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DoJ To Tax Wall Street (Again) In MBS Probe

Tyler Durden's picture




 

Fresh off a farcical ‘crack down’ on “bad actor” banks that colluded to rig the $5 trillion-a-day FX market, the DoJ is launching another faux crusade against Wall Street.

As a reminder, the Justice Department recently extracted guilty pleas from several TBTF banks in connection with forex manipulation. The entire effort was of course meaningless and ended with what amount to token fines and no jail time for any of the conspirators. Worse, the banks were able to obtain SEC waivers which ensured their ability to “efficiently” raise capital and participate in private offerings (among other important activities) would not be curtailed because after all, no one wants another “Arthur Andersen”.

If you don’t see the connection between banks rigging FX markets and a decade-old accounting scandal, that’s because there isn’t one. Here's what we said last month regarding the excuse for allowing Wall Street's to obtain SEC waivers:

The excuse for allowing Wall Street to skirt the very penalties that were put in place as a result of the very things for which the banks are now being prosecuted is two-fold: 1) there’s the so-called ‘Arthur Andersen effect’ whereby the decade-old collapse of an accounting firm and the layoffs that accompanied it are somehow supposed to represent what would happen if a Wall Street bank were not able to claim seasoned issuer status, and 2) curtailing a major bank’s ability to issue capital “speedily and efficiently”, participate in private placements, and manage mutual funds represents a systemic risk.

So, emboldened by its recent “unprecedented” prosecutorial success, the DoJ will now pursue a fresh round of MBS-related settlements with banks that knowingly packaged and sold shoddy CDOs.

Via WSJ:

Up to nine banks are in line for the next round of billion-dollar payments related to soured mortgages as federal and state officials prepare their next set of cases, people familiar with the matter said.

 

The Justice Department and state officials, which already have reaped almost $37 billion from the largest U.S. banks, are now targeting U.S. and European banks. Settlements with Goldman Sachs Group Inc. and Morgan Stanley could be finalized as early as late June, these people said.

 

The settlements relate to securities backed by residential mortgages that plunged in value during the financial crisis. Banks are expected to pay from a few hundred million dollars to $2 billion or $3 billion each, depending on their size and the level of misconduct they allegedly employed in arranging the securities, some of these people said. The deals, which are expected to come individually rather than as a group, are likely to stretch out over months as details are worked out, these people said. Negotiations with most banks are still in early stages, these people said..

 

The Justice Department could pursue settlements with large U.S. regional banks when these settlements are over, in part based on the amount of mortgage-related securities they underwrote and sold, some of these people said..

 

Other banks expected to settle in coming months include Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, Royal Bank of Scotland Group PLC,UBS AG and Wells Fargo & Co.

Most of them have disclosed that they are being investigated for mortgage matters, but the timing and size of potential fines haven’t been reported before..

 

These settlements would represent a passing of the torch to new U.S. Attorney General Loretta Lynch, since settlements with J.P. Morgan, Citigroup and Bank of America were negotiated under her predecessor, Eric Holder.

 

(Attorney General Loretta Lynch)

Ah, yes. The proverbial "passing of the torch" from one crusader for justice to another.

Or, more accurately, Loretta Lynch is now the person in charge of shaking down Wall Street for government protection money. As long as the banks pay their "taxes", no one will ever go to jail, fines will never amount to more than a fraction of the profits reaped from the activities under scrutiny, and, most important of all, the SEC will ensure that the rules designed to punish "bad actor" banks will never be enforced. 

We've said it before and we'll say it again: it's good to be TBTF.

 

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Fri, 06/05/2015 - 18:36 | 6167992 Yen Cross
Yen Cross's picture

  Lets keep beating all those dead horses...

 Angelo R. Mozilo (born 1938) was the chairman of the board and chief executive officer of Countrywide Financial until July 1, 2008

Fri, 06/05/2015 - 18:39 | 6167998 BrocilyBeef
BrocilyBeef's picture
"What The Left Hand Giveth, The Right Hand Taketh Away"

Angelo had one hell of a "nice" tan. Looked like a pumpkin.

Where is his cell block again?

Fri, 06/05/2015 - 18:46 | 6168013 Manthong
Manthong's picture

Who do I need to talk to so that I just burglarize,  rob and defraud all I want and then just occasionally pay a small fee to L.E.?

 

Fri, 06/05/2015 - 20:13 | 6168214 MonetaryApostate
MonetaryApostate's picture

*Yawn*, if people aren't going to jail WE ARE NOT IMPRESSED!

#jamiediamond4jail

Fri, 06/05/2015 - 18:49 | 6168014 Yen Cross
Yen Cross's picture

   Used 25 hundred "SQ-ft" house.

 Koi pond in basement.

 EBT verification required.

Fri, 06/05/2015 - 18:59 | 6168036 wisefool
wisefool's picture

I am sure the bathroom in his (actual) mansion is bigger than the entire McMansions of his staff. Thats how things work. Not one banker from the crisis went to jail other than Madeoff, and thats only because he pissed off some other powerful people, instead of the tax slaves.

Fri, 06/05/2015 - 19:29 | 6168039 MsCreant
MsCreant's picture

"What The Left Hand Giveth, The Right Hand Taketh Away"

Is that code for a reach around while getting screwed?

Fri, 06/05/2015 - 19:35 | 6168135 Son of Loki
Son of Loki's picture

Wake me when at least ONE Wall Street criminal goes to jail. The Gubmint is too busy searching for FIFO thieves and pole-eece departments to be bothered with the Big Billionaire Banker criminals, seems like.

Fri, 06/05/2015 - 21:27 | 6168396 venturen
venturen's picture

Loki....you better not be some indian trading stock in your parents basement.... They have you profiled!

Sat, 06/06/2015 - 08:47 | 6168921 Handful of Dust
Handful of Dust's picture

The profilers are people just like you and me. They can also see how unevenly the law is being applied.

 

Yes, all these people (fefo, etc) may be criminals also, but why prosecute one group and let the other group of wall street walk free?

They can also see, the law doesn't apply to Wall Streeters. I'm sure they scratch their heads and wonder what's going on.

Sat, 06/06/2015 - 12:20 | 6169401 DavidC
DavidC's picture

Yup.

Barclays PLC - not American
Credit Suisse Group AG - not American
Deutsche Bank AG - not American
HSBC Holdings PLC - not American
Royal Bank of Scotland Group PLC - not American
UBS AG - not American
Wells Fargo & Co - What?! American?!

DavidC

Sat, 06/06/2015 - 01:14 | 6168682 junction
junction's picture

The USDOJ is now operating no differently than a pimp collecting money from his or her stable of whores.  Loretta Lynch is a dimwit sadist picked for US Attorney becasue she will follow orders, however reprehensible. 

Fri, 06/05/2015 - 18:59 | 6168044 bid the soldier...
bid the soldiers shoot's picture

Didn't Bank of America buy Countrywide early in 2008 so they could shred every bit of incriminating evidence of BoA's collusion with Countrywide, and crush all the hard drives in their computers?

Fri, 06/05/2015 - 18:37 | 6167993 davidalan1
davidalan1's picture

Faux is right....what a fucking joke...Just call Hank Paulson..he is good at saving banks...

what I want to know is who are these bankers and how much fucking money do they need> ..Just sick

 

TBTF...

Fri, 06/05/2015 - 18:39 | 6167999 Mini-Me
Mini-Me's picture

Who said that crime doesn't pay?

Fri, 06/05/2015 - 18:40 | 6168003 BrocilyBeef
BrocilyBeef's picture

Religion?

Fri, 06/05/2015 - 18:45 | 6168016 suteibu
suteibu's picture

You just have to steal enough to buy off the cops, pigs, Feds, politicians, etc, etc, etc.

That's the secret.

Fri, 06/05/2015 - 18:44 | 6168011 Seasmoke
Seasmoke's picture

There are no securities backed by any fucking mortgages. It's one big fucking fraud.

Fri, 06/05/2015 - 18:56 | 6168034 MsCreant
MsCreant's picture

You are a bonafied nerd. 

Fri, 06/05/2015 - 18:45 | 6168015 Seasmoke
Seasmoke's picture

What about the settlement for the homeowners who were foreclosed on with fraud.

Fri, 06/05/2015 - 18:52 | 6168023 Yen Cross
Yen Cross's picture

  Seasmoke, that inventory will rot before it's sold.

 The properties will probably be bundled, and re-zoned Multi Tenant<>

Fri, 06/05/2015 - 19:32 | 6168132 Cheyenne
Cheyenne's picture

They still have a legal remedy, believe it or not.

Every foreclosure judgment obtained by a false/forged/counterfeit promissory note is void as a matter of law. That's because without a note, there was never a legal injury, and without a legal injury, the plaintiff never had standing. Standing is an essential requirement for a "case or controversy" under article III. No standing means the court never had jurisdiction to begin with, and all rulings and judgments in such cases are void--legal nullities.

As a practical matter, though, someone would have to attack such a judgment to prove this.

That said, there is no time limit--none--for a party injured by a void judgment (like a homeowner victimized by robo-signing) to collaterally attack or even set aside those void judgments in a later proceeding. A court's jurisiction is inherent. In fact, such attacks are expressly provided for under Rule 60(b)(4), Fed.R.Civ.P.

Of course, you'd need a foreclosure defense attorney with a nutsack the size of Rhodesia to put on his plaintiff's hat to bring such a case. The precedential effect of such a court ruling would rain HELL on the TBTF financial institutions. And frankly, that's long overdue.

Fri, 06/05/2015 - 18:45 | 6168017 jimfcarroll
jimfcarroll's picture

Loretta Lynch! Ha. She's only good at seizures of innocent people's property under Long Island civil asset forfeiture rules.

She can't be expected to actually prosecute criminals; I mean, she's in the White House staff.

Fri, 06/05/2015 - 18:53 | 6168026 ronron
ronron's picture

QE 4 and fines for all. that'll teach ya.

Fri, 06/05/2015 - 18:54 | 6168027 MsCreant
MsCreant's picture

Ya gotta pay to play. 

Extend those wrists to Loretta, now!

Pay your fine.

Run along.

See you round the back door, later, heh, heh, heh.

Fri, 06/05/2015 - 18:58 | 6168040 Rainman
Rainman's picture

She's been part of the moneyed elite all along .... this is all a pre-arranged kabuki theater dance with the banksters.

                            http://www.salon.com/2014/11/10/loretta_lynchs_wall_street_friends_what_you_should_know_about_ag_nominees_finance_past/

 

Fri, 06/05/2015 - 20:17 | 6168121 MsCreant
MsCreant's picture

 

...We independent women, some mistake us for whores
I'm sayin' why spend mine when I can spend yours...

...Hey sisters, soul sisters

Better get that dough sisters...

(borrowed from Moulin Rouge, Lady Marmalade)

Fri, 06/05/2015 - 19:01 | 6168048 i_call_you_my_base
i_call_you_my_base's picture

Do these MBSs still exist?

There is no justice in the US. Don't expect any.

Fri, 06/05/2015 - 19:02 | 6168050 WTFUD
WTFUD's picture

Any of those fines going into a pool to compensate Joe Soap or is the DOJ just extorting the extortionists?

Fri, 06/05/2015 - 19:05 | 6168059 suteibu
suteibu's picture

According to the government, the banks are too big to fail. 

Fine, we will assume that is true. 

Still, that doesn't mean that the officers and BoD of those same banks should not go to prison. 

Corporations were created to shield shareholders from liability (an absurd idea that brings us to where we are today), not give the officers a get-out-of-jail card for life.

Fri, 06/05/2015 - 19:06 | 6168064 Lumberjack
Lumberjack's picture

Dear DOJ,

Please spare us the bullshit. We already know the outcome and that is you will fleece us the same way they did with your useless investigation.

Fri, 06/05/2015 - 19:11 | 6168079 One And Only
One And Only's picture

She's going after Putin for corruption next. After that North Korea. Then she's going to prosecute the world.

Fri, 06/05/2015 - 19:11 | 6168081 ThisIsBob
ThisIsBob's picture

Better to get some of their dough, than to spend some of mine housing them in a cozy executive slammer.

Fri, 06/05/2015 - 19:23 | 6168109 MsCreant
MsCreant's picture

What is wrong with you? 

Asset forfeiture, Bitchez. Get all-a their dough. I am suspicious. I say seize that shit, and then don't give it back, ya know, just cuz. Like the cops do with us. 

You might look into some help for being a total and absolute downtrodden surf. 

Fri, 06/05/2015 - 19:13 | 6168086 Panic Mode
Panic Mode's picture

They wasted all their pocket money again, open their hand and asking for more. Not much different to a spoiled brat.

Fri, 06/05/2015 - 19:13 | 6168087 q99x2
q99x2's picture

Isn't it time to get a few token white guys in the banking system and the executive and the judicial branch and so on. Don't ya think.

Fri, 06/05/2015 - 19:17 | 6168098 Cheyenne
Cheyenne's picture

Settle the cases? Pray tell when these cases were even filed?

The article makes it sound like even now, prosecutors have yet to file criminal complaints: "Up to nine banks are in line for the next round of billion-dollar payments related to soured mortgages as federal and state officials prepare their next set of cases."

Let's say prosecutors file these cases today or after today. The statute of limitations on criminal fraud is 5 years, which immunizes the banks' criminal acts--all of them--prior to 6/5/10. MBS sales were over and done with by 2008. Why aren't the banks arguing this? What leverage does the DOJ have at all?

This isn't a shakedown at all. That's how it'll be presented on the rube tube, of course, but that should be your first clue that it's complete nonsense. These so-called "cases" are nothing but window dressing.

Hopefully these phantom "casess" end up in front of someone like Jed Rakoff, who turns around and smacks up Loretta Lynch personally for costs before hauling Eric Holder into court to defend malpractice charges and a disbarment proceeding.

These asshole psychopath bankers should've been rotting in prison a long time ago. But that ship has sailed. For the DOJ to pretend that it's fighting crime now is just ridiculous.

Fri, 06/05/2015 - 20:24 | 6168247 chunga
chunga's picture

The investigation of soccer fraud is a nice smack in the face to anybody still paying attention to any of these clowns.

Fri, 06/05/2015 - 19:26 | 6168117 Soul Glow
Soul Glow's picture

DoJ wrist slapping!

Fri, 06/05/2015 - 19:27 | 6168120 Caviar Emptor
Caviar Emptor's picture

Stop persecuting banksters! And stop this phony "justice".

We are living in criminal times in a criminal world. Let it run wild! It's social Darwinism. The most corrupt will survive!

Fri, 06/05/2015 - 19:41 | 6168153 khakuda
khakuda's picture

They are going after student loan lenders too. It's a shakedown baby. Government is broke.

Fri, 06/05/2015 - 19:42 | 6168157 JuliaS
JuliaS's picture

Sharing is caring.

Fri, 06/05/2015 - 19:48 | 6168167 cigarEngineer
cigarEngineer's picture

For all the hate you guys spew on bankers, they're just doing what they can get away with. Take that hate and channel it into educating your fellow citizens who vote scumbag politicians into power who then make these laws.

Think about it. If you just convince ONE person each week to your cause, and that person then convinces ONE person each week, in half a year, you have 2^26 = 67 million people on board with you.

Most people on Wall Street know the game is rigged and they're looking to get that 5-10 mil saved up and quit to secure a good future for their family. Their life sucks, their jobs suck, they never see their family, and it's not lost on them that all of government is theft.

Face reality: unless you join in on the theft, you get robbed yourself. So save the hate and join them. It's a free-for-all just like it's always been in all of history.

Fri, 06/05/2015 - 20:15 | 6168222 MsCreant
MsCreant's picture

They own the voting apparatus via lobbyists. Voting does not matter. Those with money select the candidates, not you or me. 

Fri, 06/05/2015 - 19:54 | 6168179 QQQBall
QQQBall's picture

Loretta picking the low hanging fruit. She only has 18 months to write her legacy!

 

 

Fri, 06/05/2015 - 22:20 | 6168302 TeethVillage88s
TeethVillage88s's picture

Dear Loretta Lynch;

So how come we don't have more data to discuss the Economy, the GDP, Money Velocity, Bank Charters, Why do we pay Interest to Banks for Federal Spending, and why the Power of Money is centered only in two Places Washington DC & Wall Street? Why don't the states have Simple, Streamlined, and Standardized Banking, Finance, Financial Ratings, Taxes, and Accounting, so that they can understand what is going on? Shouldn't the Many Federal Agencies protect the States from Racketeering. Where is the FTC & DOJ?

Sure, the FED hold power through making things complicated. Why is that. I mean if the FED provided the data it would be politically charged for the public to know what was going on.

- How much money is created by TBTF Banks each year, so that we understand where money is being created, we also need to look at Shadow Banking to see what they are doing

- How much money is stagnant in Bank Accounts or whatever, instead of being invested in the US Economy

- How much money is Leaking offshore for a variety of reasons and what are the categories

- How can we visually understand the change in the Economy from a an Industrial Manufacturing powerhouse to the Economy based on Financial Activity/Engineering/Rentier Rent Seeking

- What is the effect of Infrastructure projects on Velocity

- What is the Effect of Commercial Bank Decrease to 5,500 total, and the Finances being controlled by fewer powerful Banks like in VICHY Wall Street or VICHY DC, What is the Effect of the Federal Government Picking Winners for Its Large Investments and Subsidies (malinvestments perhaps?)

Fri, 06/05/2015 - 20:04 | 6168193 Robert3620
Robert3620's picture

Paying fines to not go to jail is nothing more then a shakedown. This reminds me of the church when it would absolve any sin for the proper donation. 

Fri, 06/05/2015 - 20:36 | 6168273 VWAndy
VWAndy's picture

This is like having the cops send you a bill for shooting your dog.

Fri, 06/05/2015 - 22:05 | 6168464 TeethVillage88s
TeethVillage88s's picture

Gresham's Law, bad money chases good money out of the market.

"curtailing a major bank’s ability to issue capital “speedily and efficiently”, participate in private placements, and manage mutual funds represents a systemic risk."

- Bloodless Language doesn't get you anywhere in Dealing with SEC Violations, Accounting Violations, Accounting Control Fraud, Fraudulent Financial Filings

- The FED & Private Banks & SEC must be full of Euphemisms, that "Protect" the Private Banking Fraud System

- The Fact that .gov has been 'captured' by Industry is evident through these kinds of Statements

Sat, 06/06/2015 - 01:06 | 6168678 VWAndy
VWAndy's picture

Yep its kinda hard to compete with a company that does not need to make an actual profit. Or provide a real service for that matter.

Fri, 06/05/2015 - 21:56 | 6168445 Atomizer
Atomizer's picture

Give you a lot of credit Lynch. Before you launch such investigation, make sure you have intellectual fire power of Zerohedge members. We can assist in any way. Good luck and stay in touch with us. We hope to restore the dignity of United States of America. 

Fri, 06/05/2015 - 22:32 | 6168469 TeethVillage88s
TeethVillage88s's picture

Good point Atomizer.

Ms. Lynch may be around for a long time and might actually be one to grow weary of the Status Quo and having to answer to Power, TPTB.

- Dignity
- Integrity
- Reputation of US Financial Markets
- Conservative Banking, Accounting, Financial Instruments

Line of Inquiry:

- In 2008 Europe was hit by Fraud, AAA Rated US Financial Instruments, yet nothing was revealed about European Feelings in the USA, then the FED Opened up unlimited Loans to Global Banks and a few Corporations and Select Individuals

- Was there a Threat of War or other huge threat from European Countries as a result of SYSTEMIC US FRAUD in the Financial Industry? What was the Result of this Systemic Con Game Politically, Geopolitically, Realpolitically,... did it change the Balance of Power in Europe & the Americas??

- USA has become a Nation Bogged down in Corruption, Fraud, Over Reach, Uni-political Action against other Nations Recognized by the US, Sovereign Nations, and against the Geneva Conventions...

What is the Deal Ms. Loretta Lynch, DOJ?

Sat, 06/06/2015 - 07:49 | 6168893 Atomizer
Atomizer's picture

Chasing movie theaters should be at the bottom of her list. 

Sat, 06/06/2015 - 01:03 | 6168677 scatha
scatha's picture

As we see DOJ soon will not need any taxpayer money. They will completely cover their expenses and privately pocketed profits by extortion racket against banksters or rather, open for everybody to see, form of blatant bribery.

Now we have openly financing of governmental agencies with bankster money stolen from world population, And hence no bankster will ever see prison from inside.

That's explains why they went after prosecution deals under that table (FIFA). It is because corruption and theft is done now on the table in daylight broadcast live.

For those worshipers of free markets who hate government I got news. Rejoice, US is run by private tyranny now. Government, when it was ours or was afraid of us, was not as bad however. Don't you agree?

Sat, 06/06/2015 - 07:56 | 6168899 d edwards
d edwards's picture

i have no sympathy for the big banks, but legalized extortion by a corrupt neo marxist gov is equaly hideous.

Sat, 06/06/2015 - 09:21 | 6168976 tunetopper
tunetopper's picture

Read above post- government regulates the banks. Government allows banks to have a risk-less arbitrage on borrowed money ( 2% on US Agency bonds minus Fed Funds is 1.75% spread). Govt reserves the right to confiscate profits from these banks under various schemes (currency manipulation, labor scandal, mortgage fraud, etc) This payment (legalized extortion) is obvious to all parties. These payment go to the U.S. treasury thru the DOJ. As long as rates don't rise much, which would cause losses to the Agency bonds mentioned above (albeit temporary , because they WILL mature at PAR) then the only risk is that the DOJ runs out of things to charge against the banks.

Sat, 06/06/2015 - 01:51 | 6168705 JailBanksters
JailBanksters's picture

Doesn't the Government know, they just print as much of their own money as they need

Which is why US Dollars has absolutely no value to US Banks, you could tax them 100 or 200% it won't make any difference to the Banks.

Sat, 06/06/2015 - 09:24 | 6168982 tunetopper
tunetopper's picture

They make a mockery of credit finance. BTW- good post , JailBank

Sat, 06/06/2015 - 12:39 | 6169459 Fire Angel
Fire Angel's picture

IMHO, you're too big to fail, Tyler(s). ROCK ON!!! 

Fire Angel 

Sun, 06/07/2015 - 12:22 | 6171644 MsCreant
MsCreant's picture

On a long enough time line...

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