Where Are the Financial Crisis Prosecutions?

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http://www.propublica.org/thetrade/item/where-are-the-financial-crisis-p...

You may have noticed that prosecutors in this country are in something of a white-collar slump lately.

The stock options backdating prosecutions have largely been a bust , not because it wasn’t a true scandal. The Securities and Exchange Commission and the Justice Department investigated more than 100 companies. Over a hundred took accounting restatements. Yet only a handful of executives went to prison, with some high-profile cases fizzling out.

comment by Gartrell Bibberts:
"Sounds just like Roosevelt in 1933! Lets put some SOBs in jail and ramp up our constituencies. I watch the industry too and outside of Chris Dodd and a few of his associates, I see more stupidity and greed than criminality."

Dennis_Nilsson's picture
Dennis_Nilsson
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Jul. 31, 2007 4:01 pm

Comments

It was a stunt that backfired, securities fraud, and banking fraud are ok if it is standard operating procedure, because they cannot show intent. The laws have been rewritten for just that reason, lobbying has the biggest roi of any US enterprise.

The bogus prosecution PR stunt is very much like the 'internal policing' promoted during the deregulation moves, which would make the DOJ the internal affairs department of the banks that own them...sounds about right. We police our own, uh huh.

douglaslee's picture
douglaslee
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Jul. 31, 2007 4:01 pm

Even if there were laws against much of what was done wrong in the finance sector for the last 12 years I wouldn't hold my breath waiting for Eric Holder, under look-the-other-way instructions from the White House, to do anything about them.

If they won't even investigate the crimes of the Bush Administration, like firing the US Attorneys for not prosecuting Democratic politicians OR the asinine wrongful conviction of Alabama governor Don Siegelman, MUCH LESS any war crimes in Iraq, then why would we expect them to prosecute any of their future BIG donors??!!

It's a sick and wrong world now.

Corvallis Carl's picture
Corvallis Carl
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Jun. 7, 2010 12:21 pm

Why would a guy commit suicide with his 2 year old in the house, with a dog leash? didn't say choker collar, the wife has filed to change her and her children's last name, smart move.

Suicide usually negates a life insurance policy.

douglaslee's picture
douglaslee
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Jul. 31, 2007 4:01 pm

I haven't seen any outrage here yet over the ethics ( and criminal) violations of Rangel and Dodd. They're two of the fools who kept this mess going. What? They're not Republicans or Wall Street bakers and brokers so it's OK for them to sell out their constituency and the country? Must be. I hear that Pelosi, Waters, Boxer, Reid and some others have done quit well via their positions in Congress. Where's the outrage? Those Wall Street types that you all so hate had help. Those named above are the prime suspects.

cpp224's picture
cpp224
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Jul. 31, 2007 4:01 pm

Probably Bernanke throwing another $600 billion at banksters is an indictable offense. They shipped it off to Brazilian banks where they can get 10.5% intererest. Guess who gets to pay for that kleptocracy? Shipping money to Brazil is supposed to stimulate the U.S. economy, and we're supposed to buy the nonsense..

Add Larry Summers....who in bailing derivative players like AIG enabled Goldman Sachs to take in billions. The former Goldman Sachs CEO guaranteed his own millions in the process..

Goldman Sachs should probably be indicted for fraud. It bundled mortgages it knew would fail, and then sold them to its clients. It then bet they would fail and made a bundle while driving its clients broke..

There is plenty of blame to go around. The whole system is rotten to the core...courtesy of finance buying government.

.The same fools who blocked regulating derivates were appointed to fix the mess.caused by their actions. They still aren't regulated. A new bailout for the next derivatives collapse is in process. There are nearly $1,000 trillion of them floating around.

$20 trillion globally to make less than $80 billion in sub-rime mortgages whole was essential. LOL It's bankrupting the western world.

Short music video on the topic. "Free Money In the U.S.A." Language will be very offensive to some.

http://www.youtube.com/watch?v=LeWgpoCwc9Y

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

in re the system is corrupt: true dat! And people want to turn over MORE of our economy to congress? I don't hold the disdain for bankers, Wall Street, etc. that many do, but if you decide that all are crooks, who do you want handling your money: politicians who know squat about business or businessmen who can create wealth? In actuality, I think you will find that it is frequently government over- involvement in private sector that causes problems. The housing thing started with the cost of land, not construction, going through the roof. Why? Scarcity of available land to build new construction on. Why? Because after local gov't. finished setting aside all the land barred from new construction in order to protect whatever (the scenery, the spotted fizzgig, etc.), it left far less land available for new building. California is a good example, and not surprisingly that state was one of the areas where housing prices went sky high. So did Miami, parts of the east coast and some other places. Contrast that with Texas, where local governments are far less intrusive generally. Texas hasn't had the problems that these other areas have had. It got worse when Congress decided we had a national housing problem (which we demonstrably did NOT), and then passed legislation that led to Fannie/Freddie and a lot of very bad loans. As I said, the banks should have resisted, but that doesn't excuse both political parties for getting on this band wagon. A lot of people from both sides made a lot of campaign contributions from Fredie/Fannie.

cpp224's picture
cpp224
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Jul. 31, 2007 4:01 pm

A stunning collection of right wing fantasy-facts about the housing crisis. Made my head spin.

Art's picture
Art
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Jul. 31, 2007 4:01 pm

Sorry Art, but the record and path of that disaster is clear. What's stunning is the inability of some to get beyond whining about Wall Street, bankers, fat cats, and all the other useless tripe that hinders the ability to see the problems honestly and to deal with them honestly. Too many on the right and left are in love with bumper sticker political philosophy.

cpp224's picture
cpp224
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Jul. 31, 2007 4:01 pm
In actuality, I think you will find that it is frequently government over- involvement in private sector that causes problems.

You couldn't be more wrong if you tried. The issues that created this recession were due entirely to the private sector acting without any regulation. And in all other instances, it isn't government over-involvement but that the private sector wrote the legislation that then resulted in problems, which again is not government over-involvement but the private sector.

The housing thing started with the cost of land, not construction, going through the roof.

The housing "thing" didn't start due to the cost of land but due to speculators seeing an opportunity to profit from what they saw as ever-increasing housing prices.

I'd like to see an end to all construction that destroys open space, so I would love to see more regulation to protect it. It's just too bad that you're not correct on this one as the builders, lenders, appliance manufacturers, plumbing fixture manufacturers, electrical fixture manufacturers, furniture makers, etc. all worked with politicians to make sprawl a prime element of economic growth, at the expense of farmland and wildlife habitat.

Sorry Art, but the record and path of that disaster is clear. What's stunning is the inability of some to get beyond whining about Wall Street, bankers, fat cats, and all the other useless tripe that hinders the ability to see the problems honestly and to deal with them honestly. Too many on the right and left are in love with bumper sticker political philosophy

Back atcha, but about your stunning inability to get beyond whining about government acting to promote the public interest. This recession was due entirely to government not acting to control Wall Street, bankers, fat cats and all other useless tripe that gamed the system to their advantage at our expense.

jeffbiss's picture
jeffbiss
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Jul. 31, 2007 4:01 pm

Isn't the report overdue from Phil Angelides' financial crisis inquiry commission?

chilidog
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Jul. 31, 2007 4:01 pm
Sorry Art, but the record and path of that disaster is clear
That's quite a statement to make. I would think that you would want to show us why you believe that the record shows what you think it shows. I haven't seen any good data that shows "it is frequently government over- involvement in private sector that causes problems." Just a lot of Conservative opinion and wishful thinking.

Art's picture
Art
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Jul. 31, 2007 4:01 pm

If the USA prosecuted the shinanigans in the financial sector it would open a can of worms and show just how corrupt the banksters are-

it would be seen as a "threat to national security" and as such we have to let the criminals continue the looting.... all in the name of NATIONAL SECURITY.......

http://ampedstatus.com/

http://www.alternet.org/

http://projects.propublica.org/tables/treasury-facilities-loans

http://www.flashpoints.net/

are some good news sites......

mtdon's picture
mtdon
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Jul. 31, 2007 4:01 pm
Quote Art:

Sorry Art, but the record and path of that disaster is clear
That's quite a statement to make. I would think that you would want to show us why you believe that the record shows what you think it shows. I haven't seen any good data that shows "it is frequently government over- involvement in private sector that causes problems." Just a lot of Conservative opinion and wishful thinking.

Well Art, I'm sorry too, haha..

I will agree all day that the actions performed in the absence of the Glass-Steagall act were ultimately the most obvious problems with the whole housing disaster. But you really need to look deeper than just the surface issues.

Look at what was being traded. How did they come to exist?

Where did the money come from?

And, I'm talking the absolute ROOTS - **WHERE** did that money come from?

The real issue here is that, in attempt to avoid a recession after the bursting of the Nasdaq bubble (when all the dot-com's went belly-up), Bush, freshly appointed as Mr. President, with the help of Alan Greenspan, dropped interest rates to 1% and created massive incentives to purchase houses. Banks were able to receive money from the FED for virtually nothing at all.. all they needed were people to lend to. When the government started guaranteeing mortgages, that created all the supply of people who wanted to borrow that they'd ever need.

So as a lender, now not only do you have access to incredibly cheap credit from the FED, but you have no reason to NOT write mortgages because, even in the event of default, you will still get paid what is owed thanks to the guarantee of loans.

These ingredients are REALLY what fueled and created the housing bubble. An incredible majority of the mortgages that were written during the time after these policies were introduced, would NEVER have been written under normal circumstances.

The derivative plays were involving bundled mortgages that couldn't have ever existed absent the policies that made them possible.

Somehow, the general media only manages to follow the blood trail back to the banks, and just stops there and says "here's the culprit". Somehow they completely missed the fact that the trail keeps going and starts in Washington as a result of terrible policy implementation to try and sidestep a recession that needed to happen.

Even right now, our government is STILL screwing up the market by trying to keep housing prices higher than they should be. It's so funny how the direction changed - initially, they were trying to make housing affordable to everyone. Now, it's everything they can do to keep it expensive.

Why?

Because if the banks were forced to sell off their inventory of homes at true market values, it'd absolutely bankrupt the entire system that the government blew trillions on to bail out only a few years ago. It's the economic equivalent of punching yourself in the nuts. Twice.

Cheesebone's picture
Cheesebone
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Sep. 1, 2010 9:18 am

Cheesebone. That's not a bad synopsis of the situation, although I take issue with some parts of it. However, it is off-topic. The issue is CPP224's remark, which I contend is revisionist history.

in re the system is corrupt: true dat! And people want to turn over MORE of our economy to congress? I don't hold the disdain for bankers, Wall Street, etc. that many do, but if you decide that all are crooks, who do you want handling your money: politicians who know squat about business or businessmen who can create wealth? In actuality, I think you will find that it is frequently government over- involvement in private sector that causes problems. The housing thing started with the cost of land, not construction, going through the roof. Why? Scarcity of available land to build new construction on. Why? Because after local gov't. finished setting aside all the land barred from new construction in order to protect whatever (the scenery, the spotted fizzgig, etc.), it left far less land available for new building. California is a good example, and not surprisingly that state was one of the areas where housing prices went sky high. So did Miami, parts of the east coast and some other places. Contrast that with Texas, where local governments are far less intrusive generally. Texas hasn't had the problems that these other areas have had. It got worse when Congress decided we had a national housing problem (which we demonstrably did NOT), and then passed legislation that led to Fannie/Freddie and a lot of very bad loans. As I said, the banks should have resisted, but that doesn't excuse both political parties for getting on this band wagon. A lot of people from both sides made a lot of campaign contributions from Fredie/Fannie.
As I understand CPP224's thesis, he believes that the housing bubble was caused by evironmental laws that took large parcels of land out of the market. I contend that this is twaddle. The fact that the supply of land became reduced in some states is just ordinary supply and demand. One might not like the reason that land became unavailable, but that doesn't change the fact that it is still simple supply and demand. That is not a bubble. It's just supply and demand.

The bubble came because of speculation. By definition, this involves the over-valuation of land, beyond the valuations dictated by the law of supply and demand. It wasn't Government that did the speculating. It was Wall Street.

Further, CPP224 seemed a little confused on one point.

It got worse when Congress decided we had a national housing problem (which we demonstrably did NOT)
He is saying that the reduction of land available for development caused the housing crisis, but then he says that we did not have a housing crisis.

This is what my comment was all about.

Art's picture
Art
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Jul. 31, 2007 4:01 pm

Speculation needs to be fueled with money though, otherwise it's just people wishing they could invest in something. Without the money, there is no actual speculation.

The speculation in the housing markets went ballistic because of the unprecedented growth in the real estate markets thanks to the policies introduced by the government. People assumed that houses would continue to appreciate in double-digit percentages for the rest of eternity. The reason they STARTED appreciating at such outrageous levels was because people who could previously not afford housing, all of a sudden were now a part of the market. Demand for property went up relative to supply, and prices rose as a result.

Wall Street didn't make these out-of-balance price hikes possible, but they made lots of money on the fact that it was happening. They SHOULD HAVE lost lots of money on it when it blew up in their face, as well. After all, they were speculating as well - and by definition, speculation harnesses the "high-risk, high-return" principle. The problem was that government policies made the "high-risk" part of the equation much less apparent, and turned it into something everyone thought was a "no-risk, high-return" deal instead.

I'll agree all day that there was a lot of greed that really blew the whole situation out of the atmosphere. The point I make is that, all that greed was there in the first place, long before the housing bubble ever existed. The problems arose when government screwed with the system and removed the forces that prevent lending institutions from making terrible loans in the first place.

Cheesebone's picture
Cheesebone
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Sep. 1, 2010 9:18 am
I'll agree all day that there was a lot of greed that really blew the whole situation out of the atmosphere. The point I make is that, all that greed was there in the first place, long before the housing bubble ever existed. The problems arose when government screwed with the system and removed the forces that prevent lending institutions from making terrible loans in the first place.
You're right! So, is this Government deciding to interfere in the private markets, or is this Phil Graham deciding to cease wise and prudent traditional interference in the private housing market (Graham/Leach/Bliley)?
The speculation in the housing markets went ballistic because of the unprecedented growth in the real estate markets thanks to the policies introduced by the government.
I just can't agree with that. Please explain. Which policies?

Art's picture
Art
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Jul. 31, 2007 4:01 pm

Maybe I worded it funky, I probably should have said "actions taken by the government" instead.

At the end of the day, the real root cause, the grand-daddy of all the roots, goes back to artificially low interest rates at the hands of the FED and government guaranteed mortgages. Either one of those ingredients is capable of creating massive amounts of long-term economic damage beneath the facade of short-term "growth" and prosperity. Putting both of them together is obviously disastrous.

"If a teacher hands out a ton of Pixy Sticks and Soda pop to a room full of First graders, and then leaves the room only to return an hour later and discover that the classroom has been trashed and the students aren't behaving - who do you blame?"

"Sure, Wall Street got drunk, Main Street got drunk... EVERYONE was drunk & made terrible decisions in their intoxication. But, HOW did they get drunk? Government provided the alcohol & Greenspan was handing out shots!"

Cheesebone's picture
Cheesebone
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Sep. 1, 2010 9:18 am

Maybe I worded it funky, I probably should have said "actions taken by the government" instead.

At the end of the day, the real root cause, the grand-daddy of all the roots, goes back to artificially low interest rates at the hands of the FED and government guaranteed mortgages. Either one of those ingredients is capable of creating massive amounts of long-term economic damage beneath the facade of short-term "growth" and prosperity. Putting both of them together is obviously disastrous.

"If a teacher hands out a ton of Pixy Sticks and Soda pop to a room full of First graders, and then leaves the room only to return an hour later and discover that the classroom has been trashed and the students aren't behaving - who do you blame?"

"Sure, Wall Street got drunk, Main Street got drunk... EVERYONE was drunk & made terrible decisions in their intoxication. But, where'd they get the alcohol?? Well, Government provided the alcohol & Greenspan was handing out shots!"

Cheesebone's picture
Cheesebone
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Sep. 1, 2010 9:18 am
who do you blame?
I think you have it exactly right. I blame the Government-haters.

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Art
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Jul. 31, 2007 4:01 pm

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