In a cutting attack on America’s financial hub, one of the world’s most respected economists has said Wall St is full of “crooks” and hasn’t reformed its “pathological” culture since the financial crash.
Professor Jeffrey Sachs told a high-powered audience at the Philadelphia Federal Reserve earlier this month that the lack of reform was down to “a docile president, a docile White House and a docile regulatory system that absolutely can’t find its voice.”
Sachs, from Colombia University, has twice been named one of Time magazine’s 100 Most Influential People in the World, and is an adviser to the World Bank and IMF.
“What has been revealed, in my view, is prima facie criminal behavior,” he said.
“It’s financial fraud on a very large extent. There’s also a tremendous amount of insider trading – you can even watch when you are living in New York how that works.”
In his live remarks, via videophone from New York, an emotionally charged Sachs also ripped into practices at Goldman Sachs and into the political classes on both the left and right, according to the New York Post.
“We have a corrupt politics to the core, I am afraid to say, and . . . both parties are up to their neck in this. This has nothing to do with Democrats or Republicans.”
Sachs described an environment of Wall Street influencing politicians with growing campaign contributions. In the 2012 election cycle, political contributions by the securities and investment sector hit $271.5 million, compared with $176 million in 2008, according to the Center for Responsive Politics.
“I meet a lot of these people on Wall Street on a regular basis right now,” he continued.
“I am going to put it very bluntly: I regard the moral environment as pathological. And I am talking about the human interactions . . . I’ve not seen anything like this, not felt it so palpably.”
“They have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to people, to counterparties in transactions,” he said. “They are tough, greedy, aggressive and feel absolutely out of control in a quite literal sense, and they have gamed the system to a remarkable extent.”
One audience member told the Post: “There was an initial shudder, is how I would describe it, because they could feel the passion that was in the discussion. Jeffrey Sachs’ comments were full of conviction. I was applauding him for bringing values and ethics into the discussion.”