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

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  •  It's fascinating that none of the discussions (15+ / 0-)

    about the prosecution of financial crimes ever includes the ramifications of the repeal of Glass-Steagall. There is often the demand to bring it back, but no analysis of the role repealing played in removing the illegality of many of the banks' actions. During the S&L crisis, which is often held up as the model for what should have happened, Glass-Steagall was still the law of the land. Enron happened post the repeal of that law.

    Now, there were myriad crimes and some of them were undoubtedly illegal, but given the repeal of Glass-Steagall, how many fell within the boundaries of the post repeal legal landscape and were simply unethical acitivities?

    During the interview, Lanny Breuer states:

    If you look at what we and the U.S. attorney community did, I think you have to take a step back. Over the last couple of years, we have convicted Raj Rajaratnam, one of the largest hedge fund leaders. Now, you’ll say that’s an insider trading case, but it’s clearly going after Wall Street.

    Hedge Fund Founder Raj Rajaratnam Sentenced in Manhattan Federal Court to 11 Years in Prison for Insider Trading Crimes

    There were others:

    Former Chairman of Taylor, Bean & Whitaker Sentenced to 30 Years in Prison and Ordered to Forfeit $38.5 Million

    Former Hedge Fund Managing Director Sentenced to 20 Years for Defrauding 900 Investors in $294 Million Scheme

    Why were those crimes prosecuted and not others?

    There has never been a full discussion of the role the repeal of Glass-Steagall played in facilitating the crisis.

    •  People around these parts simply don't want (8+ / 0-)

      to admit that the biggest problem was that we legalized all this shit. Because doing so really complicates the white hats/black hats construction of their frustration.

      "Every now & then your brain gifts you with the thought, 'oh, that's right, I don't actually give a **** about this.' Treasure it" -- jbou

      by kenlac on Thu Jan 24, 2013 at 08:03:54 AM PST

      [ Parent ]

    •  The Commodities Futures Modernization Act of 2000 (9+ / 0-)

      also helped to pave the way for the 2008 meltdown.   It deregulated derivatives, an investment that is nothing more than a bet on the performance of another investment.  Deregulation meant that firms could create new esoteric products that are difficult to understand, like a derivative of a derivative.  It was allowed because they were only going to be traded between sophisticated investors, like JPMorgan.  But when Chase, a commercial depository bank used by consumers, is bonded together into
      JPMorganChase, no matter how the bank segregates its funds, if JPMorgan goes under Chase is going with it.  
      Everyone's money was at risk.  

      "Democracy is a life; and involves continual struggle." ---'Fighting Bob' LaFollette

      by leftreborn on Thu Jan 24, 2013 at 08:07:49 AM PST

      [ Parent ]

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