Morgan Stanley: Please Allow Me to Introduce Myself ...

"Please allow me to introduce myself, I'm a man of wealth and taste ..."

"Some people," my mother used to say, "are just no damned good." This was from somebody who rarely used bad language around us, and it was usually said with an air of bemused resignation rather than white-hot rage. I've always leaned a little more toward the possibility of redemption myself. But the more I learn about Wall Street,the more I see the wisdom in Mom's words.

The latest lawsuit against Morgan Stanley raises the question again: Are a whole lot of Wall Street executives "just no damned good"? The evidence is overwhelming: They cheated. They lied. They used racial discrimination to make a fast buck at the expense of African Americans, ripped off their own investors (including working people's pension funds), and then took a huge bailout from the American people.

Then, once they were safely ensconced back on their plutocratic perch and raking in more unearned wealth, they quickly deployed huge amounts of that money - to subvert our political process. That way they can loosen regulations on their ownindustry while forcing us to accept an austerity program like the "Simpson Bowles" plan, which imposes even more hardship on the majority while offering even more tax breaks to people like Morgan Stanley's executives.

Did we mention that Erskine Bowles, co-author of that plan, is on the Board of Directors of Morgan Stanley?

"Pleased to meet you, Hope you guess my name ..."

If there's one area where our country prides itself on its moral progress, it's in our battle to eliminate racism and end the ruthless exploitation of racial minorities. Pride, meet Morgan Stanley.

The lawsuit [1] was filed on behalf of five Detroit-area homeowners and Michigan Legal Services in the U.S. District Court in New York. It was filed by the American Civil Liberties Union, the ACLU of Michigan, the National Consumer Law Center, and a law firm.

This is the first time ripped-off borrowers are suing an investment bank directly, rather than the subprime lender who sold their loans to that bank. That's because, according to the suit, Morgan Stanley put up the money for these loans, then demanded that subprime lender New Century write a lot of high-risk loans that it knew borrowers would be unable to repay.

In other words: New Century was the front man, not the boss.

"But what's puzzling you is the nature of my game ..."

Why would Morgan Stanley do such a thing? That's easy. They wanted New Century to put as much money on the books as it could, as quickly as it could, so that it could bundle up these mortgages and sell them to investors with lies and deception.

Morgan Stanley defrauded homeowners by concealing the true nature of these loans and knowingly selling them a bad product. Then it defrauded investors by packaging up these phony assets and selling them as if they were worth their weight in plutonium.

This issue has come up before with Morgan Stanley, most notably in a settlement [2] which the investment bank paid in order to end an investigation by Massachusetts Attorney General Martha Coakley into precisely the same kind of racial predation in that state.

"Just as every cop is a criminal, and all the sinners saints ..."

That Massachusetts settlement is pretty damning evidence against Morgan Stanley. They'll have their defenders, of course, but the bulk of their defense argument is likely to rest of the time-worn (and often false) argument that their behavior may have been immoral but was not illegal.

We'll see about that. In the meantime, what we're talking about here is morality - the bank's, and that of the politicians who so often help them escape the reach of law and fair play.

A lot of conservatives will try to blame the whole thing on black and brown people who have the audacity to think they deserve to own homes like everyone else, and to "liberals" who encouraged the dissemination of subprime loans.

Here's something they don't know: Part of the racial discrimination in this case involves the fact that many of these homeowners wouldn't have been given subprime loans if they were white. Bankers counted on patterns of racism, and on minority communities' more limited access to legal assistance, to leave them defenseless against the impact of these predatory loans.

"I've been around for a long, long year, stole many a man's soul and faith ..."

Did Rubbie McCoy, one of the plaintiffs in the lawsuit, "deserve what she got"? She didn't want to inflate her income, but her broker insisted and told her it would be all right. Her New Century/Morgan Stanley adjustable-rate loan started out at 12.14 percent and could not fall below 10.75 percent - and, for good measure, the lawsuit says it came with "excessive fees and costs."

Why did these borrowers want to own homes in the first place? For one thing, landlords in predominately African-American areas aren't known for their pleasant demeanor and eagerness to treat their tenants as valued clients. And for another, the idea of home ownership as the American dream was pitched to them by politicians of both parties.

Society told them this was the fulfillment of a dream. Bankers told them they could afford these loans. And when they were victimized, everybody turned their backs.

In what's become usual practice for Wall Street, Morgan Stanley "neither confirmed nor denied wrongdoing" in that Massachusetts settlement. But you know what? I kinda think they did admit it - when they agreed to pay $102 million to stop that investigation.

"As heads is tails, just call me Lucifer, 'cause I'm in need of some restraint ..."

Here's a lucky break for our friends at Morgan Stanley: That Massachusetts settlement was less that one one-hundredth of the $107 billion it borrowed [3] from the Federal Reserve. And since the American people created the Federal Reserve, that means that we rescued Morgan Stanley. Felix Salmon came up with a handy chart [4] that illustrates the extent of our generosity:

At the worst point, where the lines are farthest apart, we (as the Fed) saved Morgan Stanley by lending it nearly ten times what it was worth. And to show their appreciation, the executives (and the Board) at Morgan Stanley ripped our faces off.

What a grotesque phrase: "ripped his face off." Know where I got it? Morgan Stanley. As Frank Portnoy wrote in Fiasco that's what Morgan Stanley's brokers used to see after they'd convinced one of their own clients to invest in something the firm knew was lousy. Their own clients ...

The Treasury Department loves to say that the public "made back its money" on loans like the one Morgan Stanley received. But what did we get for rescuing them when, by any reasonable measure, their firm was worse than worthless?

Have we "made back our money" on the ongoing cost to our economy - and our society - of allowing predators to roam free?

I. Ripped. His. Face. Off.

Great corporate culture over there at Morgan Stanley, huh? (Did I mention that Erskine Bowles is on the Board of Directors?)

"So if you meet me have some sympathy, have some courtesy, have some taste ..."

Why are these kinds of human beings still accepted in polite company? Bob Dylan said "Money doesn't talk, it swears." In this case, it swears allegiance - to any politician willing to do its bidding.

This year Morgan Stanley contributions [5] - the ones we know about - are running four to one in favor of Mitt Romney. Its execs hosted a high-cost fundraiser [6] for him last July, arm-twisting their employees to kick into Mitt's "Victory Fund."

But money swears allegiance to anyone at any time. The visible contributions [5] from Morgan Stanley (as opposed to concealed SuperPAC donations) add up to nearly $2 million so far in this election cycle and, while Republicans are getting the lion's share of the money, a good chunk of it is going to Obama and the Democrats.

No wonder the GOP's become a wholly-owned subsidiary of Wall Street. And there are always Democrats like Harold Ford, eager to cash in [7] on their former government service. Every sitting politician, no matter which party they belong to, sees the kind of money to be made by kowtowing to people like Morgan Stanley's bankers - and a lot of them want a taste for themselves.

Did we mention that Erskine Bowles' proposal is considered "bipartisan"?

"Use all your well-learned politesse, or I'll lay your soul political career to waste ..."

In a post-Citizens United nation, money doesn't even swear anymore: It kills. It kills democracy.

People who know Erskine Bowles say he's a very nice man. He probably is. That complicates the question even further. Is it really just that people are "no damned good"? Or, pace Mom, is it our democracy that's being corrupted, making the rise of the Erskine Bowles class inevitable?

"I shouted out 'who killed democracy?' when, after all, it was you and me ..."

People who have a shred of conscience, in office or outside it, shouldn't tolerate the kinds of behavior we've seen from Morgan Stanley and our other big banks. But they do.

We do, too. We do it every day that we tolerate a political system that's run on greed and campaign contributions. Why aren't we out in the streets demanding a change?

By all means, we should vote next month. But we need to vote with our feet, too, so that when the next election comes around we'll have something on the ballot besides austerity-driven Morgan Stanley democracy.