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Department of Justice "Crackdown" On Wall Street Is Just a P.R. Stunt Targeting Small-Time Crooks
Alan Greenspan, William Black, James Galbraith, Joseph Stiglitz,
George Akerlof, Chris Whalen and many other economists and financial
experts all say that the economy cannot truly recover unless those who committed fraud are prosecuted.
So we should be ecstatic that the Justice system is finally prosecuting fraud, right?
As the Washington Post notes:
At
a news conference headlined by Attorney General Eric H. Holder,
authorities unveiled "Operation Broken Trust," a collection of unrelated
criminal and civil cases involving Ponzi schemes, foreign currency
frauds, investment scams and other market cons.
The
announcement drew attention to President Obama's Financial Fraud
Enforcement Task Force, a group of agencies working to hold accountable
people and companies accused of financial wrongdoing during difficult
economic times. The task force has struggled to pursue high-profile
prosecutions connected to the financial crisis of 2007-09.
Authorities said the operation involved 343 defendants facing criminal
charges and 189 facing civil charges, though some will be counted in
both categories. The cases represent more than $8.3 billion in investor
losses and 120,000 victims.
***
"With this operation,
the Financial Fraud Enforcement Task Force is sending a strong
message," Holder said. "To anyone operating or attempting to operate an
investment scam: Cheating investors out of their earnings and savings
is no longer a safe business plan. We will use every tool at our
disposal to find you, to stop you and to bring you to justice."
The schemes often targeted communities, churchgoers and the vulnerable,
including the elderly, a blind man and the bereaved family of a
recently deceased man, Holder and other law enforcement officials said.
That may sound impressive at first.
But
$8 billion divided by 343 (the number of criminal prosecutions) only
averages around $24 million per prosecution, which is small potatoes
given that financial fraud by the big banks has cost the country trillions.
As Andrew Ross Sorkin writes in the New York Times:
To hear Eric H. Holder Jr. tell it, the Justice Department is aggressively cracking down on financial fraud.
***
It
all sounded quite important, and the program’s slogan is pretty
catchy. But after you get past the pandering sound bites, a question
comes to mind: is anyone in the corner offices of Wall Street’s biggest
firms or corporate America’s biggest companies paying any attention to
Mr. Holder’s “strong message”?
Of course not. (I actually called
some chief executives after Mr. Holder’s news conference, and not one
had heard of Operation Broken Trust.)
That’s because in the two
years since the peak of the financial crisis, the government has not
brought one criminal case against a big-time corporate official of any
sort.
Instead, inexplicably, prosecutors are busy chasing
small-timers: penny-stock frauds, a husband-and-wife team charged in an
insider trading case and mini-Ponzi schemes.
“They will pick on
minor misdemeanors by individual market participants,” said David
Einhorn, the hedge fund manager who was among the Cassandras before the
financial crisis. To Mr. Einhorn, the government is “not willing to
take on significant misbehavior by sizable” firms. “But since
there have been almost no big prosecutions, there’s very little
evidence that it has stopped bad actors from behaving badly.”
***
Fraud
at big corporations surely dwarfs by orders of magnitude the
shareholders’ losses of $8 billion that Mr. Holder highlighted. If
the government spent half the time trying to ferret out fraud at major
companies that it does tracking pump-and-dump schemes, we might have
been able to stop the financial crisis, or at least we’d have a fighting
chance at stopping the next one.
Shawn J. Chen, a
partner in the Washington office of Cleary Gottlieb Steen &
Hamilton, called the announcement by Mr. Holder “a public relations push more than anything else.”
Mr. Chen went so far as to suggest that the number of cases Mr. Holder
cited as evidence of the department’s crackdown were somewhat
fictional.
“It’s hard to believe that they built up all these
cases in the past four months,” since the task force was created, Mr.
Chen said, suggesting it was more likely that Mr. Holder counted every
case that had anything to do with financial fraud and put them all
under the Operation Broken Trust umbrella.
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Breaking News
Attorney General Eric H. Holder leads task force which uncovers major crime ring on Wall Street.
Group of teenagers arrested for inserting slugs in nickle parking meters on Wall Street, downtown Littleville, U.S.A. "We nipped this crime spree in the bud, before it could spread to other parts of the country", exclaimed Mr. Holder.
More news at 5.
"you've got to nip it. nip it in the bud."
Oh Yeah!
Another War!
This time it'll be the "War on Fraud".
Which naturally needs another Tsar to run it.
Then in awhile..."Mission Accomplished"!
Hows the War on Drugs going? Haven't heard much lately.
“But since there have been almost no big prosecutions, there’s very little evidence that it has stopped bad actors from behaving badly.”
Damn! ... Forgot where I stashed all that blow?
"War on Fraud"
Absolutely. Let’s have a Blue Ribbon Panel to manage the whole thing. I nominate Bernard Madoff and Kenneth Lay as co-chairs with absolute oversight.
Kenny-Boy's dead, ain't he?
Not what I heard. Kenny-boy’s “massive heart attack” right before he was to surrender and go to prison may have been staged. One independent has reported that old Ken Lay has been seen ‘alive’ on the 98,000 acre Bush family hacienda down in Paraguay. I would not put it past Kenron to pull that one off. (hehehehe)
holy shit.......just when ya thought..... well, guess he went ot his reward, allright. damn nazis
more about the "hacienda": are there owls? nearly on fire? are there nazis? (the brown brothers harriman connection is still a reference).
jeff montanye -more about the "hacienda": are there owls?
Benb -Gotta be.
jeff montanye -are there nazis?
Benb –Hell, we’re talking about the Bushs. They’re all Nazis. Granpappy Prescott while at Union Bank funneled dough to Fritz Theissen to help finance A.G. Farben and the Nazi war machine. Even little Bush (Dubya) is a 322 Nazi. But they weren’t alone. IIRC Standard Oil of New Jersey was shipping oil to Hitler vis a vis Spain for almost the entire Second World War. And some of Hitler’s original financial backing came from the Milner Group out of the City of London.
jeff montanye-the brown brothers harriman connection is still a reference
Benb- The Harriman clan as far as I’ve heard still rule over us as well as of the Rockefellers of course and other Robber Barron descendents. And let’s not forget The Queens of England and the Netherlands and all their crooked pals.
Anyway I heard one guy give a brief report that Kenny-Boy Lay was hold up down on the Bush family spread with some U.S. troops. The reporter was going to follow-up so maybe the Bushs took care of him cause I haven’t heard a word since. The Bushs are clawing their way up towards the top of the ladder. Not to be trifled with.
yeah....went to his "reward"
Just say NO! to financial fraud.
Great.
As many people are beginning to realize, the War on Drugs was always a make work project on par with the WPA as well as a substantial funding source for black budget projects for the military/CIA/NSA etc.
Think about the fact that the USA has a higher percentage of the nation's population in prison than any other first world nation as well as many third world nations, including the banana republic variety. And consider that it's now well documented that the CIA/DEA/NSA/DIA are all involved in drug running.
http://en.wikipedia.org/wiki/Works_Progress_Administration
http://en.wikipedia.org/wiki/CIA_drug_trafficking
http://www.washingtonpost.com/wp-dyn/content/story/2008/02/28/ST2008022803016.html
http://en.wikipedia.org/wiki/Incarceration_in_the_United_States
War on drugs is just war on citizens.
Let's see.
We tried rehabilitation of criminals.
We tried removing social causation of crime.
Some how, we just accepted that crime pays.
.....problem is some crime's paying too good.
Rainman, this is why most vices are "illegal". There are few surer ways to get max margin & premium charged on conversion than by imposing these dynamics. In essence it's a massive state sponsored churn operation. Gotta support the TBTF & increasingly big pharma with the margins they have grown accustomed to else their cash flows would become impaired leading to a collapse of the ponzi.
Chase what matters...
Ever wonder how many lives are destroyed for smoking weed. How much money is paid in fines? That's the real crime.
oh what the hell. musical for this post? the kid's are alright. conversation at half volume, not at not.
Yes, the authorities of Command and Control are Making a Fortune arresting flower children.