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Failing to Prosecute Financial Fraud - On Either Side of the Atlantic - Is Extending Our Economic Crisis

George Washington's picture




 

Washington’s Blog

As numerous experts have pointed out for years, failing to prosecute financial fraud is extending our economic crisis.

This continues to be a key, ongoing story.

For example, the Telegraph reports today:

The
EU's financial watchdog has systemically "sabotaged" investigations
and caved into intimidation from countries including France and Italy
to cover up fraud, according to a senior official.

And Bloomberg noted on Monday:

The
U.S. Securities and Exchange Commission’s internal watchdog is
reviewing an allegation that Robert Khuzami, the agency’s top
enforcement official, gave preferential treatment to Citigroup Inc.
executives in the agency’s $75 million settlement with the firm in July.

 

Inspector
General H. David Kotz opened the probe after a request from U.S.
Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned
letter making the allegation. Khuzami told his staff to soften claims
against two executives after conferring with a lawyer representing the
bank, according to the letter….

 

According to the letter, the
SEC’s staff was prepared to file fraud claims against both individuals.
Khuzami ordered his staff to drop the claims after holding a “secret
conversation, without telling the staff, with a prominent defense
lawyer who is a good friend” of his and “who was counsel for the
company, not the individuals affected,” according to a copy of the
letter reviewed by Bloomberg News.

I will keep hammering on this until people get it: The economy will not recover unless fraud is prosecuted.

 

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Thu, 01/13/2011 - 06:52 | 872478 Tic tock
Tic tock's picture

Y'know, a compromise might be to repeal PD status. IT's function is to ensure that auctions suceed at whatever issue. IF it is left to pure bond demand, it would install a whole lot more confidence in basic fiscal systems. ITs the critical market, so making it free market would be a boost to confidence, perhaps not to the parasites, but there are others out there with deep pockets. And it wouldn't rock the boat anywhere outside of the major banks.

Thu, 01/13/2011 - 03:28 | 872405 myshadow
myshadow's picture

We have to wait until the next meltdown.

Thu, 01/13/2011 - 00:21 | 872228 cranky-old-geezer
cranky-old-geezer's picture

GW, rehasher of yesterday's news, and waster of ZH resources.

Thu, 01/13/2011 - 12:12 | 873124 Dr. Sandi
Dr. Sandi's picture

Relax, ZH buys their bits wholesale.

Thu, 01/13/2011 - 00:17 | 872222 Trifecta Man
Trifecta Man's picture

Book 'em, bitchez

Wed, 01/12/2011 - 23:39 | 872126 Stuck on Zero
Stuck on Zero's picture

Too often the scoundrels and scofflaws loot the public of hundreds of millions and then pay 30% of it in fines to the government for dropping all charges. That makes the prosecuter complicit in the crime.

The real key is to get the banksters, government shills and politicians into courts with middle class juries.  This is justice.  Plea bargains, cash settlements, no los, trading time for spilling the beans, and mercy of the court settlements are a miscarriage of justice. 

 

Wed, 01/12/2011 - 23:32 | 872100 ebworthen
ebworthen's picture

 

AMEN.

No Trust = No Relationship

 

Wed, 01/12/2011 - 23:22 | 872057 ak_khanna
ak_khanna's picture

The rich corporates and the too big to fail bunch of banksters have a lot of influence on the political class, the rule makers and the rule enforcers due to their enormous purchasing power. So irrespecti­­ve of the position in the government­­, everyone works for their benefit.

The rest of the population have to be dumped with lots of problems like unemployme­­nt, high cost of living (thanks to speculatio­­n in commodity exchanges)­­, foreclosur­­es, etc. so that they don’t devote their thoughts to the root of all problems and revolt against the comfortabl­­e arrangemen­­t between the banksters, central bankers and the government­­s.

This too big to fail group has grown more powerful in size and influence in the last two years and is likely to end up being too big to bail bringing down complete economies of countries with them.

http://www.marketoracle.co.uk/Article24581.html

Wed, 01/12/2011 - 21:59 | 871865 Dr. Sandi
Dr. Sandi's picture

Our children and grandchildren will not inherit our debts. They will be busy rebuilding our broken system from scratch.

Once the bloated, lifeless leviathan of corrupt financial dealings washes up on Reality Beach, there will be a jubilee. Debts won't be willingly forgiven as in previous jubilees. The system will simply be too broken for anybody to swap paper for paper anymore.

The forced bankruptcy of all who trusted anybody with a promise or even a contract will be living testimony to a dead financial system. The promises are false, the paper is worthless and our future depends on moving back to reality as the basis of all values, financial and social.

Buy gold, buy silver, buy land, buy protection. Real things will keep their value when the paper is rotting in the ground with the trust we have placed in people who are not worthy.

Keep your family close. They are the one real thing you can't buy.

 

 

Wed, 01/12/2011 - 23:22 | 872060 Coldfire
Coldfire's picture

Hear, hear!

Wed, 01/12/2011 - 23:19 | 872048 AnAnonymous
AnAnonymous's picture

Once the bloated, lifeless leviathan of corrupt financial dealings washes up on Reality Beach, there will be a jubilee.

 

If indeed, reality has to be summoned up, then the answer is that we are living our Jubilee.

We are past the point when physical debt can be associated with monetary debt. Sweeping the monetary debt will not reset the level of resources consumed through this debt based system.

Jubilees in the past could easily conceal this fact as consumption was so low. Today, it is totally another story.

Wed, 01/12/2011 - 22:09 | 871900 nmewn
nmewn's picture

Word.

Wed, 01/12/2011 - 21:46 | 871833 Fix It Again Timmy
Fix It Again Timmy's picture

Yes, just like when someone gets fired in the office - everyone "colors within the lines", at least for a few weeks.

Wed, 01/12/2011 - 21:24 | 871781 Buck Johnson
Buck Johnson's picture

When you don't stop fraud it signals to the others that it's okay to continue to do business the way they have been doing. 

Wed, 01/12/2011 - 20:50 | 871724 PulauHantu29
PulauHantu29's picture

"Why Steal Less....when you can Steal more?"

 

The 21st Century Wall Street Mantra

Wed, 01/12/2011 - 20:36 | 871698 apberusdisvet
apberusdisvet's picture

 

Holder is too busy sucking up to the illegals and New Black Panther Party.  Rule of Law?  "What friggin rule of law; I wipe my ass with the Constitution every day".

Wed, 01/12/2011 - 21:05 | 871691 Racer
Racer's picture

RBS got fined yesterday by the FSA and how many people had their lives very badly affected by their mistakes

Wed, 01/12/2011 - 20:15 | 871659 Fix It Again Timmy
Fix It Again Timmy's picture

There is no will to correct our rather large basket of problems - during WWII, as German divisions were advancing, Russia dismantled a large part of their industrial base, put it on railroad cars and transported it, eastward and reassembled it.  Our illustrious leaders couldn't even deal adequately with Katrina/New Orleans, a very modest operation in comparison.  Don't look for saviors, there aren't any.

Thu, 01/13/2011 - 12:19 | 873143 Dr. Sandi
Dr. Sandi's picture

during WWII, as German divisions were advancing, Russia dismantled a large part of their industrial base, put it on railroad cars and transported it, eastward and reassembled it.

I'll have you know the U.S. did the same thing. As U.S. divisions of Japanese corporations were advancing, America dismantled a large part of their industrial base, put it on ships and transported to the east where it was reassembled.

Now we don't have to buy cheap American crap, we can buy even cheaper and crappier Chinese crap.

Who says we don't learn from history!

 

Wed, 01/12/2011 - 23:57 | 872183 Andy Lewis
Andy Lewis's picture

Saviors?  Hell, I'd settle for competence.  But I guess there isn't any of that, either. 

Wed, 01/12/2011 - 19:56 | 871618 High Plains Drifter
High Plains Drifter's picture

Madoff takes a fall for the mob and his son is murdered and it all is swept under the proverial rug as fast as they can. Corruption runs rampant.  Regulatory agencies say they are investigating this and that and nothing of importance is ever done.  I am sorry if I don't trust them all.  How can I?  I will never ever trust them. 

Wed, 01/12/2011 - 19:53 | 871612 blindman
blindman's picture

our economic crisis is not a crisis, it is the end stage of

a system designed to do exactly what we see.  it is the fruit

of the tree that no one can see,  dare see.  it is bad but it is "the" economy.

( legal stealing  ) by way of fraud embodied in a federal reserve

note privately created out of "pretty blue wishes and dreams" commonly accepted as money,

with no limit or boundary that anyone of influence need respect.   an organic

and predictable effect of the "sacred" system where conformity is safety

and the king, worm.  bow to the worm, "money".  as debt

http://www.youtube.com/watch?v=1RosEIOgDiw

pardon and apologies where needed.

the fraud cannot be prosecuted.  because .....

it is the prosecutor itself.  it is the system. 

and we cannot see to change ? 

wall street bonuses coinciding with food riots and starvation

and outbreaks of diseases that can be cured with food and

water.  get it?   the virtuous cycle of starving a few hundred people

so you can have your water crafts waxed.

 want to get your blood boiling?  listen here.

http://archive.wbai.org/

Gary Null All Wednesday January 12 12:00pm   1 hour Unknown

.

some people have no integrity with regards their fellow

man,  sad fact but not an immutable object/reality.

this is good too.

Talk Back! All Tuesday January 11 3:00pm   2 hours Public Affairs

 

the solution is redirection of focus and attention to studies

and experimentation regarding population / behavior, energy and

agriculture,  ubiquitous in all locals.  ie starting from scratch, the bottom

with a direction up, so to speak.

ps. and speaking of fraud , politics and stupid crazy.

if i was crazy i would say s.p. is the perfect politician.

she is smarter than her followers and sexy.  and way dumber than her

masters. = perfect politician.  and the worst sort of leader or

representative imaginable.  a leader must be smarter than his/her

"masters" but that ends badly also so we need something new like

real education.

thank you zh, gw et. al..

 

Wed, 01/12/2011 - 19:29 | 871551 SwingForce
SwingForce's picture

ANDREW CUOMO- How could anybody expect him to prosecute????

FORMER Attorney General for the Southern District of New York , now Governor??? Perfect example when you screw up, kick 'em upstairs. He went from head of a GSE to NYAG where ALL bank lenders reside (ex.WFC) but "he had no oversight of AIG". Hogwash. You know, http://www.zerohedge.com/article/nia-comments-upcoming-bursting-bankruptcy-non-dischargeable-college-debt-bubble Lawyers can't afford to work Pro Boner (mcBags) so nobody connects the dots. Cetainly nobody pays them to.

http://picasaweb.google.com/larryokarski/TheMissilesOfOctober#5255339066005646290

Wed, 01/12/2011 - 19:05 | 871510 Rainman
Rainman's picture

Khuzami's just a patsy. Citi is a GSE dressed up to look like a legitimate private enterprise. Prosecution of Citi executive fraud would have required approval from High Command, of that you can be certain. UST was planning to dump a big position. Timmay certainly wouldn't have wanted a fraud turd floating in that punchbowl.

Wed, 01/12/2011 - 19:03 | 871506 unwashedmass
unwashedmass's picture

 

forget extending, the free giveaway (in other worlds it would be considered theft) by the collusion of the Fed and Primary Dealers of billions every month?

well, that debt is going to be ladled over the peasant population and handicap them for years and years to come.

not that anyone cares any more. there is so much theft and corruption now, its a miracle that any actual business activity is happening beyond the financial sector. why would anyone bother when you can steal so much working in finance?

and have the government not policing you, but handing it to you?

 

Wed, 01/12/2011 - 19:03 | 871497 SwingForce
SwingForce's picture

Wow, you hit the nail on the head, bro! NOBODY wants to prosecute a money-lender, not even The Supremes:

http://www.cnbc.com/id/41025694 (read Larry Okarski's comments)

 

IMPUNITY bitchez!  (Wonder why I wear a helmet?) Oh and don't forget to buy BAC at the open, its the most undervalued stock in the universe (I hear).

 

 

Wed, 01/12/2011 - 20:01 | 871627 bonddude
bonddude's picture

But all over America the little fish like these (SBNK.OB) have been busy bilking small bank shareholders ($50Million), TARP/US Taxpayers ($8.7Million) and the FDIC who customers ultimately pay insurance prems. ($10.5 Million)

Only one of a handful to go BK AFTER receiving TARP. Someone lied.

This bank could have used better regulation, like many small ones. I wonder how many times the borrowers did this? Indymac was 1.


http://www.youtube.com/watch?v=AMUKvI2Ywjs&feature=related

Wed, 01/12/2011 - 18:48 | 871471 Chartist
Chartist's picture

prosecuting fraud is a nice start....Executing for fraud will go a lot further.

Wed, 01/12/2011 - 18:28 | 871412 tony bonn
tony bonn's picture

amen and amen!!

Wed, 01/12/2011 - 20:40 | 871694 Cdad
Cdad's picture

Capital will not form in banks as corrupt as these.  And when I say capital, I am not talking about Bernanke Bananas.

Everyone knows this about the banks.  Every week, Average Joe sells stocks.  More and more people are forced out of the economy as the Federal Reserve Chairman preserves this rotten banker regime.

And so the pain will go on...

Additional:

You know, Chairman Bernanke's touts his expertise on the subject of the Great Depression.  Does anyone know if he is an expert in the depression of 1920?  Does anyone ask?  Does anyone know what I am talking about?  Is anyone out there...Bueller...Bueller...or is everyone surfing the Net on their Iphone 4 searching for news of the great new white model that should be coming out soon?

Wed, 01/12/2011 - 20:07 | 871638 YHC-FTSE
YHC-FTSE's picture

+1

Wed, 01/12/2011 - 19:40 | 871590 Arch Duke Ferdinand
Arch Duke Ferdinand's picture

"Feigning Ignorance Is Not an Excuse"

Must view... 2 vid's

Plutocracy...The Debt Money System is no longer working

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2010/12/feigning-ignorance-is-not-option.html

Wed, 01/12/2011 - 22:40 | 871955 IQ 145
IQ 145's picture

 War crime, what war crime? The only crime is losing the war. Goering, in captivity, at Nuremburg.

Wed, 01/12/2011 - 22:40 | 871954 IQ 145
IQ 145's picture

 War crime, what war crime? The only crime is losing the war. Goering, in captivity, at Nuremburg.

Wed, 01/12/2011 - 22:32 | 871942 IQ 145
IQ 145's picture

 War crime, what war crime? The only crime is losing the war. Goering, in captivity, at Nuremburg.

Thu, 01/13/2011 - 00:31 | 872248 JW n FL
JW n FL's picture

Kill one? you were pissed off...

Kill 5 or 6... you where a physco...

Kill 6 million... never mind the other millions left off the score card... and you where a genius led astray?

 

Kill for Century's... you are the Catholic Country? Kill more Christians than Muslim's during the Crusades, Your a Catholic!! Praise God!

 

I could go on but why?

 

 

I Loved the Quote by the way, both times!

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