Why Has Nobody Gone To Jail For The Financial Crisis? Judge Rakoff Says: "Blame The Government"

Tyler Durden's picture

By US District Judge Jed S. Rakoff (pdf)

Why Have No High Level Executives Been Prosecuted In Connection With The Financial Crisis?

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans  leading lives of quiet desperation: without jobs, without resources, without hope. Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever-more-esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former – if the recession was due, at worst, to a lack of caution – then the criminal law has no role to play in the aftermath. For, in all but a few  circumstances (not here relevant), the fierce and fiery weapon called criminal prosecution is directed at intentional misconduct, and nothing less. If the Great Recession was in no part the handiwork of intentionally fraudulent practices by high-level executives, then to prosecute such executives criminally would be “scapegoating” of the most shallow and despicable kind.

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years. Indeed, it would stand in striking contrast to the increased success that federal prosecutors have had over the past 50 years or so in bringing to justice even the highest level figures who orchestrated mammoth frauds. Thus, in the 1970's, in the aftermath of the “junk bond” bubble that, in many ways, was a precursor of the more recent bubble in mortgage-backed securities, the progenitors of the fraud were all successfully prosecuted, right up to Michael Milken. Again, in the 1980's, the so-called savings-and-loan crisis, which again had some eerie parallels to more recent events, resulted in the successful criminal prosecution of more than 800 individuals, right up to Charles Keating. And, again, the widespread accounting frauds of the 1990's, most vividly represented by Enron and WorldCom, led directly to the successful prosecution of such previously respected C.E.O.’s as Jeffrey Skilling and Bernie Ebbers.

In striking contrast with these past prosecutions, not a single high level executive has been successfully prosecuted in connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears very likely that none will be. It may not be too soon, therefore, to ask why.

One possibility, already mentioned, is that no fraud was committed. This possibility should not be discounted. Every case is different, and I, for one, have no opinion as to whether criminal fraud was committed in any given instance.

But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior. As the Commission found, the signs of fraud were everywhere to be seen, with the number of reports of suspected mortgage fraud rising 20-fold between 1998 and 2005 and then doubling again in the next four years. As early as 2004, FBI Assistant Director Chris Swecker, was publicly warning of the “pervasive problem” of mortgage fraud, driven by the voracious demand for mortgagebacked securities. Similar warnings, many from within the financial community, were disregarded, not because they were viewed as inaccurate, but because, as one high level banker put it, “A decision was made that ‘We’re going to have to hold our nose and start buying the product if we want to stay in business.’”

Without multiplying examples, the point is that, in the aftermath of the financial crisis, the prevailing view of many government officials (as well as others) was that the crisis was in material respects the product of intentional fraud. In a nutshell, the fraud, they argued, was a simple one. Subprime mortgages, i.e., mortgages of dubious creditworthiness, increasingly provided the sole collateral for highly-leveraged securities that were marketed as triple-A, i.e., of very low risk. How could this transformation of a sow’s ear into a silk purse be accomplished unless someone dissembled along the way?

While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and  other government agencies, I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities. Rather, their position has been to excuse their failure to prosecute high level individuals for fraud in connection with the financial crisis on one or more of three grounds:

First, they have argued that proving fraudulent intent on the part of the high level management of the banks and companies involved has proved difficult. It is undoubtedly true that the ranks of top management were several levels removed from those who were putting together the collateralized debt obligations and other securities offerings that were based on dubious mortgages; and the people generating the mortgages themselves were often at other companies and thus even further removed. And I want to stress again that I have no opinion as to whether any given top executive had knowledge of the dubious nature of the underlying mortgages, let alone fraudulent intent. But what I do find surprising is that the Department of Justice should view the proving of intent as so difficult in this context. Who, for example, were generating the so-called “suspicious activity” reports of mortgage fraud that, as mentioned, increased so hugely in the years leading up to the crisis? Why, the banks themselves. A top level banker, one might argue, confronted with increasing evidence from his own and other banks that mortgage fraud was increasing, might have inquired as to why his bank’s mortgage-based securities continued to receive triple-A ratings? And if, despite these and other reports of suspicious activity, the executive failed to make such inquiries, might it be because he did not want to know what such inquiries would reveal?

This, of course, is what is known in the law as “willful blindness” or “conscious disregard.” It is a well-established basis on which federal prosecutors have asked juries to infer intent, in cases involving complexities, such as accounting treatments, at least as esoteric as those involved in the events leading up to the financial crisis. And while some federal courts have occasionally expressed qualifications about the use of the willful blindness approach to prove intent, the Supreme Court has consistently approved it. As that Court stated most recently in Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2068 (2011), “The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.” Thus, the Department’s claim that proving intent in the financial crisis context is particularly difficult may strike some as doubtful.

Second, and even weaker, the Department of Justice has sometimes argued that, because the institutions to whom mortgage-backed securities were sold were themselves sophisticated investors, it might be difficult to prove reliance. Thus, in defending the failure to prosecute high level executives for frauds arising from the sale of mortgage-backed securities, the then head of the Department of Justice’s Criminal Division, told PBS that “in a criminal case ... I have to prove not only that you made a false statement but that you intended to commit a crime, and also that the other side of the transaction relied on what you were saying. And frankly, in many of the securitizations and the kinds of transactions we’re talking about, in reality you had very sophisticated counterparties on both sides. And so even though one side may have said something was dark blue when really we can say it was sky blue, the other side of the transaction, the other sophisticated party, wasn’t relying at all on the description of the color.”

Actually, given the fact that these securities were bought and sold at lightning speed, it is by no means obvious that even a sophisticated counterparty would have detected the problems with the arcane, convoluted mortgage-backed derivatives they were being asked to purchase. But there is a more fundamental problem with the above-quoted statement from the former head of the Criminal Division, which is that it totally misstates the law. In actuality, in a criminal fraud case the Government is never required to prove reliance, ever. The reason, of course, is that would give a crooked seller a license to lie whenever he was dealing with a sophisticated counterparty. The law, however, says that society is harmed when a seller purposely lies about a material fact, even if the immediate purchaser does not rely on that particular fact, because such misrepresentations create problems for the market as a whole. And surely there never was a situation in which the sale of dubious mortgage-backed securities created more of a huge problem for the marketplace, and society as a whole, than in the recent financial crisis.

The third reason the Department has sometimes given for not bringing these prosecutions is that to do so would itself harm the economy. Thus, Attorney General Holder himself told Congress that “it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute - if we do bring a criminal charge - it will have a negative impact on the national economy, perhaps even the world economy.” To a federal judge, who takes an oath to apply the law equally to rich and to poor, this excuse -- sometimes labeled the “too big to jail” excuse – is disturbing, frankly, in what it says about the Department’s apparent disregard for equality under the law.

In fairness, however, Mr. Holder was referring to the prosecution of financial institutions, rather than their C.E.O.’s. But if we are talking about prosecuting individuals, the excuse becomes entirely irrelevant; for no one that I know of has ever contended that a big financial institution would collapse if one or more of its high level executives were prosecuted, as opposed to the institution itself.

Without multiplying examples further, my point is that the Department of Justice has never taken the position that all the top executives involved in the events leading up to the financial crisis were innocent, but rather has offered one or another excuse for not criminally prosecuting them – excuses that, on inspection, appear unconvincing. So, you might ask, what’s really going on here? I don’t claim to have any inside information about the real reasons why no such prosecutions have been brought, but I take the liberty of offering some speculations, for your consideration or amusement as the case may be.

At the outset, however, let me say that I totally discount the argument sometimes made that no such prosecutions have been brought because the top prosecutors were often people who previously represented the financial institutions in question and/or were people who expected to be representing such institutions in the future: the so-called “revolving door.” In my experience, every federal prosecutor, at every level, is seeking to make a name for him-or-herself, and the best way to do that is by prosecuting some high level person. While companies that are indicted almost always settle, individual defendants whose careers are at stake will often go to trial. And if the Government wins such a trial, as it usually does, the prosecutor’s reputation is made. My point is that whatever small influence the “revolving door” may have in discouraging certain white-collar prosecutions is more than offset, at least in the case of prosecuting high-level individuals, by the career-making benefits such prosecutions confer on the successful prosecutor.

So, one asks again, why haven’t we seen such prosecutions growing out of the financial crisis? I offer, by way of speculation, three influences that I think, along with others, have had the effect of limiting such prosecutions.

First, the prosecutors had other priorities. Some of these were completely understandable. For example, prior to 2001, the FBI had more than 1,000 agents assigned to investigating financial frauds, but after 9/11 many of these agents were shifted to anti-terrorism work. Who can argue with that? Eventually, it is true, new agents were hired for some of the vacated spots in fraud detection; but this is not a form of detection easily learned and recent budget limitations have only exacerbated the problem.

Of course, the FBI is not the primary investigator of fraud in the sale of mortgage-backed securities; that responsibility lies mostly with the S.E.C. But at the very time the financial crisis was breaking, the S.E.C. was trying to deflect criticism from its failure to detect the Madoff fraud, and this led it to concentrate on other Ponzi-like schemes, which for awhile were, along with accounting frauds, its chief focus. More recently, the S.E.C. has been hard hit by budget limitations, and this has not only made it more difficult to assign the kind of manpower the kinds of frauds we are talking about require, but also has led S.E.C. enforcement to focus on the smaller, easily resolved cases that will beef up their statistics when they go to Congress begging for money.

As for the Department of Justice proper, a decision was made around 2009 to spread the investigation of these financial fraud cases among numerous U.S. Attorney’s Offices, many of which had little or no prior experience in investigating and prosecuting sophisticated financial frauds. At the same time, the U.S. Attorney’s Office with the greatest expertise in these kinds of cases, the Southern District of New York, was just embarking on its prosecution of insider trading cases arising from the Rajaratnam tapes, which soon proved a gold mine of good cases that absorbed a huge amount of the attention of the securities fraud unit of that office. While I want to stress again that I have no inside information, as a former chief of that unit I would venture to guess that the cases involving the financial crisis were parceled out to Assistants who also had insider trading cases. Which do you think an Assistant would devote most of her attention to: an insider trading case that was already nearly ready to go to indictment and that might lead to a high-visibility trial, or a financial crisis case that was just getting started, would take years to complete, and had no guarantee of even leading to an indictment? Of course, she would put her energy into the insider trading case, and if she was lucky, it would go to trial, she would win, and she would then take a job with a large law firm. And in the process, the financial fraud case would get lost in the shuffle.

Alternative priorities, in short, is, I submit, one of the reasons the financial fraud cases were not brought, especially cases against high level individuals that would take many years, many investigators, and a great deal of expertise to investigate. But a second, and less salutary, reason for not bringing such cases is the Government’s own involvement in the underlying circumstances that led to the financial crisis.

On the one hand, the government, writ large, had a hand in creating the conditions that encouraged the approval of dubious mortgages. It was the government, in the form of Congress, that repealed Glass-Steagall, thus allowing certain banks that had previously viewed mortgages as a source of interest income to become instead deeply involved in securitizing pools of mortgages in order to obtain the much greater profits available from trading. It was the government, in the form of both the executive and the legislature, that encouraged deregulation, thus weakening the power and oversight not only of the S.E.C. but also of such diverse banking overseers as the O.T.S. and the O.C.C. It was the government, in the form of the Fed, that kept interest rates low in part to encourage mortgages. It was the government, in the form of the executive, that strongly encouraged banks to make loans to low-income persons who might have previously been regarded as too risky to warrant a mortgage. It was the government, in the form of the government-sponsored entities known as Fannie Mae and Freddie Mac, that helped create the for-a-time insatiable market for mortgage-backed securities. And it was the government, pretty much across the board, that acquiesced in the ever greater tendency not to require meaningful documentation as a condition of obtaining a mortgage, often preempting in this regard state regulations designed to assure greater mortgage quality and a borrower’s ability to repay.

The result of all this was the mortgages that later became known as “liars’ loans.” They were increasingly risky; but what did the banks care, since they were making their money from the securitizations; and what did the government care, since they were helping to boom the economy and helping voters to realize their dream of owning a home.

Moreover, the government was also deeply enmeshed in the aftermath of the financial crisis. It was the government that proposed the shotgun marriages of Bank of America with Merrill Lynch, of J.P. Morgan with Bear Stearns, etc. If, in the process, mistakes were made and liabilities not disclosed, was it not partly the government’s fault?

Please do not misunderstand me. I am not alleging that the Government knowingly participated in any of the fraudulent practices alleged by the Financial Inquiry Crisis Commission and others. But what I am suggesting is that the Government was deeply involved, from beginning to end, in helping create the conditions that could lead to such fraud, and that this would give a prudent prosecutor pause in deciding whether to indict a C.E.O. who might, with some justice, claim that he was only doing what he fairly believed the Government wanted him to do.

The final factor I would mention is both the most subtle and the most systemic of the three, and arguably the most important, and it is the shift that has occurred over the past 30 years or more from focusing on prosecuting high-level individuals to focusing on prosecuting companies and other institutions. It is true that prosecutors have brought criminal charges against companies for well over a hundred years, but, until relatively recently, such prosecutions were the exception, and prosecutions of companies without simultaneous prosecutions of their managerial agents were even rarer. The reasons were obvious. Companies do not commit crimes; only their agents do. And while a company might get the benefit of some such crimes, prosecuting the company would inevitably punish, directly or indirectly, the many employees and shareholders who were totally innocent. Moreover, under the law of most U.S. jurisdictions, a company cannot be criminally liable unless at least one managerial agent has committed the crime in question; so why not prosecute the agent who actually committed the crime?

In recent decades, however, prosecutors have been increasingly attracted to prosecuting companies, often even without indicting a single individual. This shift has often been rationalized as part of an attempt to transform “corporate cultures,” so as to prevent future such crimes; and, as a result, it has taken the form of “deferred prosecution agreements” or even “non-prosecution agreements,” in which the company, under threat of criminal prosecution, agrees to take various prophylactic measures to prevent future wrongdoing. But in practice, I suggest, it has led to some lax and dubious behavior on the part of prosecutors, with deleterious results.

If you are a prosecutor attempting to discover the individuals responsible for an apparent financial fraud, you go about your business in much the same way you go after mobsters or drug kingpins: you start at the bottom and, over many months or years, slowly work your way up. Specifically, you start by “flipping” some lower level participant in the fraud whom you can show was directly responsible for making one or more false material misrepresentations but who is willing to cooperate in order to reduce his sentence, and – aided by the substantial prison penalties now available in white collar cases – you go up the ladder. For a detailed example of how this works, I recommend Kurt Eichenwald’s well-known book The Informant, which describes how FBI agents, over a period of three years, uncovered the huge price-fixing conspiracy involving high-level executives at Archer Daniels, all of whom were successfully prosecuted.

But if your priority is prosecuting the company, a different scenario takes place. Early in the investigation, you invite in counsel to the company and explain to him or her why you suspect fraud. He or she responds by assuring you that the company wants to cooperate and do the right thing, and to that end the company has hired a former Assistant U.S. Attorney, now a partner at a respected law firm, to do an internal investigation. The company’s counsel asks you to defer your investigation until the company’s own internal investigation is completed, on the condition that the company will share its results with you. In order to save time and resources, you agree. Six months later the company’s counsel returns, with a detailed report showing that mistakes were made but that the company is now intent on correcting them. You and the company then agree that the company will enter into a deferred prosecution agreement that couples some immediate fines with the imposition of expensive but internal prophylactic measures. For all practical purposes the case is now over. You are happy because you believe that you have helped prevent future crimes; the company is happy because it has avoided a devastating indictment; and perhaps the happiest of all are the executives, or former executives, who actually committed the underlying misconduct, for they are left untouched.

I suggest that this is not the best way to proceed. Although it is supposedly justified in terms of preventing future crimes, I suggest that the future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing. Just going after the company is also both technically and morally suspect. It is technically suspect because, under the law, you should not indict or threaten to indict a company unless you can prove beyond a reasonable doubt that some managerial agent of the company committed the alleged crime; and if you can prove that, why not indict the manager? And from a moral standpoint, punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility.

These criticisms take on special relevance, however, in the instance of investigations growing out of the financial crisis, because, as noted, the Department of Justice’s position, until at least very, very recently, is that going after the suspect institutions poses too great a risk to the nation’s economic recovery. So you don’t go after the companies, at least not criminally, because they are too big to jail; and you don’t go after the individuals, because that would involve the kind of years-long investigations that you no longer have the experience or the resources to pursue.

In conclusion, I want to stress again that I have no idea whether the financial crisis that is still causing so many of us so much pain and despondency was the product, in whole or in part, of fraudulent misconduct. But if it was -- as various governmental authorities have asserted it was –- then, the failure of the government to bring to justice those responsible for such colossal fraud bespeaks weaknesses in our prosecutorial system that need to be addressed.

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DoChenRollingBearing's picture

"It's Queen Elizabeth's (II) fault."

-- Lyndon LaRouche

VD's picture

As per above, Eric Holder should be jailed. This nation has been reduced to a farce and miscarriage of justice all around for top 1% and then some; captured SEC will never prosecute beyond token minor bs: they all need to to jailed. that's what's called taking an oath -- no one is honoring shit.

aint no fortunate son's picture

It would have been nice if Judge Rakoff had written this piece two or three years ago, BEFORE the statutes of limitations were expiring. As to Holder, he's a disgrace, beyond the pale.

Diogenes's picture

When you see statements like this from important public officials it is proof positive that the fix was in. Now it is ok to talk about it because it is too late to do anything. Expect to see more statements like this from other sellouts I mean big shots.

NoDebt's picture

Just the 3 step process for crisis management in action here:

1.  Deny there is a problem.

2,  OK, there's a problem but there's nothing that can be done about it.

3.  OK, OK, there's something we could have done about it, but it's too late now.

We have arrived at Stage 3, as Dogonese points out.  Thank God it's over.  Now we can go about our normal lives.  Nothing to see here.  It's all over.  Move along.

Al Gorerhythm's picture

This ass wipe has never uttered an oath or heard of The Constitution, right?

Money clause..... Trampled

Second Ammendment.... Being trampled,

Free Speach clause........ Trampled

Presumption of Innocence.... Trampled

Right of Asembly....... Trampled.

Right to an Attorney........ Trampled.

Freedom from Taxation on one's labour....... Trampled

Property rights with no taxation........ Trampled.

The right to persue happiness through honest endeavour (like a lemonade stand) ..... Trampled.

Freedom of travel..... Trampled.

etc, etc, ad nauseum  ......  Trampled

And this cunt is a judge of the Supreme Court. May you wither in pain and die, you miserable motherfucker.

GetZeeGold's picture



For the life of me I cannot believe we'd ever die for these sins


We were merely freshmen


Nothing To See Here's picture

It would have been nicer if this judge, as most people here, would know that "deregulation" has nothing to do with the subprime crisis. The deregulation script is the government's game, as it implies that MOAR regulation would have saved us from the financial collapse in 2008.

Glass-Steagall was the only piece of law which was repealed in the runup to the crisis, while regulation of the financial markets as a whole was expanding at an alarming rate. And the repeal of Glass-Steagall had nothing to do with what happened. Glass-Steagall dated back to 1933 and it applied to deposit institutions. Bear Stearns, Merrill Lynch, Lehman, AIG, Fannie, Freddie, etc. were not deposit institutions and thus were NOT regulated by GS before it was repealed.

stormsailor's picture

no statute of limitations on fraud

mc225's picture


some people act as though glass-steagall were a panacea.

in truth, competing currencies with no regulation would be better than a federal reserve, regulated. for who regulates the regulators?

we need unregulation... people free to float any currency they want; people free to exchange in any currency they can imagine.


TheLoveArtist's picture

Why was Rubin so eager to repeal it then, he had a very long tenure with Goldmans Sachs.  While I don't blame the Jews for everything they have had quite a few dirty hands in the pie.  Reminds me of a quote by one of Europe's greatest statesmen, FREDERICK THE GREAT OF PRUSSIA wrote in his Testament politique that: We have too many Jews in the towns. As soon as you get away from the frontier, the Jews become a disadvantage, they form cliques, they deal in contraband and get up to all manner of rascally tricks which are detrimental to Christian burghers and merchants. I have never persecuted anyone from this or any other sect; I think, however, it would be prudent to pay attention, so that their numbers do not increase..... Here are some CITY JEWS, Blankfein of Goldman Sachs, Paulson former treasury sec and former head of Goldman Sachs in charge of ONE TRILLION dollar TARP handout to Wallstreet JEWS, Rubin former sec or treasury who pushed repeal of Glass-Steagall act, tax cheat Geithner, Summers, Junk Bond LBO specialist Michael Milken, Yellen, Greenspan, Bernake, Stepen Cohen of SAC, just to scratch the surface of the CLAN of Thieves.

assistedliving's picture

Hank Paulson is a Christian Scientist if i'm not mistaken. 

truth is every LIAR NINA NO DOC ALT A, sub prime, junk bond, S&P, Moody's, Fitch,GMAC, GE etc. etc. shit, ud hv to indict Half of USSofA(R).  when the boat leaks, even women and children drown

sgorem's picture

fuck the blame! where's THE fucking JUSTICE.....and the Executioner!.....sooner, rather than later, there will be blood in the streets, and hunger is the key.  When .gov controls the toggle switch for your electric, your gas, your food, your heat, your money, your internet, your cell service, your job, your Ebt card, the highways, the bandwith, the radio, tv, and has the DHS and local and state police armed to the teeth with the latest/greatest military armaments, it ain't gonna end well for the common sheeple.

zanez's picture

No statute of limitations on rope and lamp posts.

Againstthelie's picture

Libertarians must be glad about it, because it's a result of an extremely weak state owned by the Plutocrats. In fact it's not even a state, it's only a BUSINESS.

PT's picture

+1 to you Againstthelie.

But I see you went straight over the heads of four (so far).  You tried to tell 'em, but they still don't get it. 

jet813's picture

No it's King Georges fault - damn that stamp tax

nmewn's picture


Pass a law forcing mortgages to be made on some past pretense, to people who cannot pay and then expect to control/regulate the ethics of your actions (the crafting the law) with your technocrats who are just as stupid as the lawmakers themselves.

Expecting greed or self interest to go away (from the lawmaker to the CEO to the one getting the loan) is like expecting the sun to never rise.

Joebloinvestor's picture

The government didn't waste a whole lot of time going after the savings and loan criminals.

Cognitive Dissonance's picture

The S&L's were not too big to fail. Ultimately they were too little to (successfully) fraud.....and get away with it.

Cdad's picture

...and I do believe we are quickly getting to the point........where the fraud in the big banks can no longer be swept under the rug, too.  No, I'm not saying that Eric Placeholder is getting ready to act.  I'm talking about the market itself.  Don't know if any of you have noticed...but the only cash that seems to be going into the market anymore is Bernanke's funny money.

As such...that moment when it is all too apparent that there is nothing but fraud going on...that is the moment that Jamie Dimon, Loyd Blankfien, etc...just let it all go...and sell.

These last couple weeks on the market...absolutely abysmal liquidity.  

TheRideNeverEnds's picture

that is the moment that Jamie Dimon, Loyd Blankfien, etc...just let it all go...and sell.


That is exactly WHY they wont be prosecuted.   Since they ARE the market, backed by the FED backed by tax dollars its zero risk to them and we shall continue up untill they say otherwise, if Obama and co. cross them they will crash the market and you better believe they have made that clear to him in their many many publicized private meetings at the white house.


I believe they are in the process of transferring the risk to the bagholders (retail customers) currently, hence the light volumes.  There are not enough public buyers for them to all out sell and they know it, easy does it till they can unwind positions and position on the short side then woosh, they pull the rug out.     

Bangin7GramRocks's picture

Why would they ever "pull the rug out"? Only if they were facing actual prosecution for the crimes that they committed against the world. They make more money by keeping the ponzi going. The threat that they could and would drive the world economy into a vicious depression is what has kept them out of jail. It's called leverage. Not sissy financial leverage, but real leverage!

The Old Man's picture


From http://en.wikipedia.org/wiki/Savings_and_loan_association

Item # 10 under "Decline of S & L's" (circa 1986-1995)

A virtual end of inflation in the American economy, together with overbuilding in multifamily, condominium type residences and in commercial real estate in many cities. In addition, real estate values collapsed in the energy states — Texas, Louisiana, Oklahoma particularly due to falling oil prices — and weakness occurred in the mining and agricultural sectors of the economy.

So the problem existed beforehand with S & L's and the TBTF banks gradually took up the slack after Glass Steagall was nullified.

Somebody had to take it up.

But .gov didn't think ahead to what they created. And they damn well know it's their fault.

Everybodys All American's picture

I don't think jail is the right place for these people either. I'm thinking to let God sort it out would be a better solution.

Flakmeister's picture

Don't you know, jail is only for little people....

That and for Blacks dumb enough to get caught with a dime bag.....

American justice for wealthy is simply to fine the bastards 5-10% of whatever they grifted after giving them a 20% tax cut...

A Lunatic's picture

The whole damnable system is a fraud from the highest levels down to the people of Wall-Mart who gleefully trample and kill each other every fucking Black Friday........

Cognitive Dissonance's picture

This time it's really different.

<Wall-Mart will open Thanksgiving afternoon, thus no Black Friday. Problem solved.>

A Lunatic's picture

Black Friday is no longer politically correct anyhow, so why not throw Thanksgiving to the corporate wolves. It would be nice if they could also be open all day Christmas as well so people don't have to wait until the day after to take back all of their gifts.....


Thin_Ice's picture

Geesh, don't give 'em that idea. They may just do it.

I think the way Black Friday has morphed into Black Thanksgiving is a sign of what our society has become. Drunk on consumption and the pursuit of the "deal", ignoring what we have and being thankful for it and instead focusing on more, more, MOAR! Sometimes I hate consumerism.

But the retailers will be pushing hard this year due to deflated margins and a shorter shopping season. Nevermind I started to seeing X-Mas themed commercials the day before Halloween.


Let the mayhem ensue.

StychoKiller's picture

How many cheap waffle irons and Spiderman towels do the Ignorati need?

Vendetta's picture

I heard the waffle irons are $1.87 this year instead of the $2 last year.   People will be wild about it and start hitting each other over the head with them because there will only be 2,000 waffle irons allowed for each store.

udaman's picture

Why would anyone down vote that comment?

GumbyMe's picture

I guess in the end, it's "We the people", the "owners" of our government, who caused all of this, therefore we can only blame ourselves.

CH1's picture

"We the people", the "owners" of our government

That hasn't been true for a LONG time, my friend.

The Old Man's picture

No, it's the rating agencies faults. If they would have bothered to attempt "Due Dilligence", like all the rest of us "HAVE" to, then maybe the bundled POS MBS's  would have not been such a F******  "TULIP" trade in the first place.  And DOJ apparently takes it in the ass just like us. It'll be a miracle if this judge EVER get's nominated to the SCOTUS. He just signed his resignation and is retiring, I'll bet. Law? What Law?

Orly's picture

Alas, poor Rakoff. I knew him well, Horatio...

The cracks are beginning to resonate on a global scale.


A public figure stating for the record what ZeroHedge has alleged all these years.

And just WWNTD?

"In 1935 at his annual birthday party/press meeting a 79 year old Tesla related a story where he claimed a version of his mechanical oscillator caused extreme vibrations in structures and even an earthquake in downtown New York City."


A simple device.  How quaint, even... Keep sounding off.  Keep telling everyone who is willing to listen.

The gateway to the fourth turning has arrived, ladies and gentlmen.


DoChenRollingBearing's picture

Good seeing you around, Orly!

fonzannoon's picture

I never thought I'd see the sentence "the gateway to the fourth turning has arrived" followed by a smiley face.

Colonel Klink's picture

Judge Rakoff should be careful when flying, hot tubbing, or driving his car.

Clowns on Acid's picture

Exactly Orly - Where was the Hon Judge Rakoff after QE1 ? QE2 ? in fact QE?. Only now do we see after the Lame Stream media pefformances of Weill, Rubin, Hank Paulsen, Greenspan, and Hazaur (see ZH) ... we now get a Judge angrily arguing that perhaps the banks were at fault ... but it was the Clinton (Weill / Rubin) triumpherate that repealed Glass Steagal, put the CRA Act on 'roids under a Bwarney "He made me bite the pillow" Frank and Chris "the human brown bag" Dodd controlled Congress.  This got the resecuritization of the securitizations going full bore.

Hey when Franklin Raines collected $40MM for his time at Fannie... where was the Hon. Judge Rakoff then ?

The rats are painting themselves as cats these days at a mile a minute.

TheFreeLance's picture

Yes. One more time -- finance did not break in 2008, the rule of law did.

The legal cartel looked around, blinked, and collectively said, "Well, if THOSE guys have to lose THEIR phony money, what about OUR phony money?"

There was zero interest in prosecuting serial fraud if the prosecution only took money from the banksters without enriching a member of the legal cartel -- worse, routine investigation EXPOSED many members of said cartel to financial and prosecutorial risk as co-conspirators in the fraud.

Any honest US Atty in America could've RICO'd Countrywide and Golden West, popped the bubble, blown up HELOCs, put a few dozen banksters and govt officials in jail and cauterized the wound. It would have been painful, horrible, and completely unprecedented. But it would have been done. Over.

Unlike QE Forever.

sgorem's picture

+1000 for the Clowns, bravo.

Diogenes's picture

Anything made of metal will vibrate at a certain frequency. The larger the object the lower the frequency. If you can set up a vibration of the right frequency the object will fatigue and be destroyed.

Orly's picture

Not exactly the theory.

All things resonate in and of themselves, simply because the parts that create the whole are not really "there" but move in and out of their true selves.  It's a quantum thing...

What Nikola Tesla demonstrated was that almost anything in the Unviverse can be used as a medium of frequency, such that the vibration may live inside of the medium and, without altering the medium itself, can compound its own strength by the power of "resonance," independent of the medium it exists in,  Bamboo will do, if you don't mind, though it is conceded that metals work exceptionally well.

The point being the resonant voice can grow louder and louder, stronger and more forceful independent of the will of the medium to stop the vibration.  In fact, there reaches a point of critical resonance, when even the efforts of the medium to try to stop it add to the compounding power.  Hence the earthquake in Bedford-Stuy...

We are at the critical juncture when all of our tiny voices, our "conspiracy theorist" voices, have resonated to the point where the medium will try to crush us,  Unfortunately for them, as they add their voices of denial, the resonant frequency only gets more powerful.

I believe it was William Shakespeare (or some fraud writing under that pseudonym...) who pointed out the absolute liar by saying, "I believe thou dost protest too much."

Listen for more blatant, loud and obvious protests coming from our eloquent leaders, while the more and more common man looks up from his grinding wheel and asks the age-old question: "what the fuck, yo?"


Flakmeister's picture

Good grief, please take your pseudo-science bullshit elsewhere...

To describe the propagation of sound in a solid object does not require Quantum Mechanics....

Google "normal mode" and get back to us...

And quit smearing the good name of Tesla with your drivel...

Orly's picture

Ah, Flak...

Still a jerk, I see.  Quantum mechanics and "solid objects" in the same sentence?  Really?  Bing the words "mechanical resonance" and get back to your AlGore altar before you freeze to death in your anthropogenic global warming world, willya?

Tell us what else you don't understand about the way the real world works, please.  I'm dying to hear.  Solar cycle much?  Prolly not...

It was in that same apartment building that Tesla tried his new Crooke's tube- only in Tesla style at a megavolt of electricity- to reproduce Roentgen's experiment using this new "X" ray by exposing himself before a glass photographic plate.

After an hour, Nikky said, when the inside of his head got warm, did he think he had exposed it enough.  Sure enough, when the plate was processed, there was an image of the inside of his calvarium.  Needless to say, the rest of his days were spent in diminshing returns, increasing paranoia and delusion.

Do you have a C/T scanner in your mommy's basement, Flak?  Jus' curious...

Flakmeister's picture

You are a babbling fool....

Do you think they call it "Solid State Physics" for shits and giggles?

Hows that Electric Universe thingie tie in with recent CMB data from the Planck experiment? Or did I confuse you with another a whackadoo?

BTW, she has been dead for 8 years...