Joe Costello at Yves Place:

Make no mistake folks, there’s a criminal element atop our financial industry, who operate with both the complicity and culpability of much of our political class. Until we reform our politics and the financial industry, we will not have economic vitality. And we will not have reform, until it is demanded and undertaken by the American people. That is where we are.

It is. That's what the foreclosure crisis is all about, for example. Ritholz explained:

The process of purchasing a home in America culminates with an event called “the Closing.” It is an hour plus long contract signing that ensures the buyer is legitimately taking title, possession and legal ownership of a unique parcel of land and any structures upon it. The process gives any buyer specific rights to that property that cannot be abrogated under the laws of the United States.

At the closing, buyers sign and initial numerous documents. The goal is to accomplish the following:

1) Papers are signed that will be filed with the County Clerk (or appropriate officer) along with recording fees, for the official transfer of title from the prior owner to the new owner. The enabling purchase loan (i.e., mortgage note) is also filed with the Clerk.

2) The buyer receives title (ownership) of the land;

3) The mortgage lender establishes a new interest in that property contingent upon their mortgage note;

4) All other claims, liens, tax obligations and prior mortgages, home equity lines or second notes are satisfied and extinguished before title passes to the new owner.

5) Third party claims of any interest in that property superior to the buyer are eliminated;

6) Title Insurance is purchased and issued so the buyer has a recourse in case of defects in ownership occurs.

Every step of the process is designed to protect the property rights of all parties. The result is more than a mere transaction selling property from one party to another; rather, this has created a system where ownership interests are clearly defined; where title history can be reviewed going back decades and centuries. There is a certainty to the purchasers of this property against all future claims.

Everything about this process has been created to make sure the transfer goes off perfectly. In a nation of laws, contract and property rights, there is no room for errors. Indeed, even small technical flaws can be repaired via a process called “perfecting title.”

Well, the banks call the rule of law "paperwork" and say it's too expensive -- meaning they get smaller bonuses -- and they shouldn't have to do it.

Well, do you imagine for one single second that if you wanted to dump your house on the market for some quick cash, that you could get away without doing that "paperwork"? Not a chance.

So, rule of law for you, but not for them. That's what it means to be ruled by criminals. (In Latin America, they call that "impunity." It's one of the signs of a banana republic.

So, why don't our legacy parties make holding the banksters accountable to the law an issue in the primaries? I don't know, of course -- only being a peasant -- but I'd guess the incentive structure is the same for them both: They're both on the take from the thieves, and get a cut from the take. Both parties understand very well what's going on. They like it that way.

UPDATE Ritholz notes further:

As we noted previously, esteemed economists such as Hernando de Soto have identified that the respect for title, proper documentation, contract law and private property rights are the underlying reason capitalism works in Western nations, but seems to flounder elsewhere.

We cannot have free market capitalism without this process. So what does it mean if banks have been systemically, fraudulently and illegally undermining this process?

Well, again, at the very least it means we're ruled by criminals. And that every member of the elite is either in on it, knows about it, or hasn't done their due diligence.

At the very most, it means that capitalism just ate itself up, and so what now?