Matt Taibbi's Latest: " Why Isn't Wall Street In Jail?"

From Matt Taibbi of Rolling Stone:

Why Isn't Wall Street in Jail?

Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them

Over drinks at a bar on a
dreary, snowy night in Washington this past month, a former Senate
investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's
your whole story right there. Hell, you don't even have to write the
rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check.
"Everything's fucked up, and nobody goes to jail. You can end the piece
right there."

Nobody goes to jail. This is the mantra of the
financial-crisis era, one that saw virtually every major bank and
financial company on Wall Street embroiled in obscene criminal scandals
that impoverished millions and collectively destroyed hundreds of
billions, in fact, trillions of dollars of the world's wealth — and
nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant
and pathological celebrity con artist, whose victims happened to be
other rich and famous people.

The rest of them, all of them, got off. Not a single executive who ran
the companies that cooked up and cashed in on the phony financial boom —
an industrywide scam that involved the mass sale of mismarked,
fraudulent mortgage-backed securities — has ever been convicted. Their
names by now are familiar to even the most casual Middle American news
consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan
Chase, Bank of America and Morgan Stanley. Most of these firms were
directly involved in elaborate fraud and theft. Lehman Brothers hid
billions in loans from its investors. Bank of America lied about
billions in bonuses. Goldman Sachs failed to tell clients how it put
together the born-to-lose toxic mortgage deals it was selling. What's
more, many of these companies had corporate chieftains whose actions
cost investors billions — from AIG derivatives chief Joe Cassano, who
assured investors they would not lose even "one dollar" just months
before his unit imploded, to the $263 million in compensation that
former Lehman chief Dick "The Gorilla" Fuld conveniently failed to
disclose. Yet not one of them has faced time behind bars.

Instead, federal regulators and prosecutors have let the banks and
finance companies that tried to burn the world economy to the ground get
off with carefully orchestrated settlements — whitewash jobs that
involve the firms paying pathetically small fines without even being
required to admit wrongdoing. To add insult to injury, the people who
actually committed the crimes almost never pay the fines themselves;
banks caught defrauding their shareholders often use shareholder money
to foot the tab of justice. "If the allegations in these settlements are
true," says Jed Rakoff, a federal judge in the Southern District of New
York, "it's management buying its way off cheap, from the pockets of
their victims."

To understand the significance of this, one has to think carefully
about the efficacy of fines as a punishment for a defendant pool that
includes the richest people on earth — people who simply get their
companies to pay their fines for them. Conversely, one has to consider
the powerful deterrent to further wrongdoing that the state is missing
by not introducing this particular class of people to the experience of
incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison
for one six-month term, and all this bullshit would stop, all over Wall
Street," says a former congressional aide. "That's all it would take.
Just once."

But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.

Just ask the people who tried to do the right thing.

Here's how regulation of
Wall Street is supposed to work. To begin with, there's a semigigantic
list of public and quasi-public agencies ostensibly keeping their eyes
on the economy, a dense alphabet soup of banking, insurance, S&L,
securities and commodities regulators like the Federal Reserve, the
Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of
the Currency (OCC) and the Commodity Futures Trading Commission (CFTC),
as well as supposedly "self-regulating organizations" like the New York
Stock Exchange. All of these outfits, by law, can at least begin the
process of catching and investigating financial criminals, though none
of them has prosecutorial power.

The major federal agency on the Wall Street beat is the Securities
and Exchange Commission. The SEC watches for violations like insider
trading, and also deals with so-called "disclosure violations" — i.e.,
making sure that all the financial information that publicly traded
companies are required to make public actually jibes with reality. But
the SEC doesn't have prosecutorial power either, so in practice, when it
looks like someone needs to go to jail, they refer the case to the
Justice Department. And since the vast majority of crimes in the
financial services industry take place in Lower Manhattan, cases
referred by the SEC often end up in the U.S. Attorney's Office for the
Southern District of New York. Thus, the two top cops on Wall Street are
generally considered to be that U.S. attorney — a job that has been
held by thunderous prosecutorial personae like Robert Morgenthau and
Rudy Giuliani — and the SEC's director of enforcement.

The relationship between the SEC and the DOJ is necessarily close,
even symbiotic. Since financial crime-fighting requires a high degree of
financial expertise — and since the typical drug-and-terrorism-obsessed
FBI agent can't balance his own checkbook, let alone tell a synthetic
CDO from a credit default swap — the Justice Department ends up leaning
heavily on the SEC's army of 1,100 number-crunching investigators to
make their cases. In theory, it's a well-oiled, tag-team affair:
Billionaire Wall Street Asshole commits fraud, the NYSE catches on and
tips off the SEC, the SEC works the case and delivers it to Justice, and
Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and
off to 36 months of push-ups, license-plate making and Salisbury steak.

That's the way it's supposed to work. But a veritable mountain of
evidence indicates that when it comes to Wall Street, the justice system
not only sucks at punishing financial criminals, it has actually
evolved into a highly effective mechanism for protecting
financial criminals. This institutional reality has absolutely nothing
to do with politics or ideology — it takes place no matter who's in
office or which party's in power. To understand how the machinery
functions, you have to start back at least a decade ago, as case after
case of financial malfeasance was pursued too slowly or not at all,
fumbled by a government bureaucracy that too often is on a first-name
basis with its targets. Indeed, the shocking pattern of nonenforcement
with regard to Wall Street is so deeply ingrained in Washington that it
raises a profound and difficult question about the very nature of our
society: whether we have created a class of people whose misdeeds are no
longer perceived as crimes, almost no matter what those misdeeds are.
The SEC and the Justice Department have evolved into a bizarre species
of social surgeon serving this nonjailable class, expert not at
administering punishment and justice, but at finding and removing
criminal responsibility from the bodies of the accused.

The systematic lack of regulation has left even the country's top
regulators frustrated. Lynn Turner, a former chief accountant for the
SEC, laughs darkly at the idea that the criminal justice system is
broken when it comes to Wall Street. "I think you've got a wrong
assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.

In the hierarchy of the SEC, the chief accountant plays a major role
in working to pursue misleading and phony financial disclosures. Turner
held the post a decade ago, when one of the most significant cases was
swallowed up by the SEC bureaucracy. In the late 1990s, the agency had
an open-and-shut case against the Rite Aid drugstore chain, which was
using diabolical accounting tricks to cook their books. But instead of
moving swiftly to crack down on such scams, the SEC shoved the case into
the "deal with it later" file. "The Philadelphia office literally did
nothing with the case for a year," Turner recalls. "Very much like the
New York office with Madoff." The Rite Aid case dragged on for years —
and by the time it was finished, similar accounting fiascoes at Enron
and WorldCom had exploded into a full-blown financial crisis. The same
was true for another SEC case that presaged the Enron disaster. The
agency knew that appliance-maker Sunbeam was using the same kind of
accounting scams to systematically hide losses from its investors. But
in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap
— widely regarded as one of the biggest assholes in the history of
American finance — was a fine of $500,000. Dunlap's net worth at the
time was an estimated $100 million. The SEC also barred Dunlap from ever
running a public company again — forcing him to retire with a mere
$99.5 million. Dunlap passed the time collecting royalties from his
self-congratulatory memoir. Its title: Mean Business.

And the conclusion:

So there you have it. Illegal immigrants: 393,000. Lying moms: one.
Bankers: zero. The math makes sense only because the politics are so
obvious. You want to win elections, you bang on the jailable class. You
build prisons and fill them with people for selling dime bags and
stealing CD players. But for stealing a billion dollars? For fraud that
puts a million people into foreclosure? Pass. It's not a crime. Prison
is too harsh. Get them to say they're sorry, and move on. Oh, wait —
let's not even make them say they're sorry. That's too mean; let's just
give them a piece of paper with a government stamp on it, officially
clearing them of the need to apologize, and make them pay a fine
instead. But don't make them pay it out of their own pockets, and don't
ask them to give back the money they stole. In fact, let them profit
from their collective crimes, to the tune of a record $135 billion in
pay and benefits last year. What's next? Taxpayer-funded massages for
every Wall Street executive guilty of fraud?

The mental stumbling block, for most Americans, is that financial
crimes don't feel real; you don't see the culprits waving guns in liquor
stores or dragging coeds into bushes. But these frauds are worse than
common robberies. They're crimes of intellectual choice, made by people
who are already rich and who have every conceivable social advantage,
acting on a simple, cynical calculation: Let's steal whatever we can,
then dare the victims to find the juice to reclaim their money through a
captive bureaucracy. They're attacking the very definition of property —
which, after all, depends in part on a legal system that defends
everyone's claims of ownership equally. When that definition becomes
tenuous or conditional — when the state simply gives up on the notion of
justice — this whole American Dream thing recedes even further from
reality.

Read the full thing here

Comments

[Rick64]

And court costs.

[blindfaith]

We have lost our country, we watched it happen and stood by like cowards. We still are cowards. They know it.
Nuff said, right.

[SpeakerFTD]

Nothing is going to change until some regular Joe walks up to one of these guys on a Manhattan street corner and puts a bullet in their head.   The media would go bananas, the administration would speak darkly of conspiracy, but enough people would cheer quietly in the background to encourage a copycat act a week later.  

Or somebody sets themselves on fire outside the Fed.

Until we reach the point where these kind of things take place, do not expect change.  TPTB are just as corrupt as any one of the tinpots currently bagging up their gold in the Mideast, and like their fellow thieves, they speak a good game about justice and freedom, but in the end, only respond when threatened.

[MayIMommaDogFac...]

Or somebody sets themselves on fire outside the Fed.

I think the quandry for someone considering this today is the huge carbon footprint their combustion would create.  8-|

Or not. ;)

[GoinFawr]

narf narf narf.

[TriggerFinger]

wooaah!  the head of the nail has been hit 

[TheAkashicRecord]

When there's nothing left to burn, you must set yourself on fire.

[Pee Wee]

Your premise is junk.  Shooting a cockroach doesn't rid the infestation, or send a message to the others. 

[GoinFawr]

No, they're not cockroaches. At least not in the sense that they would breed like 'em- too greedy for the most part, don't wanna share, spawn just slow 'em down.

More like centipedes: remove the head and voila! (uh, in case there are any loonies out there: that was a metaphor, ok? Be smart, be subtle or you will end up making the situ worse. Peace.)

[FreakuentFlyer]

or, enough ppl board the next ship for a new world and start things over, over there.

[Coldfire]

A dream, a plane and 200 West...

[eddiebe]

Obviously a rethorical question. The real question we should ask is what do ' we the people' do about it and when?

[newworldorder]

"We the people" are not able to do anything about it.

I and you the "individual" can protect our family and move on.

[calltoaccount]

...what do ' we the people' do about it?"

http://ampedstatus.org/join-the-movement/

[GreenSideUp]

There will probably come a time when people pull an Egypt but if all the ZHers joined up and did that now, most people would just think we're a bunch of crazies and the news would smear us as such, if it was even reported.  Witness the tea partiers.

What to do now is use your creative mind and do everything you possibly can to withdraw from the system: withdraw money and consent and quit playing by their rules.  Practice peaceful civil disobedience.  Learn jury nullification.  Go "back to the future"; plant a garden, build local communities, start living a simpler life now.   

[JW n FL]

1. You would have to educate the majority, so the majority could take action.

2. what would motivate the food stamp, jerry springer watching crowd enough to get off thier fat asses?

3. Nothing we have.

Yes we are doomed as a Country becuase the broader populace is stupid.

But, I may be wrong... so be a boy scout and prepare for the worst, pray for the best and do your part to educate the idiot masses.

[azengrcat]

Hey they paid their protection fees fair and square!!!

[Zero Govt]

correct, which connects fraudulent bwanksters to their protection racket, politicians and Regulators, and implicates all 3 in a criminal syndicate. We have a clear target so when we pull the trigger they're all taking lead, not just Wall Street but the US Govt too 

[AccreditedEYE]

What the hell do we have to do to get Tyler into the top SEC slot? You want to talk about fear of God? Lloyd would shit himself.

[alien-IQ]

you would likely see that largest mass resignation of executives in corporate history...that is...if their assassination attempts fail.

[AccreditedEYE]

Sweet! Don't let the door hit you on the way out boys! Jesus, just thinking about the fear that would wash over the Street... simply priceless.

[Terminus C]

Not to be too cynical but most likely "Tyler" would end up making a quiet $billion or two and spend his time surfing tranny porn.

Everyone has a price.  That is how this shit happens.

[Shed Boy]

Everybody in power gets a pass jail card. Even the cops.

http://www.king5.com/news/Seattle-officer-wont-be-charged-in-woodcarver-...

"We do not and legally cannot put police officers on trial for murder or send them to prison for their discretion to use deadly force in good faith and without malice, however tragic the outcome may be," Satterberg said during a Wednesday news conference.

[AnAnonymous]

As disatisfaction in the general public increases, it will grow harder and harder to prosecute the Police.

[MachoMan]

When the failure to prosecute anyone with any power hits local governments, then we will no longer rely upon the legal system to perform a prosecutorial function.  It will have long since been materially discarded.

[serotonindumptruck]

You seem to be under the illusion that prosecutorial and judicial misconduct is an anomaly or an infrequent occurrence. Anyone who has suffered through the corruption of the judicial process (civil or criminal) in the USA would likely have a completely different perspective. Prosecutorial and judicial immunity is becoming a popular (and unfortunately legal) defence against civil and criminal actions filed against corrupt judges and prosecutors.  That legal exemption is being routinely and regularly abused, and I believe that many people are beginning to realize that the only way to defeat this level of tyranny and corruption is through the path of violent revolution.

[MachoMan]

As a member of the bar, I can attest that local officials and prominent people are not above the law.  Case in point, one of our municipal judges recently thought it would be a good idea to start charging all the citizens a fee when they plead not guilty and then later changed their plea (generally traffic citations).  Needless to say, this didn't fare well upon higher judicial scrutiny.

While some aspects of our legal system are totally out of control, TPTB are relatively few in number...  the privileges allowed them are not allowed others...  even local judges...  and persons with power.  When even the little guys are above the law, then we've all got to worry.

PS, you can cram your violent revolution up your rambo watching mulletted ass.  Lead the way pilgrim.

[serotonindumptruck]

No offence intended, MachoMan.

I had a recent discussion with the County Sheriff here. He's been in law enforcement since the mid 1960's, and I am on good terms with him. He seems to sincerely believe that "there's a war coming". When I asked him to elucidate on what I thought to be an odd and rather intriguing comment, he dodged the inquiry by changing the subject.

What do you suppose he meant by that?

"There's a war coming."

[MachoMan]

The war has always been raging.  Our lives are in a constant state of battle/flux between poles in numerous categories...  one of which, probably what he is referring to, is the battle of the productive versus the nonproductive.  Essentially, the ranks of the productive (this is loosely defined as anyone that can generate money, although I know this is not productive in the technical or real sense) can no longer sustain the nonproductive and "austerity" (entitlement cuts) must be implemented.  This means, persons such as him (see generally the governor of alabama's comments on sheriff dept cuts) are going to be out of a job.

The war, as he may call it, is going to be between those with items worth stealing and those with the desire to steal it from them (how the items were originally acquired aside).  The question is whether those with a desire to control on the macro level will utilize the breakdown in the social structure to effectuate additional control mechanisms.  My thoughts are that this is but a pipe dream.

But yes, we're just in a transition phase and so the "war" seems to be right outside our windows rather than off in far distant lands...  however, make no mistake about it, the war is always raging, in all walks of life, in all places inhabited by humans.

PS, tell him to try and get a lump sum payment from his pension before we tell him to go fuck himself.  I know I would.

PS2, maybe he is up on his political affairs and was simply referring to the strife in the third world?  (sarcasm).

[ajax]

Just three things:

1. Why does Taibbi write "most of these banks" instead of "all of these banks" in his fifth paragraph?

2. The only jaywalking ticket I was ever issued was in Seattle.

3. NYC is full of very attractive women working parttime in S/M dungeons  to make enough money to pay off their school bills. Blankfein and ilk know just where to go to get fucked. Read Jean Genet.

[RichardENixon]

Go to jail? Ridiculous. These people own the jails.

[alien-IQ]

The sad thing is that nothing in this wonderfully written article is even remotely surprising.

That's how fucked up this has gotten.

[Rick64]

+10

[Zero Govt]

Alien

It's actually not surprising in historical terms at the ending of any 'Empire' (Ceasers Rome, Venice, Greece, British, Napolean etc). They always end saturated in crumbling money, servants, luxury, corruption, self-delusion and surrounded by crones.

That's where we're at i'm afraid. A truly historic point, the end of the Western Empire and by default the end of The Parasite Club of politicians and monopolists that top (mark) every great collapse. So not a surprise, utterly predictible, and so too you'll be pleased to hear, is their end  ;)

[ToddGak]

I feel when we look back, the beginning of the end will be marked as when Nixon closed the gold window and told the rest of the world (and especially France) to go fuck themselves.  This was caused by the deficit spending needed to fund the Vietnam war.

[thegreatsatan]

If you have to ask, then you will never know.

This administration protects its own dumbass.

[jomama]

because they own the legislators, the prosecutors and the judges (and the prisons)? duh?

[A_MacLaren]

George Carlin, "...its a big club and you ain't in it..."

http://www.youtube.com/watch?v=i5dBZDSSky0

[Husk-Erzulie]

Classic.

"It's called the american dream because you have to be asleep to believe it."

Fuckin' Geo, man...

[MilleniumJane]

RIP George...our country's prophet Jeremiah...

[Cammy Le Flage]

Wall Street "owns" the jails silly.

[jobs1234]

I guess the best response to this is just emulate what they do.

Lie, cheat, steal, obfuscate, and BTFD

[RobotTrader]

No way these guys are ever going to go to jail.

Sheesh, they knew Madoff's business was a scam, and they didn't say anything.

Plutocrats and PigMen will always bend the rules, screw the little guy, and get rich.

It has been that way for years.  In fact, it was much worse in the 1920's and 1930's.

Nothing is going to change.

Either trade with the PigMen and make a little money, or trade against the PigMen and get wiped out.

It is really that simple.

I learned my lesson a few years back, and I can tell you my blood pressure and stress levels are much lower now.

LOL....

[alien-IQ]

to be well adjusted to a sick society is not a sign of good mental health.

nor is surrender without a fight a sign of courage.

[buzzsaw99]

+1

[whatz that smell]

you can cut your ballz off per rbotrder or you can strap em on like m. taibbi, h. talim, m. keiser, m. faber, m. whitney, c.a. fitz, d. vrabel, billy hudson, billy black... or...

[disabledvet]

Oh, yeah.  Meridith Whitney "strapping on her balls" screaming "this one's for you Frankenfurter!"

[Rick64]

He has a valid point if you are a trader/traitor. He has been correct in most of his analysis on trading.

[alien-IQ]

"go long because the fed is propping up the market" hardly qualifies as insightful analysis.

[Rick64]

Didn't say insightful, I said correct.

[Bay of Pigs]

Sorry, but I don't listen to cowards like Robot. I could care less about his trading calls. And on top of everything else, he bashes gold regularly.

He can go fuck himself.

[DaveyJones]

if all you care about is money, it's correct. If you're human, have children, or think past your next meal, it's not.

[clymer]

God forbid that we have a regulated market and honest money. You know.. So people can trust in the system and we can start to build a solid economy?

..just sayin

[Ham Wallet]

Actually it does.

[AZSovreign]

Did you actually just make sense in one of your posts???

I better get my eyeballs lasik'd..

[GoinFawr]

Me too: all the better to gaze at your avatar.

[Hugh G Rection]

Congratulations Robo... I'm glad you are sleeping better after selling your soul. 

Eventually these crooks will be held accountable, maybe not through the legal system, but when the SHTF any one of them not on a G5 to Dubai is going to be given a refresher course on the French Revolution.

[Revolution_star...]

"but when the SHTF any one of them not on a G5 to Dubai is going to be given a refresher course on the French Revolution."

When the SHTF, I'm going hunting.

[palmereldritch]

but when the SHTF any one of them not on a G5 to Dubai is going to be given a refresher course on the French Revolution.

Better Call Saul!

http://www.bettercallsaul.com/

[Azannoth]

They can't keep this going forever just look at Tunisia and Egypt they thought they where invincible too

[ToddGak]

Although our food prices are rising here in the U.S., they are not rising nearly as rapidly as in the countries we export inflation to, such as the ones you mentioned.  Thus, we are not going to head into the town center and stir shit up anytime soon.  Maybe if bread goes to $20 a loaf this year we might see some disturbance.

[blindfaith]

Hey Robot you said,

"Either trade with the PigMen and make a little money, or trade against the PigMen and get wiped out." 

Isn't that the real problem here?  The bitching on ZH about what is going on, and yet "you" keep piling into the very pig sty you are criticizing?

Must be me, but I have a higher standard even if I have to eat week old bread and drink muddy water to keep my integrity (I have done this to survive, so I know from where I speak).

You go join them, leave me out I still have a mirror in my house.

[disabledvet]

actually the real problem is "what to do when the big Market Mo turns to into the Mr. Big Market SLOW."  this was the problem in 2008 as well as 2001--and "these cycles come quicker and quicker."  there's only one asset class all the oligarchs hate and that of course is cash.  needless to say all this Depression talk in DC was the greatest head-fake in history since how can you have a depression when the government attacks cash as an asset class either through unpaid wars, unpaid entitlements or unpaid interest? Of course we need not mention Wall Street as "their job is tell us what to buy."  In other words without a strong Fed there really is nothing.

[lieutenantjohnchard]

so today the catfish mouth robo tells us trading is simple. yesterday in the span of two posts he went from it really isn't hard to make money to it's a jungle out there for survival.

so since the jpm silver short is a myth (robo's own words yesterday) i guess robo's simple trade is shorting silver; and when the reality of the myth becomes mainstream that simple trade (trade with the pigmen jpm style) for robo will mean a fortune to him.

keep us appraised dear robo of your short silver position.

[Oracle of Kypseli]

Robo,

You and others like you are a defacto enablers. If you and everyone else stayed out of the market, they will not succeed. But.. you want the extra few nickels in your pocket instead of doing the noble thing. 

You are selling your soul... and at the end, you may end up loosing these nickels anyway. 

[AnAnonymous]

Either trade with the PigMen and make a little money, or trade against the PigMen and get wiped out.

Trade can or can not be a consensual action.

It is very likely that the Pigmen can control their side of trade, they can determine who trades with them or who does not. It might even be a decisive key in their trading strategies.

So it would be better, instead of disguising this side, to tell "either trade with the Pigmen as long as they  allow it and make a little money"

[New_Meat]

Robo:

"No way these guys are ever going to go to jail."

Yep and :

"...whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are."

There was a time when 1/2 of NYC taxes came from like 40,000 individuals.  They drove out some/not all of the high earners (Limbaugh is vocal about this comme d'habitude ;-) but the fricken city collapses if those bonuses (all up/down the chain) are not paid.  So add this to the list of the systematic reasons for housing and wage inflation.

- Ned

[ed. and for the record, I'm just a little piglet, nay PigMan ;-)]

[thegreatsatan]

Fuck, not only did none of them go to jail, they all got nice fat bonus checks. 

[Zero Govt]

it's called "Rewarding Fraud" ...Washington slipped the Bill through (under the table as usual) in fact the establishment of the Federal Reserve 70 years ago was entirely based on the same reward system for parasites

[cougar_w]

At first I read that as "nice fat bonus chicks" and thought, so what?

[MilleniumJane]

Yeah and how about those folks working at Gubbermint Motors who got bonuses?  One can run one's company to the ground and still get richly rewarded.  GM still hasn't paid back the loan or said "Thank you" to the American people.  Rat bastards.  All of them.  Withdraw from the system and wait for the uprising.

http://money.cnn.com/2011/02/11/news/companies/gm_bonus/index.htm

[AZSovreign]

Easy to commit crime in Gotham when Batman is the ringleader..

[AnAnonymous]

Hard to prevent crime though.

[Rick64]

 The same people that work in the gov. and its agencies(FDA, SEC, CFTC, ect..) have or are going to work for the entities that they are building cases against . Its a conflict of interest to destroy their future prospects. The revolving door needs to be stopped. 

[fragrantdingleberry]

Actually, Blankfein might like a pound me in the ass prison. You never know about a banker's sexual proclivities.

[Bob]

Supermodels and jet set call girls get boring after a while.  You start craving something you can really feel . . .

[Pee Wee]

We used to call that "all suck, no love."

[Bastiat]

Taibbi does a great service: he reaches a different audience and he cuts deep and true.

[aheady]

FTW. His real value in my opinion.

[DaveyJones]

it's his tone more than his content. His honest anger. Something has to rile the masses.  

[Bastiat]

His sense of outrage.

[WALLST8MY8BALL]

LIBERTY AND JUSTICE - FOR THOSE THAT CAN AFFORD IT!

[buzzsaw99]

Justice = Just Us

[DaveyJones]

just ice. that's where they've placed the rulebook

[hound dog vigilante]

word to my man gus

seems like no one to trust

[Dr. Acula]

I think you're attacking the wrong people. It's not the fault of entrepeneurial owners and managers that the voters of America have bestowed on them a government-created bedlam of socialism, price fixing (e.g. the price of loanable funds), insurance for discovered bailment fraud (FDIC), and endless government interventions and thefts.

If entrepeneurs are corrupt and wicked, it's only because their boss - the average citizen - is also corrupt and wicked.

>Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling.

At worst, this is no different from someone selling snake oil potions. But perhaps Goldman Sachs was just as deluded as their customers into believing the housing bubble would last? This is really a case of caveat emptor.

>from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded

This is just the same thing again. Buffet called derivatives weapons of financial mass destruction, why would any sane person invest in these? Ever hear of due dilligence?

>Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley.

Probably the majority of these should have collapsed into bankruptcy and their factors of production should have been auctioned off to people who don't use them to destroy wealth. How is the executives' fault that the government intervened using stolen taxpayer money to aid AIG?

>to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose

Can someone point me to this story? Who was he supposed to disclose it to, and why?

[jobs1234]

Taibbis point is if the common person did any of this, they would be in jail for life, or in some countries, executed.

See what happens in China if you mess up on a scale like this.

[Dr. Acula]

I agree people should be punished; but only for actual crimes, like murder, theft, and fraud - i.e. crimes with actual victims. "messing up" is not a crime.

Elected board members running a company into the ground through incompetence is not a crime.

Selling wacky derivatives fated to blow up instantly is not a crime.

I'm not sure if receiving stolen taxpayer money from the government is a crime - at least, the original theft is.

[dark pools of soros]

bribing pension & muni fund managers (and who knows who else) to take these with other's people future on the line is the crime...  there were bribes - not just stupidity

[Bay of Pigs]

WTF? Selling FRAUDULENT derivatives is most certainly a crime. They knew what they were doing, and they knew they would fail. 

Fraud:

According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".^[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud.

[Goldilocks]

Talk about fraud ... check out this "Redicecreations Radio - MP3" discussion about money.

You'll have an epiphany!

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Tracy Twyman - Alconomics, Money & Magic

Tracy Twyman is a prolific author and commentator who approaches historical research from an esoteric perspective. She is probably best known for her book The Merovingian Mythos and her underground cult magazine Dagobert's Revenge, in recent years she has pioneered what she calls "Alchenomics": the study of relationship between alchemy, economics, and the evolution of money through the ages. Her works on this subject include her 2005 book Solomon's Treasure: The Magic and Mystery of America's Money and her most recent book, Money Grows on the Tree of Knowledge. In this interview, Tracy talks about her latest work. Topics Discussed: ritual magic, alchemy, the origin of the dollar sign and the word, the Hapsburg dynasty, "Plus Ultra", Chez Republic, tallers, Tyer, currency, rod of Asclepius, healing, serpent icons, Nehushtan, Jesus, Nicholas De Vere, Bretton Woods, L A Waddell, monetary system an alchemical system, trust in God, green, talismans, Francis Bacon, the Unitas, the bancor, SDR's (special drawings rights), magic tricks and more.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Notice the word "Tyer" … pretty close to the name, "Tyler". If you want to know what a "Tyer" was, you’re going to have to listen to the MP3.

Every once in a while Redicecreations Radio does a great interview … this is one of them.

[Pee Wee]

You are absolutely right, and justice needs to extend to those that "misrepresented" their financial position to get a loan -- yep single moms, too. Perhaps Taibbi can do a piece on the rotten poor, too.  Fraud is fraud.

The rules (as explained to a younger me by a Fortune-50 mentor) are "no lying, cheating, or stealing, the rest is yours - all yours."

Most think that is a moral strategy, it's not, it's to protect what you get.

[dark pools of soros]

read Griftopia.. he goes over all the bases

[jobs1234]

So me running my car into your house due to incompetence would NOT be a crime?

Or me paying you in Shrute Bucks for your services and telling you they are accepted at Bank of America is NOT a crime?

Wow so I have a lot of latitude to work with in this new world.

[Dr. Acula]

>So me running my car into your house due to incompetence would NOT be a crime?

Yes, in my view it's a crime. You must compensate me for the property damage you caused. You will likely face the social apparatus of coercion, viz. the police.

But mismanaging a company I own a share in and causing its value to plummet is not a crime. After all, I still own the same share of the company. I cannot own it's value. The value is something subjective that exists in other people's minds and cannot be owned by anyone.

>Or me paying you in Shrute Bucks for your services and telling you they are accepted at Bank of America is NOT a crime?

Yes, fraud is a crime.

[dark pools of soros]

run your private complany into the ground anyway you want..  but misrepresenting shareholder interests is what's on the docket

[Winston Smith 2009]

"'messing up' is not a crime. Elected board members running a company into the ground through incompetence is not a crime. Selling wacky derivatives fated to blow up instantly is not a crime."

When the act of fraud is even the smallest part of any of those, it most certainly is. Matt's past and current articles along with the many thousands of pages of evidence I've read about on the net and the many documentaries and web videos I've watched indicate to me that fraud was and _IS_ both _rampant_ and _obvious_.

[Dr. Acula]

"When the act of fraud is even the smallest part of any of those, it most certainly is."

I agree fraud is a crime. Maybe I just haven't seen as much evidence of it as you have in the subjects brought up here.

If the government will not prosecute it, why cannot shareholders pursue the matter in civil court?

[iDealMeat]

HFT servers can't file a complaint..

[calltoaccount]

"I agree fraud is a crime. Maybe I just haven't seen as much evidence of it as you have..."

I'll make it easy for you:

Still Banking on Fraud William K. Black | Wednesday 26 January 2011

A truly amazing thing has happened in banking. After the worst financial crisis in 75 years sparked the “Great Recession,” we have

• Failed to identify the real causes of the crisis
• Failed to fix the defects that caused the crisis
• Failed to hold the CEOs, professionals, and anti-regulators who caused the crisis accountable—even when they committed fraud
• Bailed out the largest and worst financial firms with massive public funds
• Covered up banking losses and failures—impairing any economic recovery
• Degraded our integrity and made the banking system even more encouraging of fraud
• Refused to follow policies that have proved extremely successful in past crises
• Made the systemically dangerous megabanks even more dangerous
• Made our financial system even more parasitic, harming the real economy

And pronounced this travesty a brilliant success.

The Bush and Obama administrations have made an already critically flawed financial system even worse. The result is that the banking industry’s future is bad for banking, terrible for the real economy, horrific for the public—and wonderful for the top executives at the largest banks. This is significantly insane, especially given that over the past 30 years, the savings-and-loan fiasco and other crises provided ample opportunity to learn about those flaws. It appears that we will need to suffer another depression before we are willing to put aside the crippling dogmas that have so degraded the financial system, the real economy, democracy, and the ethical standards of private and public elites.

The Economics Blindfold

Why did most of the experts neither foresee nor understand the forces in the U.S. banking industry that caused this meltdown? The short answer is: their dogmatic belief in neoclassical economic theory that is impervious to the facts, or what I like to call “theoclassical” economics.

Theoclassical economics is premised on the asserted effectiveness of private market discipline. This (oxymoronic) discipline is the basis for the “efficient markets” and “efficient contracts” hypotheses that are the pillars of faith supporting modern finance theory and much of neoclassical microeconomics. Collectively, these hypotheses lead to absolute faith that markets exclude fraud. “A rule against fraud is not an essential or even necessarily an important ingredient of securities markets,” wrote eminent corporate law scholars Frank Easterbrook and Daniel Fischel in their 1991 The Economic Structure of Corporate Law, in a typical statement of that faith.

How are markets supposed to exclude fraud? Easterbrook and Fischel offer two reasons. The first, a circular argument, lies in theoclassical economists’ core belief that markets are by nature efficient. Markets that allow frauds cannot be efficient. Therefore, markets must exclude fraud.

The other argument rests on “signaling” theory. The logical premise is that honest firms have a financial incentive to signal to investors and creditors that they are honest. The false premise is that honest firms have the unique ability to signal that they are honest. Easterbrook and Fischel claim that there are three signals of honesty that only honest firms can transmit: hiring a top-tier audit firm, having the CEO own substantial stock in the firm, and operating with extreme leverage, i.e., a high ratio of debt to capital.

The reality, which Fischel knew before he co-authored the treatise, was that firms engaging in so-called control fraud can mimic each of these signals. Control fraud occurs when the executives at a seemingly legitimate firm use their control to loot the firm and its shareholders and creditors. In banking, accounting is the weapon of choice for looting. Accounting control frauds have shown the consistent ability to get “clean” accounting opinions from top tier audit firms; their CEOs use their stock ownership to loot the firm; and they love to borrow extensively, as that allows them to loot the firm’s creditors.

In fact, the claim that markets inherently exclude fraud runs contrary to all of our experience with securities markets. The role of epidemics of accounting control frauds in driving recent financial crises is well documented. The national commission that investigated the causes of the savings-and-loan debacle found that at the “typical large failure,” “fraud was invariably present.” Similarly, the Enron and WorldCom scandals were shown to be accounting control frauds.

Theoclassical economists, however, refused to acknowledge these frauds because recognizing the existence of control fraud would challenge the assumptions underlying their faith-based economic theories. This economic dogma was so dominant that it drove regulatory policy in the United States, Europe, and Japan during the last three decades. Regulations ignored control fraud and assumed that paper profits produced by fraud were real. The result, from the mid-1990s on, was regulatory complacency endorsed by economists who actually praised the worst of the emerging control frauds because of their high reported profits.

So it is no surprise that the recent U.S. banking crisis was driven by an epidemic of lending fraud, primarily mortgage lenders making millions of “liar’s loans” annually. According to Credit Suisse, for instance, 49% of all mortgage originations in 2006 were stated-income loans, meaning loans based on applicants’ self-reported incomes with no verification. MARI, the Mortgage Bankers Association experts on fraud, warned in 2006 that these loans caused endemic fraud:

Stated income and reduced documentation loans … are open invitations to fraudsters. It appears that many members of the industry have little historical appreciation for the havoc created by low-doc/no-doc products that were the rage in the early 1990s. Those loans produced hundreds of millions of dollars in losses for their users.

One of MARI’s customers recently reviewed a sample of 100 stated income loans upon which they had IRS Forms 4506. When the stated incomes were compared to the IRS figures, the resulting differences were dramatic. Ninety percent of the stated incomes were exaggerated by 5% or more. More disturbingly, almost 60% of the stated amounts were exaggerated by more than 50%. These results suggest that the stated income loan deserves the nickname used by many in the industry, the “liar’s loan.”

Why would scores of lenders specialize in making liar’s loans after being warned by their own experts and even by the FBI that such loans led to endemic fraud? (Not that they needed any warnings. Bankers have known for centuries that underwriting is essential to survival in mortgage lending. Even the label “liar’s loan,” widely used in the industry, shows that bankers knew such loans were commonly fraudulent.) How could these fraudulent loans be sold to purportedly the most sophisticated underwriters in the history of the world at grossly inflated values blessed by the world’s top audit firms? How could hundreds of thousands of fraudulent loans be pooled into securities, the now-infamous collateralized debt obligations (CDOs), and receive “AAA” ratings from the top rating agencies? How could markets that are supposed to exclude all fraud instead accommodate millions of fraudulent loans that hyper-inflated the largest financial bubble in history and triggered the Great Recession?

The answer is the financial system is riddled with incentives so perverse that it is criminogenic—it creates fraud epidemics instead of preventing fraud. When compensation levels for banking executives and professionals are very large and based substantially on reported short-term income, financial firms become superb vehicles for control fraud. Add in deregulation and desupervision, and the result is an environment ripe for a fraud epidemic.

Accounting is the weapon of choice for financial sector control frauds. The recipe for a lender to maximize (fictional) reported accounting income has four ingredients:

• Extremely rapid growth
• Lending regardless of borrower creditworthiness, at premium yields
• Extreme leverage
• Minimal loss reserves

The first two ingredients are related. A U.S. housing lender operates in a mature, reasonably competitive industry. A mortgage lender cannot grow extremely rapidly by making high-quality mortgages. If it tried to do so, it would have to cut its yield substantially in order to gain market share. Its competitors would respond by cutting their yields and the result would be modest growth and a serious loss of yield, reducing reported profits. Any lender, however, can guarantee extremely rapid growth and charge borrowers a premium yield simply by making loans to borrowers who most likely cannot repay them. Worse, hundreds of lenders can follow this same recipe because there are tens of millions of potential homebuyers in the United States who would not be able to repay their loans. Indeed, when hundreds of firms follow the same recipe, they hyper-inflate the resultant financial bubble, which in turn allows borrowers to refinance their loans and thereby delay their defaults for years.

Economists George Akerlof and Paul Romer explained in 1993 that accounting fraud is a “sure thing” and explained why it caused bubbles to hyper-inflate, then burst. Note that the same recipe that produces record fictional income in the short-term eventually produces catastrophic real losses. The lender will fail (unless it is bailed out or able to sell to the “greater fool”), but with their compensation largely based on reported income, the senior officers can walk away wealthy. This paradox—the CEO prospers by causing the firm’s collapse—explains Akerlof and Romer’s title, Looting: The Economic Underworld of Bankruptcy for Profit.

Senior executives can also use their ability to hire, promote, compensate, and fire to suborn employees, officers, and outside professionals. As Franklin Raines, chairman and CEO of Fannie Mae, explained to BusinessWeek in 2003:

Investment banking is a business that’s so denominated in dollars that the temptations are great, so you have to have very strong rules. My experience is where there is a one-to-one relation between if I do X, money will hit my pocket, you tend to see people doing X a lot. You’ve got to be very careful about that. Don’t just say: “If you hit this revenue number, your bonus is going to be this.” It sets up an incentive that’s overwhelming.

You wave enough money in front of people, and good people will do bad things.

Raines knew what he was talking about: he installed a compensation system at Fannie Mae that produced precisely these perverse incentives among his staff and made him wealthy by taking actions that harmed Fannie Mae.

In an earlier work, Akerlof had explained how firms that gained a competitive advantage through fraud could cause a “Gresham’s” dynamic in which bad ethics drove good ethics from the marketplace. The national commission that investigated the savings and loan debacle documented this criminogenic dynamic: “[A]busive operators of S&L[s] sought out compliant and cooperative accountants. The result was a sort of “Gresham’s Law” in which the bad professionals forced out the good.” The same dynamic was documented by N.Y. Attorney General Andrew Cuomo’s 2007 investigation of appraisal fraud, which found that Washington Mutual blacklisted appraisers who refused to inflate appraisals. An honest secured lender would never inflate, or permit the inflation of, appraisals.

Failure to Respond

The U.S. government’s response to the meltdown has been not merely inadequate, but actually perverse. The Bush and Obama administrations’ banking regulators have left frauds in charge of failed banks and covered up the banks’ losses, allowed the behemoths of the industry to become even larger and more dangerous, and passed a “reform” law that fails to mandate the most critical reforms.

In March 2009, Congress, with the explicit encouragement of Federal Reserve Board Chairman Bernanke and the implicit acceptance of the Obama administration, successfully extorted the Financial Accounting Standards Board on behalf of the banking industry to force it to change the banking rules so that banks did not have to recognize losses on their bad assets until they sold them. Normal accounting rules sensibly require banks to recognize losses on bad loans when the problems with the loans are not “temporary.” The losses at issue in the recent crisis were caused by system-wide fraud and the collapse of the largest financial bubble in world history. They were not temporary—moreover, they were (and are) massive. If banks had recognized these losses as they were required to do under pre-existing accounting rules, many of them would have had to report that they were unprofitable, badly undercapitalized, or even insolvent.

Gimmicking the accounting rules so bankers could lie about their asset values has caused the usual severe problems. First, it allows CEOs to pretend that unprofitable banks are profitable and so continue to pay themselves massive bonuses. This is not only unfair; it contributes to a broadly criminogenic environment. Second, it leads banks to hold onto bad home loans and other assets at grossly inflated prices, preventing markets from clearing and prolonging the recession. This is the Japanese scenario that led to the country’s “lost decade” (now extended). Third, it makes it harder for regulators to supervise vigorously, should they try to do so, because many regulatory powers are triggered only when losses occur with the resulting failure to meet capital requirements. Indeed, the assault on honest accounting was launched with the express purpose of evading the Prompt Corrective Action law, passed in 1991 on the basis of bitter experience: when savings-and-loan CEOs who had looted “their” institutions were allowed to remain in control of them by using fraudulent accounting, the losses and the fallout of the S&L crisis kept growing. Fourth, it embraces dishonesty as an official policy. Indeed, it implies that the solution to the accounting fraud that massively inflated asset valuations is to change the accounting rules to encourage the massive inflation of those same asset values. Effective regulation is impossible without regulatory integrity; lying about asset values destroys integrity.

Even in the case of the roughly 20 massive U.S. financial institutions considered “too big to fail,” the public policy response has been perverse. The terminology itself demonstrates how economists err in their analysis—and how much they identify with the CEOs who helped cause the Great Recession. They refer to the largest banks as “systemically important institutions,” as if these banks deserved gold stars. By the prevailing logic, however, the massive banks are the opposite: ticking time bombs that can take down the global financial system if they fail. So “systemically dangerous institutions,” or SDIs, would be more apt.

It should be a top public policy priority to end the ability of any single bank to pose a global systemic risk. That means that the SDIs should be forbidden to grow, required to shrink over a five-year period to a size at which they no longer pose a systemic risk, and intensively supervised until they shrink to that size. These reforms are vital for all banks but particularly urgent for the SDIs, with their potential to cause massive damage.

Instead, the opposite has been done. Both administrations have responded to the financial crisis by allowing (indeed, encouraging) SDIs, even insolvent ones, to acquire other failed financial firms and become even larger and more systemically dangerous to the global economy. The SDIs’ already perverse incentives were made worse by giving them a bailout plus the accounting cover-up of their losses on terms that made the U.S. Treasury and the Federal Reserve the “fools” in the market (on behalf of US taxpayers)  

With small- and medium-size banks likely to continue to fail in high numbers due to residential and commercial real estate losses, the financial crisis has increased the long-term trend toward extreme concentration in the financial industry. The SDIs will pursue diverse business strategies. Some will continue their current strategy of borrowing short-term at extremely low interest rates and reinvesting the proceeds primarily in government bonds. They will earn material, not exceptional, profits but will do little to help the real economy recover. Others will invest in whatever asset category offers the best (often fictional) accounting income. They will drive the next U.S.-based crisis.

What about the long-awaited bank reform law, which Congress finally delivered in July 2010 in the form of the Dodd-Frank Act? The law does not address the fundamental factors that have caused recurrent, intensifying financial crises: fraud, accounting, executive and professional compensation, and regulatory failure. The law does create a regulatory council that is supposed to identify systemic risks. The council, however, will be dominated by economists of the same theoclassical stripe who not only failed to identify the systemic risks that produced the recent financial crises, but actually praised the criminogenic incentives that caused those crises.

The chief international reform, the Basel III accord, shares the fundamental deficiency of the Dodd-Frank Act. Dominated as they were by theoclassical economists, the Basel negotiations not surprisingly produced an agreement that ignores the underlying causes of the crisis. Instead, it focuses on one symptom of the crisis—extreme leverage, the third ingredient of the recipe for optimizing accounting control fraud. The remedy was to restore capital requirements to roughly the levels required under Basel I (Basel II eviscerated European banks’ capital requirements). Fortunately, the United States did not fully implement the Basel II capital reserve reductions, which means that the leverage of non-fraudulent U.S. banks has been significantly lower than their European counterparts. However, capital requirements only have meaning under honest accounting. Once one takes into account the fictional “capital” produced by fraudulent lending—along with the revised accounting rules that are helping banks hide their losses—the irrelevance of the proposed Basel III capital requirements becomes clear. (For more on the Dodd-Frank Act as well as Basel III, see “Underwater” in the November/December 2010 issue of D&S.)

If the Dodd-Frank Act of 2010 and the Basel III proposals are the limits of our response to the crisis, then the most probable outcome in the near- and medium-term is the Japanese scenario—a weak, delayed, and transitory recovery followed by periodic recessions. Banks will remain weak and a poor provider of capital for economic expansion.  

With private market “discipline” having become criminogenic, the only hope for preventing the current crisis was vigorous regulation and supervision. Effective supervision is possible. For instance, in 1990-91, savings-and-loan regulators used their hard-won understanding of accounting control fraud to stop a developing pattern of fraud in California involving S&Ls making stated-income loans. Unfor-tunately, at the federal level the dogmatic belief that markets automatically prevent fraud led to complacency and the appointment of anti- regulators chosen for their willingness to praise and serve their banking “customers.” (The “reinventing government” initiative championed by former Vice President Al Gore and by George W. Bush when he was Texas’ governor indeed instructed banking regulators to refer to bankers as their “customers.”) President Obama has generally left in office, reappointed, or promoted the heads (or their “acting” successors) of the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve, the Federal Reserve Bank of New York, and the Federal Housing Finance Agency. Several of these leaders did not simply fail as federal regulators; they actually made things worse by aggressively preempting state regulatory efforts against fraudulent and predatory mortgage lenders.

None of the reforms to date addresses the fundamental criminogenic incentive structures that have produced recurrent, intensifying financial crises. True, liar’s loans have been largely eliminated, and in 2008 the Federal Reserve finally used its regulatory authority under the Home Ownership and Equity Protection Act of 1994 to regulate mortgage bankers (after most of the worst ones had failed), but none of this came soon enough to contain the current crisis and none of it will prevent the next one. The accounting control frauds merely need to switch to a different asset category for a time.

William K. Black is executive director of the Institute for Fraud Prevention and teaches economics and law at the University of Missouri at Kansas City. He is former senior fenderal financial regulator, and is author of The Best Way to Rob a Bank Is to Own One (Univ. of Texas Press, 2005), which focuses on control fraud in the savings-and-loan crisis.

Sources: George A. Akerlof, 1970, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics 84(3):488–500; George A. Akerlof and Paul G. Romer, 1993, “Looting: The Economic Underworld of Bankruptcy for Profit,” in W. Brainard and G. Perry, eds., Brookings Papers on Economic Activity 2:1-73; William K. Black, 2003, “Reexamining the Law-and-Economics Theory of Corporate Governance,” Challenge 46(2):22-40; William K. Black, 2005, The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry, Austin: University of Texas Press; Frank Easterbrook and Daniel Fischel, 1991, The Economic Structure of Corporate Law, Cambridge, Mass.: Harvard University Press; National Commission on Financial Institution Reform, Recovery and Enforcement (NCFIRRE), 1993, Origins and Causes of the S&L Debacle: A Blueprint for Reform. Washington, D.C.: Government Printing Office. 

Source URL: http://www.truth-out.org/still-banking-fraud67187

All republished content that appears on Truthout has been obtained by permission or license.

[scaleindependent]

I can't wait for Dr Acula to respond.

waiting....

[karzai_luver]

are you living on MARS!

The judges are bought to the level of at least 90%

You are not getting a civil case and "the investors" unless you can gain standing don't have a chance.

Only cases that can be brought much less FOUGHT are between the criminals to see who ends up with the big chunks!

[karzai_luver]

You shill

Messing up on purpose when the whole effort was based on messing up and cashing before the mess was discovered is  crime.

Bribing of public officials via secret deals cut that take affect after they leave the gvt after setting the rules of the game in order to have a nice payday waiting is a crime.

Placing before the voters two choices(hehehe) that are both purchased using money stolen via past crimes is a crime.

Hell it's treason.

It was all a crime.

You sound like you need to learn what the definition of IT is.

Shill.

[Dr. Acula]

>You sound like you need to learn what the definition of IT is.

Crime is not "things you don't like". It needs a victim who has a complaint of injury.

>Bribing of public officials via secret deals

The briber is as innocent as the mistress who helps a married man cheat - after all, she's not violating any vows. The bribe-receiver is a different story.

But, even receiving a bribe is not criminal per se. If I bribe someone working at McDonalds to insert jalapenos into my burger, who's being victimized exactly?

>Placing before the voters two choices(hehehe) that are both purchased using money stolen via past crimes is a crime.

There were only two choices??? I seem to remember at least 4 choices. I think there was also an option to not vote.

[vicorjh]

"...who's being victimized exactly"

The person/entity who owns the jalapenos?

[eddiebe]

No mess-up here, but stone cold calculated fraud of the highest order. It just goes on and on and on and on.

 Change you can believe in?  OMG!

[the grateful un...]

They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. 

Either you didn't get it, or you don't agree with it. Destroying the value of property, which is what the Federal Reserve is doing, by their complicity in bailing out out the banking system, is a purely Marxist, or Socialist transfer of power. In our case the USA isdevolving, and the current situation is close to Russian style gangster capitalism, presided over by a corrupt Chicago insider, (I am not sure why the assholes on the right worry so much about Obama's Muslim roots, its his Chicago style of politics that needs a good cleaning) That the voters COULD SEE THAT GOLDMAN WAS OBAMA'S LARGEST CONTRIBUTOR and still thought he would do THEIR bidding, does give your statement some validity. Is their sin of omission on the voters part worse?  You robbed me, is it my fault I had something to steal? 

[AnAnonymous]

You robbed me, is it my fault I had something to steal? 

Sounds like a real Indian...

[Dr. Acula]

>You robbed me, is it my fault I had something to steal? 

Not your fault, but it's your problem.

Those holding dollars and dollar-denominated assets are sitting ducks. Someone holding $10,000 has paid about $4 per day rent since Christmas for the privilege of holding the devaluing green confetti.

[Dr. Acula]

"Destroying the value of property, which is what the Federal Reserve is doing, by their complicity in bailing out out the banking system, is a purely Marxist, or Socialist transfer of power."

I agree; it's theft.

I simply think many financial executives are not criminals (though some may be). They are not thugs, thieves, murderers, or fraudsters. It's the deluge of cheap money and free bailouts that makes their coolly calculated acts appear out-of-control. If you know your rich uncle will bail you out of trouble, then why not go blow all your money on hookers, gambling, and coke?

I think blaming the execs is like focusing on the symptoms, and not on the pathogens causing the disease.

[plongka10]

Ultimate responsibilty for the actions of a corporation rest upon the shoulders of the chief executive. There are no excuses.

[FreakuentFlyer]

there is more logic in these 10 sentences than about 50% of articles that appear on ZH.

what most of these executives do/did, is the rational equivalent of walking into a wallmart and buying some imported goods. it is just a "easy" to do in their position as it is easy for me, you, or anyone else to walk into a wallmart and export thy neighbour's job to some other place where ppl work 60h/week while smiling, like our predecessors did before it occurred to them it was too hard.

[Reese Bobby]

You "talk" a lot but I see no substance in your thought process.  Although I am sure you are just a swell guy...  You should read the article, especially the last paragraph, think about it, and then chime in best you can.

The Big Banks own our politicians, our supposed regulators and the private Federal Reserve Bank.  Once you understand that fact your particular arguments are irrelevant; basically just insulting.

Once we realize the Big Banks can treat our currency as an obscene joke how is the regular American supposed to feel about answering that 5AM alarm clock to go make $25,000 a year to support a CRIMINAL Enterprise.

Me?  I am wealthy thanks to the money handling business.  But after the past few years I feel dirty and have lost respect for the industry. The average American should hate us...A LOT MORE...

[weinerdog43]

Of course we know that no republicans ever have taken a dime from Goldman nor have there been any problems prior to 2009.

[disabledvet]

Apparently it really was news to the Admin that the mob started in New York first.  Perhaps it is true irony that truth and honesty really has found a home in Chi-town now that many are formerly of DC.  In the meantime "follow Daddy Warbucks."

[the grateful un...]

we know that it was chicago (and mayor daley, who is what grandson to the current chief of staff, what a rotten stench this does omit) which brought about kennedy, and morphed nixon into a bizarro world replica of himself. and while nixon in the first place might have solved nothing, except a bad end to the missile crisis, chicago has more to do with americas problems than all the islamic world

[AccreditedEYE]

Wow dude, get a clue. How long have you been reading this blog?

1. But perhaps Goldman Sachs was just as deluded as their customers into believing the housing bubble would last? This is really a case of caveat emptor.

Do you know what a credit default swap is? Do you know what brought down AIG? Look at the size of the insurance The Squid bought.... they knew what they were buying because they were about to burn down the building....

2. This is just the same thing again. Buffet called derivatives weapons of financial mass destruction, why would any sane person invest in these? Ever hear of due diligence?

The reference made in the story is to SHAREHOLDERS of AIG common... NOT buying the actual instruments Cassano is talking about. Shareholders, in general, invest based off of the PUBLIC reporting of the companies they buy shares in.

3. How is the executives' fault that the government intervened using stolen taxpayer money to aid AIG?

SEE ANSWER TO #1

P.S.- Enjoy your junk.

[Dr. Acula]

"they knew what they were buying because they were about to burn down the building"

Are you saying they're arsonists? What actual crime did they commit, and when?

Does it make you criminal if you sell someone a house built on a swamp? If you sell someone a car with engine problems, should you be imprisoned?

[GoinFawr]

Hahahahah!Give it up Dr.Acula, this line of reasoning is the stupidest you've come up with yet. Come up for air! Lloyd needs to get back to doing God's work!

[Clamdigger]

Here, here! Real crimes are crimes committed by brown people. The acts of the holy (the Bernank, Dimon, et al) aren't crimes at all. Merely systemic problems.

You fucking genius.

[N_Jones]

Both of those are actual crimes if the seller does not disclose that information. That is called fraud. Which creating a derivative which you know to be risky and selling it as AAA is fraud. Hence criminal. :)

[the grateful un...]

let's ask Neil Bush, hey Neil what happened at Silverado? A development built on top of a dump? Well it was never meant to be developed, thats' right. You just drew up some maps and plans and then had the property reassessed at a higher value? I think that was a crime Neil.

[jobs1234]

I understand your "buyer beware" argument but the problem is that the product sold had the possibility of blowing up the whole financial system (and did)

It would be like me running a gas truck into a nuclear power plant by accident.

[Dr. Acula]

>I understand your "buyer beware" argument but the problem is that the product sold had the possibility of blowing up the whole financial system

Good. Crazy derivative schemes and ninja/liar loans should blow up. They add no social value and consequently should have zero value as imputed by consumers, not huge values imputed by government bailouts and FMAE/FMAC. The faster they blow up, the better. That's capitalism in action.

[disabledvet]

if they sold me that car or house they should be.  on the other hand if i did the selling...if i did the selling....hmmmm....didn't they throw the French kid under the bus too?  RUTHLESS!  First rule of financial conspriracy:  kill the salesman.

[Revolution_star...]

"What actual crime did they commit, and when?"

you seem to enjoy tossing salad for the squid.

[Bob]

Dr. Acula, is there any fucking ill in this world, be it never so vile, that you can't twist into evidence of socialism?

Stupid is one thing, crazy another altogether. 

[Dr. Acula]

Socialism definitely enters the picture here. Don't you see that the free market could weed these guys out, if it were given an actual chance?

I mean, would you give your money to snake oil salesmen, or sleezy, suspected financial fraudsters? I know I sure wouldn't.

But I have to, because institutions like the Fed and government programs like FMAE/FMAC/TARP do it for me.

Research the historical Law Merchant, if you don't understand my point of view - this system of law was self-enforced and it prevented fraud, it wasn't something government-enforced that encouraged fraud, bubbles, bailment fraud, gratuituous bailouts, and rampant gambling.

What's crazy is persisting with solutions that are known not to work.

[Pee Wee]

"Socialism definitely enters the picture here. Don't you see that the free market could weed these guys out, if it were given an actual chance?"

One of the more savory morsels on this forum today.

[GoinFawr]

If you like eating bullshit, I suppose.

[faustian bargain]

Putting a banker in jail won't solve a damn thing. Ending the fiat scam, bailouts, and the 'TBTF' racket will.

[Zero Govt]

all those will help, including jailing bankers and indeed asset stripping them before their arses hit the cells

[faustian bargain]

Jailing the bankers might help placate our sense of justice, but it would do nothing to change the structural problem. More bankers would just appear and take their place.

Government caused the problem, bankers just exploited it (possibly a chicken-and-egg situation, but government has the power and responsibility to make the rules). You can't punish bankers for playing a game the government wants them to play, and expect anything to change because of it.

[Bob]

Never mind.  Junked.

[faustian bargain]

Excellent.

[plongka10]

Please keep up; your government is OWNED.

[faustian bargain]

And how exactly does jailing a banker make the government any less owned? I suggest you try to do the keeping up.

[Temporalist]

Allstate Sues JPMorgan Over $750M in MBS

http://www.thestreet.com/story/11011495/1/allstate-sues-jpmorgan-over-75...

[Zero Govt]

BINGO! ...while this great article is absolutely correct about The Parasite Clubs collusion to prevent criminal justice being carried out there will be 'justice'..... 1,000's of investors are out of pocket, even 1,000's of the bwanksters own shareholders will be to (when they go bust). What Washington and the Regulators refuse to do investors will achieve by suing Wall Street bwanksters non-stop for years to come... the collateral damage to WS will be death by a 1,000 financial and reputational cuts and as a bonus drive a wedge between WS and DC who won't be able to associate with the bwanksters for fear of their own slippery skins

[Joeman34]

Had an interview with SEC examiners this morning as they're auditing my office this week.  Examiner didn't recognize the term 'ETF' - seriously...

No wonder things are the way they are...

[Rick64]

Put some tranny porn on a large flatscreen, it works everytime.

[buzzsaw99]

midget tranny porn

[Revolution_star...]

anal midget tranny porn

[I Am The Unknow...]

Oppression and Grand Larceny have been perfected and are now a science....no longer an "art" form practiced by menaical third world dictators.  This is now institutionalized.  The only way out is to escape these instituions and the countries that harbor them.  Rebellion will not work in this case because rebellion requires financing when the protests stop and things have to get on again....hence strengthening the very institutions you're protesting against.  Furthermore, you can't make your government uphold the rule of law just like you can't make your local sheriff issue a traffic ticket to somebody you have on film running a stop sign.  You simply have to leave town when there is no rule of law.   

When the productive, good and decent people leave town, the corrupt society will implode as it feeds on itself and eventually you will have tumbleweeds blowing through your own personal version of Tombstone, AZ.  

[AnAnonymous]

Oppression and Grand Larceny have been perfected and are now a science....no longer an "art" form practiced by menaical third world dictators.

Funny. It's been a while. Dictators have taken their lessons from the West.

Zimbabwe Ben has nothing Zimbabwe. It should have been Robert 'The American' Mugabe as he was the copy cat of US way of doing.

Ben 'Star Spangled Banner' Bernanke Or Uncle Ben... Ben Bernanke is one of the purest American ever. Nothing alien in him, only 100 pc American.

[SwingForce]

Lets not forget who the DA for The Southern District of NY has been; ANDREW CUOMO.

Now he's Gov. of NY State. Failure to Prosecute? I wonder why.

[Bob]

At least he's taken his lame ass somewhere he can preach "austerity."

The people would seem to be gluttons for punishment.

[bob_dabolina]

Barney Frank would love 6 months of pound me in the ass prison.

[RichardENixon]

Especially if he gets to be a "Lucky Pierre"

[johnQpublic]

solution:

if you get called to jury duty, no ones liable under the law unless everyone is

in other words.....NOT GUILTY

applies to all crimes

we have justice for all, or justice for none

see how they like that as the prison industrial complex goes in the dumpster