateralized debt obligations and hedged them, they could take all the future profits and then count it in their bonuses this year,” she said.

The author also says US laws have become very weak.

“One of the problems of deregulation in the US – the regulations and laws have been so weakened over the last 20 years that a lot of what by any common sense standards should be criminal is now permitted. It’s what they call civil – you can sue the companies, but you can’t put anybody in jail,” she said.