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Developing story. The probability of Rakoff turning down SEC Settlement #2 just went up substantially.
Rakoff the slow. He still is sitting on roughly $60m
in undistributed SEC Worldcom Victim Trust funds
with Richard Breeden. Don't get your hopes up.
A judge that is not simply a rubber stamp is an amazing thing these days. The SEC is trying to sweep a massive shareholder fraud under the rug as per standard slap on the wrist procedure and Rakoff refuses to play ball!
Sadly, and I do sincerely mean sadly, a judge that doesn't rubber stamp actually hurts those who wish to break down and then rebuild the justice system. Why? Because Rakoff brings some credibility to a justice system that should be blown to pieces and rebuilt from the ground up.
As long as the bad guys can point to what is essentially a corrupt system and say "see, it works, at least some times" and thus maintain that reform is possible, there will never be real change. There really are times when a complete demolition is necessary, rather than changing bits and pieces, because the demolition will force bigger changes in the larger monstrosity.
We must stop clinging to the false hope that if we just rebuild the house 10 feet higher, we will solve the problem. This allows us to conveniently forget that the levee is 30 feet higher than the house. The solution is not a higher house, it's relocation to higher ground, about the 1,000 year flood level, not raising the house about the "whenever the weakest part of the levee breaks because of lack of money for maintenance" 20 year political cycle level.
Somewhere, some language must have a precise word for this philosophical stance: supporting a corrupt system in the hope that it will become so egregious that it will collapse. Anyone? I bet German has a word for it...
Actually, Lenin first suggested "heightening the contradictions", but yes, the German Communists of the early 1930s were the first to try it, with their pro-Nazi rallying cry "Nach Hitler, Uns!" (After You-Know-Who, Us!) They figured that Schickelgruber would screw the pooch so badly that the masses would immediately rise up in revolt and turn to the Commies to lead them. Didn't exactly work out that way -- Communism did follow Adolf, but only after the Russians imposed it forcibly, and it didn't last once the USSR's power to maintain it vanished.
If this all sounds familiar to you, it's the same gambit Ralph Nader tried in 2000 (http://dragon.soc.qc.cuny.edu/Staff/levine/Ralph-Nader-As-Suicide-Bomber...): Peel off enough votes from Gore to allow Bush to win on the idea that Bush will screw up so badly that America will rise up in revolt and march under the banner of the far left. (This was based on knowing that Buchanan wouldn't take nearly as many from Bush as Nader would take from Gore; while far-lefties hate electoral politics and have to be dragged to the polls, far-righties love to use democracy's own tools to subvert it.)
Didn't work in the 1930s, didn't work in 2000, won't work now.
CD so what would you have him do ? Become corrupt or do we have to wait for the all the good judges to be replaced by the bad ones? I believe we can have change before total collapse or would change cause total collapse? I think there is a fine line between any scenario. BTW I always enjoy your posts, you have a way of putting things into perspective.
Watch the Judicial Branch...more to come.
did you see their new uniforms?
So then there is a chance for more pain? Too sweet. I look forward to it.
superbowl viewership sets record - obviously too many people out of work !!
Thanks for keeping this out in front Tyler.
DH - note Tyler's post caption about the SEC settlement facts not jiving with Cuomo's suit allegations. One set of facts: Lewis the patsy of Paulson and Bernanke. Second set: Lewis the Malevolent Manipulator, with Paulson and Bernanke the unwitting saps. Somehow, Set #2 fails to command my respect, but it is the set of facts Cuomo has decided to put forward. It can have only one purpose in my view: to force Lewis to dime out Paulson et al.
There is a third possibility: it is a calculated attempt to force Lewis to take the hit, and leave Paulson and Bernanke out of the whole mess. A Treserve mob hit, in other words, with Cuomo the guy who paints houses. Not the guy we thought he is. So I view that as a remote and improbable possibility.
Thanks Ned for the options.
I know Lewis really wanted ML, but I think when he saw the numbers roll in he did a "whoa, nellie" so I agree that set #2 is unlikely.
I'm still in the first camp that paulson/bernanke demanded that lewis stick with the deal and lewis was promised assistance, etc. I keep going back in my mind to the time and conclude that bernanke and paulson were generally panic stricken and we know how humans behave in panic situations.
Perhaps, the US taxpayers will be lucky and the good judge will hold Mary Shapiro in contempt. As I recollect, Judge Rakoff threw out SEC Settlement #1 for two reasons: (a) the amount was too small and (b) the SEC wanted the victimized BoA shareholders to pay the fine instead of the negligent BoA Senior Management and Board of Directors. While SEC Settlement #2 increases the fine, Mary Shapiro and the SEC are still not listening to Judge Rakoff as to who pays the fine (the predators or the victims). Perhaps, Mary and some of her colleagues would listen better if they spent a few days in some of the holding cells at Foley Square? Now that would provide some real CHANGE!
I'm confused if there is no wrong doing why give back the $?
Everywhere I look if you get caught the little fish get filleted the big fish get released...
The whole punitive code and enforcement rules are a sham...
Cuomo Reaches Pension Pacts With Markstone, Wetherly
Other firms entangled in the probe include the Carlyle Group, which agreed in May to end “pay to play” tactics in its public pension fund business and pay $20 million to resolve Cuomo’s probe.
In June, Riverstone Holdings LLC paid $30 million in restitution in a settlement with Cuomo and agreed to adopt reforms. At least five other firms before today also agreed to adopt a new “code of conduct” banning firms from using placement agents or other third parties to negotiate with public pension funds to obtain investments.
Why is Judge Rakoff the only one that seems capable of seeing the very OBVIOUS and VAST fraud being committed by the SEC????
Why is the SEC allowed to engage in this cover up?!
Where is the justice?
Oh goody, I've been hoping that this would blow up on the SEC.
I hope Rakoff gives the big FU to the SEC and BofA.
The SEC is letting these criminals off with just a fine (which is about the size of one guy's bonus). They need to start sending people to jail!
I read this fuckin site every day and fuckin Chicago traders are like wtf you know so much. These guys are like gorillqs in open revolt over gettin fleeced day in and dau out, they're pissed off for real--and yet they hadn't heard of zh.
I know 1 thing's true--it's strange times.
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