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I have said for some time that the recovery we are now seeing is unsustainable. The recession was a result of rot in the system and major inefficiencies in the economy (think parasitic behavior). The economy has been reflated on a wave of freshly printed dollars and debt. Unfortunately very little if anything has been doe to cut out the original rot. Attempts at reform have been limited at best and overall, pretty much totally ineffective.

We now know that there was no desire within the Attorney General's office to actually prosecute those behind the collapse (and yes ... there bloody well was fraud and illegal behavior). The general attitude from the president on down was "let's move on", "nothing to see here". And as a result a sustainable recovery will remain illusive.

Exhibit 1: From the PBS show "The Untouchables"
The Assistant US Attorney General - Lanny Braeuer

But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.
Reread that again. The US Assistant AG implies that EVEN IF there is massive wrongdoing, it will not be prosecuted if it might hurt someone else. This appears to be a fundamental new legal concept.

So by extension, if someone drives drunk and kills someone, but has a big family that depends on his wage, then he would not be prosecuted because of the damage that would be suffered by his family. REALLY????

Ted Kaufman seems to understand - even if the top law enforcement folks don't have a clue.

That is not the job of a prosecutor, to worry about the health of the banks, in my opinion. Job of the prosecutors is to prosecute criminal behavior. It’s not to lie awake at night and kind of decide the future of the banks.
Also note the revolving door of the crooks compromised through government. Breuer worked for Covington and Burling LLP, as did Eric Holder
Why these two levels of justice? Could this disparity simply be a case that the big banks will fight charges more aggressively, thus making criminal prosecutions more difficult?  Maybe.   But it also undoubtedly has something to do with the fact that the top leadership at DOJ is drawn almost exclusively from White Collar Criminal Defense Practices at large firms that represent the very firms that Justice is supposed to be investigating. Covington and Burling,  the firm from which both Attorney General Eric Holder and Associate Attorney General and head of the criminal division Lanny Breuer hail, has as its current clients Goldman Sachs, Bank of America, JP Morgan, Wells Fargo, Citigroup, Deutsche Bank, ING, Morgan Stanley,  UBS,  and MF Global among others. Other top Justice officials have similar connections through their firms.
Beuer's previous position?
Mr. Breuer returned to Covington in 1999 as co-chair of the White Collar Defense and Investigations practice group, where he specialized in white collar criminal defense and complex civil litigation and represented individuals and corporations in matters involving high-stakes legal risks. He also vice-chaired the firm’s Public Service Committee. At Covington, Mr. Breuer developed a reputation as one of the top defense lawyers in the country.
Exhibit 2: The housing mess.

The recent settlement with the banks over foreclosure fraud was supposed to provide some form of closure on the housing mess. Unfortunately it now seems that the whole thing was just one big COVERUP of fraud. Quelle Surprise.

Over at Naked Capitalism, Yves Smith and Co have done some investigative work of their own to show how bad the situation is when it came to Bank of America (remember they were particularly bad having previously devoured Countrywide, one of the biggest black holes in the real estate bubble)

The main posts are:

As grim as this sounds, the conduct was worse than the leaks suggested. After extensive debriefing of Bank of America whistleblowers, we found overwhelming evidence that the bank engaged in certain abuses frequently, in some cases pervasively, in its servicing of delinquent mortgages. This is particularly important because Bank of America has been identified in previous settlements as far and away the biggest mortgage miscreant, paying over 40% of last year’s state/federal mortgage settlement among the five biggest servicers.

This settlement, as intended, was yet another significant bailout to predatory servicers. As we will demonstrate over our upcoming series of posts, conservative estimates of damages due to borrowers under the consent order who suffered improper foreclosures from Bank of America exceed $10 billion. That contrasts with the cash portion of the settlement amount for Bank of America of $1.2 billion.** The amount owing for other abusive practices would have increased this total further.

The OCC gave two rationales for shutting down the reviews. The first was that they were costly to Bank of America and other serivcers, potentially diverting funds from borrowers.

Again note the attitude. We can't keep investigating because it is costing the bank too much! There was clear evidence of major wrongdoing and damages in excess of $10 billion ... and BofA skates off with a tiny $1.2 billion fine. Now if you could rob a bank and only get a slap on the wrist, and get to keep 90% of the proceeds, why would you not keep robbing banks.


The system is rotten. Those in positions of power (in the banks and on Wall Street) appear to have suffered little from the entire recession. So why ... would we expect them to behave differently in the future?????

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Comment Preferences

  •  Tip Jar (29+ / 0-)

    There's room at the top they're telling you still But first you must learn how to smile as you kill If you want to be like the folks on the hill

    by taonow on Wed Jan 23, 2013 at 09:35:16 AM PST

  •  I have been assured by people who are smarter (13+ / 0-)

    than me that we can easily just vote our way out of this mess.

    16 - 20 years and maybe it will have improved!

    All we gotta do is be patient and tolerate every last needless inequity forced upon us and not think about acting up.

    Take it like good citizens and maybe a few decades from now there will be a ray of hope.

    The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men.

    by xxdr zombiexx on Wed Jan 23, 2013 at 09:46:58 AM PST

  •  all systems managed by man are and will be (0+ / 0-)

    corrupt to some degree.

    you have to go way into the authoritarian realm to get to a system that does not have corruption.

    and in the end it too will be corrupt.

    power corrupts and absolute power corrupts absolutely.

    -You want to change the system, run for office.

    by Deep Texan on Wed Jan 23, 2013 at 10:01:55 AM PST

  •  Lanny A. Breuer - responsible enforcement? (4+ / 0-)
    Recommended by:
    taonow, chuckvw, 3goldens, walkshills

    Breuer, getting tough on the bad guys!!!!!!!

    And he states...."No matter what, individual executives and employees must answer for their conduct."

    When will this answering for their criminal conduct start, Mr. Breuer?

    Assistant Attorney General Lanny A. Breuer.... head of the Criminal Division for last 3 years.  

    The Criminal Division is based in Washington, D.C., and has approximately 600 lawyers across 15 sections.  Division lawyers prosecute an array of federal crimes – from public corruption (in our Public Integrity Section), to cybercrime (in our Computer Crime and Intellectual Property Section), to violent and organized crime (in our Organized Crime and Gang Section), to financial fraud (in our Fraud Section).
    So there is still a financial fraud division in the DOJ...who knew?
    In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct.  I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake.  And, in some cases, the health of an industry or the markets are a real factor.  Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.

    Oh my what keeps him up at night.....

    When the only tool we had to use in cases of corporate misconduct was a criminal indictment, prosecutors sometimes had to use a sledgehammer to crack a nut.  More often, they just walked away.  
    In the world we live in now, though, prosecutors have much greater ability to hold companies accountable for misconduct than we used to – and the result has been a transformation in the culture of corporate compliance.  
    Well, there you have it, a transformation in the culture of corporate compliance???
    In appropriate circumstances, large corporations, such as Siemens AG, must plead guilty for their crimes.  In other cases, because the company has gone to extraordinary lengths to turn itself around, for example, or provided the government with extensive cooperation, a deferred prosecution agreement or non-prosecution agreement may be the best resolution.  

    No matter what, individual executives and employees must answer for their conduct.

    And, perhaps most important of all, companies know that they are now much more likely to face punishment than they were when our choice was limited to indicting or walking away.  Overall, this state of affairs is better for companies, better for the government, and better for the American people.

    "Who are these men who really run this land? And why do they run it with such a thoughtless hand?" David Crosby

    by allenjo on Wed Jan 23, 2013 at 11:07:59 AM PST

  •  Why has the DOJ failed to act on evidence of (3+ / 0-)
    Recommended by:
    taonow, chuckvw, walkshills

    Wall Streeters criminal activities?

    Is there a chance some prosecutions may still take place?

    More than four years after the financial crisis, not one senior Wall Street executive has faced criminal prosecution for fraud. Are Wall Street bankers simply “too big to jail?”
    In The Untouchables, FRONTLINE producer and correspondent Martin Smith investigates why the U.S. Department of Justice has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse.
    So, after talking with top prosecutors, government officials and industry whistleblowers, what did he find? Is there a chance some prosecutions may still take place?

    What do we really know about the criminal cases that could be have been pursued? And what does this investigation reveal about Wall Street and its relationship with the government?
    Live Chat Wed. 2 pm ET

    "Who are these men who really run this land? And why do they run it with such a thoughtless hand?" David Crosby

    by allenjo on Wed Jan 23, 2013 at 11:19:57 AM PST

  •  The rot cuts right into the sinew and bone (4+ / 0-)
    Recommended by:
    tardis10, 3goldens, allenjo, Joieau

    of both parties and our ruling elite.

    We're not supposed to notice the smell.

    (There are good people, whistleblowers, mid-level people in the industry and government - many of them interviewed for this must-see Frontline - who pulled every fire alarm within reach. This administration and Congress cut them off at the knees.)

    Perpetual crisis means never having to say you're sorry.

    by chuckvw on Wed Jan 23, 2013 at 01:09:23 PM PST

  •  I agree, like a cancer it needs to be cut out! (3+ / 0-)
    Recommended by:
    tardis10, 3goldens, walkshills

    It seems that neither side wants to go after Wall Street. They are a tax on our economy sucking money off the top (skimming) and producing little of substance. They wrote the rules to the game and know how to collect the fees from all of us.

    Now they are supposedly too big to prosecute as they reign over the commoners from Main st with legal immunity.

    The reason I took the handle "Simple Serf" is because after the crash none of the Kings of finance were held accountable. Instead, they were rewarded with extravagant bonuses for losing money. That showed the game was rigged.

    We are all looked down on as serfs in their kingdom.

    Great Diary!!

  •  The "Too Big To Fail Get Out of Jail Free Card"... (2+ / 0-)
    Recommended by:
    allenjo, walkshills

    Too Big to Jail: Big Banks Can Finance Terrorists and Walk Away Scot-Free: (Dec. 2012)

    ...megabank HSBC has escaped criminal prosecution for money laundering that probably funded terrorists and narcotics traffickers. Why? Because regulators and prosecutors were petrified that an indictment would undermine the entire financial system. The Times quotes anonymous government sources who confessed fears about bringing formal charges because doing so would be a "death sentence" for the bank. So they let it off the hook...

    No big U.S. bank -- Wells Fargo included -- has ever been indicted for violating the Bank Secrecy Act or any other federal law.

    ...Large banks are protected from indictments by a variant of the too-big-to-fail theory.

    Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

    The theory is like a get-out-of-jail-free card for big banks, Blum says.

    There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,” Blum says. “They seem to be willing to do anything that improves their bottom line, until they’re caught.”

    Maybe the govt. needs to let the financial markets "panic".  The alternative is to let the banks continue to be the number one employer of organized criminals, and the drug money launderers and terrorist financiers.  
  •  Eric Holder needs to be prosecuted (2+ / 0-)
    Recommended by:
    allenjo, taonow

    for dereliction of his duties

    It is inexplicable.  If the banksters are able to escaped because time runs out to prosecute, then Holder should be prosecuted.

  •  Eric Holder opposed to prosecuting both (1+ / 0-)
    Recommended by:

    corporate criminals and corporations because that's who will be paying him.

    "In this statement, Holder expressed himself as being against prosecuting corporate crime, because he felt that only individuals should be criminally prosecuted. Holder has, however, also opposed criminal prosecutions of top corporate executives as individuals: not a one of them has been even prosecuted, during his term, much less convicted. Mokhiber pointed out that Holder came to his federal office from the elite corporate law firm of Covington & Burling, which defends corporations against criminal prosecutions. Mokhiber also noted, “And he’s going back to Covington & Burling.” So: Holder’s future income will be derived from corporations that will be hiring C&B to defend them from prosecutions for crimes, and from other legal charges against them. In other words: President Obama, when he had hired Holder, was actually hiring a career defender of corporations; and this person, Holder, has been continuing in this very same capacity while on the federal payroll, during his four-year hiatus from his career, as a professional corporate defender. Holder is, in other words, doing what is in his long-term personal career interest: protecting big-corporate criminals."

    Hope I didn't break any laws copying this from Buzzflash posted by Truthout.

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