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View Diary: The Obama Administration Protection of Wall Street Criminals - A Possible Explanation (326 comments)

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  •  I think he's say Rubin is not a criminal, he is (7+ / 0-)

    a man who was a dedicated public servant, who along with a lot of other bankers made some big mistakes and didn't put enough stock in all the warnings they were getting.  And he's talk about how difficult it is to be an executive and responsible for such a huge organization.

    See, I imagine Robert Rubin walking into Obama's office.  And that isn't just some fantasy - it actually happens - and them have some familiar conversation, and Rubin warmly looking Obama in the eye and saying, Mr. President, do you really think I'm a criminal and deserve to go to jail?

    We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both. - Former Supreme Court Justice Louis Brandeis

    by RageKage on Wed Jan 23, 2013 at 11:40:22 PM PST

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    •  Well, we'll never know who is and who is not (38+ / 0-)

      a criminal until proper investigation are conducted, no matter where they lead.  No proper investigations have been conducted thus far.  It has been a cover-up, instead.

      •  and if Rubin or anyone else had any suspicions, (3+ / 0-)

        well wasn't it their executive job to go find out? Geez, these guys have to do some work for their bonuses, don't they?

        •  Yes, it was. (1+ / 0-)
          Recommended by:

          And no, they apparently don't.

          I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country. -- Thomas Jefferson

          by nilajean on Thu Jan 24, 2013 at 10:56:13 AM PST

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      •  This WH has aggressively prosecuted whistleblowers (53+ / 0-)

        Drake, Kriakou, Manning, Assange--the list is quite long.  I'll defer to Jesselyn Radack for the details.  I will note that I'm still disturbed by the fact that the CIC publicly commented on Manning's guilt while a court martial panel that ultimately reports to the CIC considers Manning's case.

        The president clearly has no qualms about pursuing perceived crimes in certain fields.  The failure of his DOJ to even investigate financial crimes in the wake of the worst financial crisis in 8 decades speaks louder than any words ever could.  A comparison to the much smaller S&L crisis is highly instructive.  

        In the former situation, there were 1,100 criminal referrals and 839 convictions.  Nothing remotely close to that record was compiled here.   Occam's Razor tells us that a conscious lack of interest in pursuing such crimes is the most logical explanation.

        Some men see things as they are and ask why. I dream of things that never were and ask why not?

        by RFK Lives on Thu Jan 24, 2013 at 06:07:14 AM PST

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        •  There is a big lie that Wall Street, Republicans (20+ / 0-)

          many Democrats have been promoting for at least two decades which is that "financial markets are better left to police themselves than be regulated by government".

          Clinton bought into it and I think that Obama also believes that myth - even now after the myth was proven to be completely false by the market collapse of 2008.

          Still, that's their ideological perspective on the role of government with respect to the financial markets.

          And the only explanation for the lack of government intervention is that they don't want to intervene and that they do not feel that they should change the status quo - believing that the markets will take care of themselves - even though we had to bail them out - they still believe this big lie.

          •  It's not just Obama or Clinton... (8+ / 0-)

            It's the American Public.  Americans fundamentally believe in the divine power of the 'free market'.  It is the reaction to all of those years of the 'Red Scare'.  I think if you asked the average American where criminal prosecution of the Wall Street executives ranked in their priority list, it would be pretty low.

            'Goodwill' between the GOP and the President is as abundant as unicorn farts - Me'

            by RichM on Thu Jan 24, 2013 at 08:18:13 AM PST

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          •  I'll say one thing for the Obama administration (7+ / 0-)

            They certainly succeeded in redefining the word "Hope."

            As I try to find answers, one kind of crazy idea keep popping up in my head... It goes like this: He knows what's going on; he fully understands the level of corruption, how endemic it is, and how widespread it is in the entire system.  And he came to the realization that he needed a long-term strategy to properly address the issue....

            I've been considering this theory because the other, more plausible, is too painful to consider: that Obama is in on it; that he knows he is protecting these criminals.

            •  I think he knows exactly what's going on (5+ / 0-)

              and that he and others have convinced themselves that the market will work it out naturally.  I will bet money that many in the inner circle believed that it would be possible to "work our way" out of the recession - as was done in the Clinton Era - but the problem is that they grossly underestimate the depth and breadth of the problem.  That "working our way out" can only happen if there are foundational adjustments made to put the financial markets on more sound footing.  None of that has happened - the tepid Dodd-Frank bill and the consumer protections are nice, but neither really addresses the fundamental issues - problematic deal structures that are still being put together even after it was proved that these deals are structurally unsound.  It is not okay.

        •  The SEC (18+ / 0-)

          and various states Attorneys-General are still jointly investigating many of the large banks connected to the mortgage-backed securities meltdown. I worked as a contract attorney doing document review for a big firm representing one of the big banks for most of last year. Discovery phase is just now wrapping up and has been going on for years. These things take time, the banks have a ton of money and resources to keep investigators bogged down.

          Will there be criminal charges? I don't know, but after reviewing literally tens of thousands of internal documents (kill me now) I would venture a guess as to why there haven't been more prosecutions: Many of the so-called Masters of the Universe didn't know what the fuck they were doing. They didn't understand the extent of the weakness in the real estate market, but more importantly, they didn't understand how exposed their own hedged positions were.

          They understood for the most part that subprime mortgages were junk, so they shorted those positions (bet against them). They then gambled on higher-rated (non-subprime) mortgages, not realizing that these mortgages were also worthless (as investments), hence the enormous losses when the entire real estate market took the plunge.

          So unlike the S&L Crisis, which was an actual ponzi scheme perpetrated intentionally, the 2008 crisis was primarily the product of various degrees incompetence. The banks themselves lost huge, enormous sums of money when everything went south. In order for there to be criminal liability, there needs to be intent, which really seems to be lacking in many of these cases, and that may be why there haven't been hundreds of bankers brought up on charges - though those charges could still be coming, as I mentioned above.

          This is just my perspective having had an inside look at the inner workings of at least one of the big players. I'm not an expert on Securities law by any stretch, so maybe others have more context they can add.

          •  Thank you, cato. (10+ / 0-)

            That confirms what I've been reading the last couple of years. Flim-flam trumps competence to the extent that sometimes, there's no there there. (I saw that firsthand with so-called "healthcare." The practice of medicine wasn't lucrative enough for the ignoramuses who took it over in the '80s.)

            Do you think the CEOs incompetence is partly driven by gamblers lust? (Don't know what else to call it, but I've seen it; even felt it briefly.)

            Just curious, at this point ;)

            "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

            by cotterperson on Thu Jan 24, 2013 at 07:25:46 AM PST

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          •  Nice try. I don't buy that for a second. n/t (2+ / 0-)
            Recommended by:
            Jim P, blueoasis
          •  Still, "liar's loans," telling investors (17+ / 0-)

            the liar's loans all packaged together were sound investments (while betting against those investments themselves), the robo-signings, ...

            ...these were endemic in the business.

            It's hard to imagine that a multitude of low-level employees in a hierarchical enterprise spontaneously took it upon themselves to say to Mr & Mrs New Mortgage Applicant "hey, let's get this done. Let's say you make ... heck, $10,000 a month." Like 200,000 times.

            When people were systematically deceived, when financial data is deliberately falsified, when titles are falsely assigned... there's laws about that.

            And we've not even touched on the drug-money laundering, the terrorist-money laundering, the rate-fixing, and myriad other things.

            "Gosh we didn't know what we were doing" is no excuse. These people weren't possessed by demons while they were sleep-working.

            Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

            by Jim P on Thu Jan 24, 2013 at 08:36:20 AM PST

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          •  Didn't some Judge once say, (5+ / 0-)

            "Ignorance is no excuse for breaking the law"?  They can claim they didn't understand, but they are still the ones who DID IT.  No?

            •  Yes, but what crimes are you alleging? (4+ / 0-)

              Fraud? This is the definition of fraud:

              Wrongful or criminal deception intended to result in financial or personal gain.
              A person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.
              You can't be guilty of fraud if you weren't intentionally misleading investors. Like I said above, I'm not an expert, or even very well versed in securities law. I am a lawyer, however, and I understand the requirements for criminal responsibility. Losing money, even the amounts we're talking about, is not necessarily a crime. I know everyone wants to put these creeps in jail, but you still need things like probable cause to do so, and the SEC and State AG's are reviewing the evidence as we speak.
              •  From the Senate Sub committee on Investigations (4+ / 0-)
                WASHINGTON – Senate Permanent Subcommittee on Investigations Chairman Carl Levin, D-Mich., issued the following statement on the Department of Justice’s announcement regarding Goldman Sachs:

                “Our investigation of the origins of the financial crisis revealed wrongdoing and failures among mortgage lenders, banking regulators, credit rating agencies and investment banks. One of those investment banks, Goldman Sachs, created complex securities that included “junk” from its own inventory that it wanted to get rid of. It misled investors by claiming its interests in those securities were “aligned” with theirs while at the same time it was betting heavily against those same securities, and therefore against its own clients, to its own substantial profit. Its actions did immense harm to its clients, and helped create the financial crisis that nearly plunged us into a second Great Depression.

                I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

                by Lcohen on Thu Jan 24, 2013 at 11:13:01 AM PST

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          •  I can easily believe that these greedy idiots (8+ / 0-)

            were meddling with forces--and financial instruments--they didn't understand.

            I don't much care.

            They had a responsibility--to their own shareholders if no one else--either to understand or not to play.

            When did ignorance of the law or of the market become a get-out-of-jail excuse?

            When you triangulate everything, you can't even roll downhill...

            by PhilJD on Thu Jan 24, 2013 at 09:03:13 AM PST

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            •  They're Free to Use that as a Defense (6+ / 0-)

              Prosecutors routinely charge people with writing bad checks when perhaps the defendant made an accounting error instead. Doesn't stop them from having to defend themselves at trial. Of course, you have to actually indict someone first.

              "The problem with posting quotes off the Internet is you never know if they're genuine."--Gen. George Washington at the Battle of Gettysburg, February 30, 1908

              by Aspe4 on Thu Jan 24, 2013 at 09:23:04 AM PST

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            •  Ignorance of what law? (2+ / 0-)
              Recommended by:
              cotterperson, Mr Robert

              Is making bad investments against the law? Is selling assets which don't perform a crime?

              Of course if they purposefully misled investors, then they should be held criminally liable. At least in the investigation I was a part of, it wasn't clear to me that they did mislead the investors who purchased these securities. Other banks may have been intentionally pushing toxic assets at investors - I don't know.

              My original point was that there were ongoing investigations contrary to the diarists (and many commenter's point), and that it's taking a long time because in order to prove that these banks were acting intentionally, you have to piece together millions of pieces of evidence over the span of several years.

              It takes a lot of time, and based on my experience it would be very difficult to prove. Like I said above, it wasn't clear to me that (at least this bank in particular) misled its investors, and you need probable cause to charge someone of committing a crime. This is clearly another reason that so many of these cases have been settled without trial. The trials would take years and years, and the chances of a conviction would've been questionable at best. Like I mentioned, discovery on the investigation I was working on just wrapped up. In 2012. That's four years for one investigation of one bank.

              I mean, this is part of what makes these banks too big to fail, too big to prosecute, and too big to exist. The failure to break up these behemoths was perhaps the biggest missed opportunity of Obama's first term.

          •  So I was a banking (4+ / 0-)

            lawyer during the S&L crisis.  Beyond the criminal, though, many of the S&L's went down due to falling property values in certain regions (eg Texas) and others bought instruments that they did not understand.

            The difference: the S&L crisis was not nearly as systemic as this one was.

            The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

            by fladem on Thu Jan 24, 2013 at 10:02:47 AM PST

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        •  Assange is hiding from rape charges. (1+ / 0-)
          Recommended by:

          In Sweden.  For waiting until a wikileaks supporter fell asleep in order to F* her in a manner she'd explicitly refused all night.  With about as much of a "paper trial" as would be physically possible in such a case.  With five courts ruled against him, two specifically on the strength of the evidence, and two of them supreme courts.

          He needs to f*ing stand trial for what he did.  Any excuse for Assange's run is an excuse for rape.

    •  Nah. (20+ / 0-)

      Rubin's one of them, and Obama's distinctly not stupid.

      Robert Edward Rubin (born August 29, 1938) served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs, eventually serving as a member of the board, and co-chairman from 1990 to 1992. His most prominent post-government role was as director and senior counselor of Citigroup, where he performed ongoing advisory and representational roles for the firm.

      "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

      by cotterperson on Thu Jan 24, 2013 at 05:26:38 AM PST

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      •  At some point (19+ / 0-)

        in all of these discussions, someone is going to note that Barak Obama was raised by his grandmother: who was a bank Vice-President.

        Always blows me away that no one ever thinks about how this may color his perception of this crisis.

        I do think that there was a decision made that being too aggressive was dangerous, though in the book Confidence Men Obama is shown as wanting to take over Citibank - an idea Geithner killed.

        As an ex-prosecutor I understand the difficulty here, and my suspicion is that almost all of the actors in this were acting on the basis of opinion letters written by very expensive lawyers.

        At the end of the day, though, I don't get the lack of prosecutions.

        The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

        by fladem on Thu Jan 24, 2013 at 06:02:42 AM PST

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        •  I guessed that the decision not to (16+ / 0-)

          dig too deeply into the bad deals which were in some cases estimated to be between $20 Trillion and $80 Trillion was a way of avoiding a total world market collapse - that the call was made to let those deals unravel in their own time and not hit the market all at once.  That made sense.

          What doesn't make sense, though, is the fact that there has been very little effort put into preventing more of those toxic assets from being created and sold.  THAT makes no sense, to me.  Not breaking up the banks and avoiding enacting much stricter regulation for the purposes of protecting our economy from future hits was the huge mistake.  

          And, I think the DoJ should have gone after some key players, if for no other reason than to trigger a reset in those companies business cultures that would be more mindful of playing by the rules.

          •  Winding down is SLOW, (5+ / 0-)

            but isn't as life-threatening as a CRASH. As of just yesterday, our taxpayer money no long protects the banks' investors. (Swaps as in late 2011 stood at $700 trillion.)

            Clients of the largest U.S. banks withdrew funds this month at the fastest weekly pace since the Sept. 11 attacks as a deposit-insurance program ended and customers tapped into their year-end cash hoards

            Net withdrawals at the 25 largest U.S. lenders totaled $114.1 billion in the week ended Jan. 9, pushing deposits down to $5.37 trillion, according to Federal Reserve data released last week.

            Customers may be moving money no longer insured by the U.S., drawing down year-end balances and investing in advancing equity markets. A Federal Deposit Insurance Corp. backstop, the Transaction Account Guarantee program, ended last month, prompting some analysts, investors and trade organizations to predict it could drive funds from the banking system. ....

            The transaction-account protections were introduced in the wake of the 2008 credit crisis and had guaranteed about $1.5 trillion in non-interest-bearing accounts above the FDIC’s general limit of $250,000. The program expired Dec. 31.


            Of course, I'd love to see some prosecutions, too. Big Guys in Jail. For Life.

            But I'd rather be safe.

            "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

            by cotterperson on Thu Jan 24, 2013 at 07:39:02 AM PST

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            •  I think that people could have it both ways (2+ / 0-)
              Recommended by:
              cotterperson, Laconic Lib

              if it was handled correctly.

              There were people who knew that they were selling junk.

              •  The thing is, as cato says elsewhere, (4+ / 0-)

                state and federal investigations are continuing so both federal and state laws (and their statutes of limitations) can be applied. New York Attorney General Eric Schneiderman is the one who really pushed hard for it, for two reasons:

                1 - The banks' trusts are held in New York, so state law can be applied.
                2 - New York has a strong anti-fraud law, the Martin Act, which was implemented after the Great Depression.

                Those investigations may yet lead to high-level prosecutions, and they only started in this way a year ago. With Frontline exposing Lanny Breuer and with Jamie Dimon publicly going nuts, maybe they'll pick up the pace. (Dimon should be easy pickins' ;)

                It's most unfortunate, but altogether predictable, that the corporate media wouldn't report on the biggest real-estate fraud since we stole this land from the Native Americans. What gives me a Big Sad is to see the blame placed on the president, when he repeatedly told us in his first campaign that it wouldn't be easy or quick, and we wouldn't all agree.

                Oh, well. It's a long path, and I wish you the best. We must never give up!

                "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

                by cotterperson on Thu Jan 24, 2013 at 08:43:05 AM PST

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          •  And that is where... (5+ / 0-)

            It is easy to see that there is some sort of economic terrorism going on where nation-less executives can say, "That's a nice economy you have there, it would be a shame if something happened to it."  The sad truth is that we will probably never really know the full truth.  But I really see no prevention in this happening again.

            'Goodwill' between the GOP and the President is as abundant as unicorn farts - Me'

            by RichM on Thu Jan 24, 2013 at 08:29:31 AM PST

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        •  Obama's grandmother lived in a different world, (10+ / 0-)

          when banks were trusted. And regulated. No doubt she colored his perceptions in many ways. However, I think we're seeing the effect of the revolving door -- laws written to protect bankers for decades by the legislators they funded.

          In addition, the corrupt US banks had bet our retirement funds on "swaps," which as of 2011 were valued at $700 trillion -- not to mention our homes, of course, and the full faith and credit of the US government. Furthermore, it was global. Goldman-Sachs, as first reported by Bloomberg, either caused or exacerbated the problem in Greece (for instance). Furthermore, he had Bill Clinton at his side -- tragic mistake, as Clinton was complicit in this.

          Now, I'd like to see these bastards fry as much as anyone else. But at what cost to regular people? If you bring down the CEO, do you also bring down the banks that hold so much of ordinary people's lifetime investments?  

          After that, what would happen? Another Great Depression was predicted often as Obama took office. Might we still face that? The many would suffer. The few would not.

          We're rid of Lanny Breuer, at least, after his Goldman-Sachs years, and his time keeping Robert Reich away from Clinton. More and better prosecutions, I agree, but at a price we can afford.

          Jamie Dimon is being publicly and personally punished, at least (see this thread w links last night). The banks lost a ton of investors this week because the FDIC no longer insures their investments.

          These are my thoughts strictly as a non-legal non-financial type who's been reading Bloomberg and Reuters regularly trying to understand this mess -- made complex on purpose by the banks. (I do know something about journalism, and those are two fine sources. I do not rely on the "commentariat" for my information, though some like Krugman and James Galbraith offer insight.)

          Strongly recommend Galbraith's 2006 column, which later became a book. The Predator State. A snip:

          In a predatory economy, the rules imagined by the law and economics crowd don’t apply. There’s no market discipline. Predators compete not by following the rules but by breaking them. They take the business-school view of law: Rules are not designed to guide behavior but laid down to define the limits of unpunished conduct. Once one gets close to the line, stepping over it is easy. A predatory economy is criminogenic: It fosters and rewards criminal behavior.
          _/long ramble

          "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

          by cotterperson on Thu Jan 24, 2013 at 07:14:08 AM PST

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        •  Because it's a cover-up. n/t (0+ / 0-)
        •  There we have the problem. President Obama is (2+ / 0-)
          Recommended by:
          Ray Pensador, Dallasdoc

          (wait for it) The President.

          Geithner doesn't get to kill his ideas unless he lets them.

          I have no idea if President Obama thinks he's playing a long game, or if he thinks paying the Danegeld is just the only option, of if he feels that the has to avoid challenging his own expert appointees, or if he thinks this is all just funny as hell.

          We're never going to get the tapes we got from Kennedy and LBJ and Nixon.  We'll never know what he thought, or didn't, in private.

          So we're just stuck with what he did and did not do, and speculation as to why is really just the concoction of fairy tales or horror stories we want to entertain ourselves with.

          "I have often seen people uncivil by too much civility, and tiresome in their courtesy." Michel de Montaigne

          by JesseCW on Thu Jan 24, 2013 at 01:07:37 PM PST

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