A feature story on TARP Special Inspector General (SIGTARP) Neil Barofsky, running late tonight via Bloomberg, and also appearing on SFGate.com, indicates and/or infers that the SIGTARP's office is now jumping
ahead of the Securities and Exchange Commission (SEC) and, possibly, (even) the Department of Justice (DoJ), in its investigations into what
may result in the filing of the first criminal charges against any entity or individual associated with the Wall Street bailouts.
Barofsky testified before the Senate Finance Committee on April 20th, where, according to tonight's story, he said his office "...would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group Inc. that is at the center of a U.S. Securities and Exchange Commission lawsuit filed against the investment bank on April 16."
The primary difference in today's coverage of the story, versus what we were told last week, appears to be focused upon a potentially more aggressive role for the SIGTARP's office in the overall matter. As noted in tonight's story, Barofsky's office is now taking the lead in the investigation. Last week, as I noted in
my diary on this story, all indications were that Barofsky's office would be working with (and, possibly, referring matters to) the SEC and DoJ. Tonight, it sounds like the SIGTARP's office is at the forefront of the enforcement efforts, instead.
Additionally, and perhaps most importantly, I believe this is the first time that even the remote possibility of charges (either criminal or civil) being brought against then-NYFRB President Tim Geithner are being mentioned (not by Barofsky, but by an MSM outlet such as Bloomberg), at all. However, it would not be a stretch to say that tonight's story would certainly infer that our current Treasury Secretary's role in the matter is being investigated. Of course, whether or not this will all lead to any conclusive result--other than a "report"--remains to be seen.
Barofsky: Criminal Charges Possible in Alleged AIG Coverup
Bloomberg News (via SFGate.com)
Wednesday, April 28, 2010
..."I've been in contact with the SEC," he told the committee. "We're going to coordinate with them, but we're going to lead the charge. We're going to review these transactions."
Barofsky and Geithner's offices have gone toe-to-toe over AIG, alleged lax oversight of TARP funds and even over the question of whom Barofsky reports to.
Barofsky, a former federal prosecutor who was once the target of a kidnapping plot by Colombian drug traffickers, says he's also looking into possible insider trading connected to TARP. He says his agency would want to know if bankers bought stock in their companies before it was made public that their institutions would get TARP money, for example.
"There was a time when, if you got that word the stock price would go up, and if you were to trade on that information prior to the public announcement, that would be classic insider trading," Barofsky says.
--SNIP--
...Barofsky says the question of whether the New York Fed engaged in a coverup will result in some sort of action.
"We're either going to have criminal or civil charges against individuals or we're going to have a report," Barofsky says. "This is too important for us not to share our findings."
He won't say whether the investigation is targeting Geithner personally...
Yes, stating the obvious, there are major differences between civil complaints, criminal charges, and "reports."
So, while all eyes and ears were focused, yesterday, here: "Notes on Senate Hearings on Goldman Sachs;" and here: "Blankfein Testimony to the Permanent Senate Subcommittee on Investigations," a quick perusal of the day's other economic/business ledes demonstrates to us that Wall Street continues to -- as Matt Taibbi just nailed it in Monday's Guardian -- "move forward into a world of greed without limits," burning down the proverbial economic house of cards, both here and abroad.
As we also learned at the Wall Street Journal's website on Tuesday, Wall Street's placing bets that cities, counties and states across America will fail. (SEE: "States Bristle as Investors Make Wagers on Defaults.") Some investment houses will claim that it's an "insurance policy" against their own purchases of municipal bonds, but the fact of the matter remains that many of those bonds are already insured by the monoline insurers (those firms whose only business is to insure bonds and other government-related investment vehicles). But, perhaps, more importantly, as greed-driven speculators (many of whom are buying "naked shorts," where there's no underlying reason--other than a desire to make a casino bet--for the purchaser to hedge another bond or related investment vehicle) force the price of insuring these bonds upward, adding hundreds of millions, if not billions, of dollars in needless expenses to the bottom lines of local governments across America, and sovereign funds throughout the world, that are issuing them.
When everything's said and done, I would say that I agree with Matt Taibbi's assessment of the bigger picture--without respect to the usual suspects, whether it's Goldman, AIG, Geithner or others--as he explained it in an uncharacteristically philosophical and somewhat reserved (for Taibbi, anyway) article in Monday's (UK) Guardian...
Taibbi: The Lunatics Who Made a Religion Out of Greed and Wrecked the Economy
The Guardian / By Matt Taibbi
April 26, 2010
...Even if he stands to make a buck at it, even your average used-car salesman won't sell some working father a car with wobbly brakes, then buy life insurance policies on that customer and his kids. But this is done almost as a matter of routine in the financial services industry, where the attitude after the inevitable pileup would be that that family was dumb for getting into the car in the first place. Caveat emptor, dude!
People have to understand this Randian mindset is now ingrained in the American character. You have to live here to see it. There's a hatred toward "moochers" and "parasites" - the Tea Party movement, which is mainly a bunch of pissed off suburban white people whining about minorities consuming social services, describes the battle as being between "water-carriers" and "water-drinkers". And regulation of any kind is deeply resisted, even after a disaster as sweeping as the 2008 crash.
This debate is going to be crystallised in the Goldman case. Much of America is going to reflexively insist that Goldman's only crime was being smarter and better at making money than IKB and ABN-Amro, and that the intrusive, meddling government (in the American narrative, always the bad guy!) should get off Goldman's Armani-clad back. Another side is going to argue that Goldman winning this case would be a rebuke to the whole idea of civilisation - which, after all, is really just a collective decision by all of us not to screw each other over even when we can. It's an important moment in the history of modern global capitalism: whether or not to move forward into a world of greed without limits.
Every vampire squid has his (or her) day...maybe. At least one might hope so...