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It's interesting that we learn of the specifics of more calls for criminal and civil prosecution of Wall Street executives -- this time by our government's own Financial Crisis Inquiry Commissiion -- on the same day that French President Nicolas Sarkozy went "postal on Jamie Dimon," the CEO of JPMorgan Chase, at the World Economic Forum, in Davos, Switzerland, while absolutely hammering America's top banks, asking: "...are we in the market economy or in a madhouse?" From Reuters: "French president says banks need tough regulation."

French president says banks need tough regulation
By Lisa Jucca and Paul Taylor
January 27, 2011

DAVOS, Switzerland, Jan 27 (Reuters) - French President Nicolas Sarkozy clashed with the head of U.S. bank JP Morgan Chase (JPM.N) at the Davos forum on Thursday, telling him bankers had done things which defied common sense.

But when he rose at a later session of the World Economic Forum to ask Sarkozy to get the G20 to avoid overregulation of banks, the French president launched into a broadside accusing financiers of behaviour that he said had caused the crisis.

"The world has paid with tens of millions of unemployed, who were in no way to blame and who paid for everything," Sarkozy said to Dimon. "It caused a lot of anger..."  

Courtesy of Zero's the money quote from Sarkozy...

"The world has paid with tens of millions of unemployed, who were in no way to blame and who paid for everything. It caused a lot of anger. Too much is too much. The world was stupefied to see one of five biggest U.S. banks collapse like a house of cards. We saw that for the last 10 years, major institutions in which we thought we could trust had done things which had nothing to do with simple common sense. That's what happened... There is an ocean between flexibility and the scandal we saw.  So if people present me as obsessed with regulation, it's because there is a need for regulation. I don't contest the principle of securitisation, but when one offshore country guaranteed 700 times its GDP, are we in the market economy or in a madhouse? Bonuses don't bother me, provided there are also ... draw-downs when there are losses. When things don't work, you can never find anyone responsible. Those who got bumper bonuses for seven years should have made losses in 2008 when things collapsed."

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I haven't yet had time to peruse the Financial Crisis Inquiry Commission's (FCIC's)  long-awaited report, entitled, "THE FINANCIAL CRISIS INQUIRY REPORT: FINAL REPORT OF THE NATIONAL COMMISSION ON THE CAUSES OF THE  FINANCIAL AND ECONOMIC CRISIS IN THE UNITED STATES," released just this morning. (My diary, linked HERE, from yesterday, covered this matter in considerably greater detail.)  But, according to a post within the past hour by HuffPo's Shahien Nasiripour, "Wall Street Appears To Have Violated Federal Securities Law, Crisis Panel Finds," it doesn't take much to posit that it appears that the FCIC has more than just suggested that criminal (and civil) charges should be brought against many of the major Wall Street players we've come to know and despise over the past three years. In fact, we're being told by the FCIC that: "Wall Street firms that sold mortgage-backed securities appear to have violated federal securities laws by misleading investors on the quality of the underlying mortgages..."

That's known as fraud. And, this all means we're talking about some of the most senior executives (at the time) at JPMorgan Chase, Bank of America, Citigroup, and Goldman-Sachs, among others. The FCIC has forwarded their testimony to the DoJ and the Securities and Exchange Commission for criminal and civil review and subsequent prosecution. More from Nasiripour...

Wall Street Appears To Have Violated Federal Securities Law, Crisis Panel Finds
Shahien Nasiripour
Huffington Post
First Posted: 01/27/11 10:28 PM Updated: 01/27/11 10:28 PM

...The claim of allegedly widespread securities law violations is among the more explosive findings in a sweeping report released Thursday by the Congressionally-appointed Financial Crisis Inquiry Commission...

In his post, Nasiripour makes particular note of a topic upon which Naked Capitalism Publisher Yves Smith has written extensively, and yours truly, as well; and, that's the FCIC testimony, back in September 2010,  of Clayton Holdings' former President Keith Johnson...

In September, the crisis commission heard testimony from Keith Johnson, former president of Clayton Holdings, one of the nation's biggest mortgage research companies. Johnson testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm on behalf of Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added.

A madhouse, indeed...

Originally posted to on Thu Jan 27, 2011 at 09:03 PM PST.

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