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Sherman Act.
http://www.rollingstone.com/politics...0110216?page=2The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.
Sherman Act.
Howzat?
We have a justice department and an anti-trust act. Breaking up the TBTF's is well within the government's ability. But they're not interested.
http://www.rollingstone.com/politics...0110216?page=3The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency's failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America's most powerful bankers.
Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quan ies of shares in a firm called er Financial. "It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying er," Aguirre recalls. "And he wasn't just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day." A few weeks later, er was bought by General Electric — and Samberg pocketed $18 million.
After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg's who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg's case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. "Mack is busting my chops" to give him a piece of the action, Samberg told an employee in an e-mail.
A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank's clients, as it happened, was a firm called er Financial. We don't know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every er share in sight, right before it was snapped up by GE — a su iously timed move that earned him the equivalent of Derek Jeter's annual salary for just a few minutes of work.
The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn't likely to fly, explaining that Mack had "powerful political connections." (The investment banker had been a fundraising "Ranger" for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)
Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank's regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.
Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target's firm is being represented not only by Eliot Spitzer's former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC's enforcement division — not Aguirre's boss, but his boss's boss's boss's boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.
Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.
http://www.rollingstone.com/politics...0110216?page=4Over and over, even the most obvious cases of fraud and insider dealing got gummed up in the works, and high-ranking executives were almost never prosecuted for their crimes. In 2003, Freddie Mac coughed up $125 million after it was caught misreporting its earnings by $5 billion; nobody went to jail. In 2006, Fannie Mae was fined $400 million, but executives who had overseen phony accounting techniques to jack up their bonuses faced no criminal charges. That same year, AIG paid $1.6 billion after it was caught in a major accounting scandal that would indirectly lead to its collapse two years later, but no executives at the insurance giant were prosecuted.
http://www.rollingstone.com/politics...0110216?page=5Another clue that something was amiss with AIGFP's portfolio came when Goldman Sachs demanded that the firm pay billions in collateral, per the terms of Cassano's deadly contracts. Such "collateral calls" happen all the time on Wall Street, but seldom against a seemingly solvent and friendly business partner like AIG. And when they do happen, they are rarely paid without a fight. So St. Denis was shocked when AIGFP agreed to fork over gobs of money to Goldman Sachs, even while it was still contesting the payments — an indication that something was seriously wrong at AIG. "When I found out about the collateral call, I literally had to sit down," St. Denis recalls. "I had to go home for the day."
After Cassano barred him from valuating the derivative deals, St. Denis had no choice but to resign. He got another job, and thought he was done with AIG. But a few months later, he learned that Cassano had held a conference call with investors in December 2007. During the call, AIGFP failed to disclose that it had posted $2 billion to Goldman Sachs following the collateral calls.
"Investors therefore did not know," the Financial Crisis Inquiry Commission would later conclude, "that AIG's earnings were overstated by $3.6 billion."
"I remember thinking, 'Wow, they're just not telling people,'" St. Denis says. "I knew. I had been there. I knew they'd posted collateral."
http://www.rollingstone.com/politics...0110216?page=5A year later, after the crash, St. Denis wrote a letter about his experiences to the House Government Oversight Committee, which was looking into the AIG collapse. He also met with investigators for the government, which was preparing a criminal case against Cassano. But the case never went to court. Last May, the Justice Department confirmed that it would not file charges against executives at AIGFP. Cassano, who has denied any wrongdoing, was reportedly told he was no longer a target.
Shortly after that, Cassano strolled into Washington to testify before the Financial Crisis Inquiry Commission. It was his first public appearance since the crash. He has not had to pay back a single cent out of the hundreds of millions of dollars he earned selling his insane pseudo-insurance policies on subprime mortgage deals. Now, out from under prosecution, he appeared before the FCIC and had the enormous balls to compliment his own business a en, saying his atom-bomb swaps portfolio was, in retrospect, not that badly constructed. "I think the portfolios are withstanding the test of time," he said.
http://www.rollingstone.com/politics...0110216?page=5Throughout the entire crisis, in fact, the government has taken exactly one serious swing of the bat against executives from a major bank, charging two guys from Bear Stearns with criminal fraud over a pair of toxic subprime hedge funds that blew up in 2007, destroying the company and robbing investors of $1.6 billion. Jurors had an e-mail between the defendants admitting that "there is simply no way for us to make money — ever" just three days before assuring investors that "there's no basis for thinking this is one big disaster." Yet the case still somehow ended in acquittal — and the Justice Department hasn't taken any of the big banks to court since.
http://www.rollingstone.com/politics...0110216?page=6So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year.
Here's an economics lesson for you liberals: More regulation means more restrictions on the financial sectors ability to make money and lend money. There's no reason to make things harder for banks when they're trying to recover from all the idiots that the government made banks loan money to. If banks had to cut some corners to make ends meet, use some creative accounting techniques - so be it!
You know, if people are so intent on ing about bank bailouts and scandals...why didn't the government just bail out the American people's debts to lenders? You know why? Becuase people are stupid and banks know what they're doing. So let the banks do their thing, you just keep doing yours.
The important thing to take out of this discussion, is whether or not it's fair to tax rich people more than poor people.
Not to mention that if America just gave normal people money, they wouldn't know what to do with it, and would probably just spend it on heroin and strippers.
Just let the banks do their thing
You just keep doing yours
The government is not only not interested in prosecution but, as decribed in the OP, the regulatory apparatus mostly exists to shield the regulated companies from the legal consequences of their own behavior.
i liked his characterization of people working in the justice system move into positions with these firms.
WH, I believe that was meant as a pejorative.Here's an economics lesson for you liberals
I guess "the rule of law" is so 20th Century. As long as the mythical God Econos is satisfied, who needs it?
Anyone know who Aguirre's SEC boss was (the one that stopped the Morgan Stanley case cold)? I'd like to give him a job, sounds like a loyal fellow.
Tbh, all this crossover between the SEC and the financial sector reminds me of how former food industry CEO's go off and de-regulate things while working for the FDA. It's really sickening, but it's just another reminder of why social movements like the Tea Party are completely clueless and ineffective. No one has the balls to take these people down, plus they're surrounded by lawyers that have spent their lives manipulating the law rather than protecting it.
Look, banking is REALLY HARD. You can't really blame the people who run stuff for misplacing a few decimals here and there.
My proof, you ask? It's so hard to find good bankers that when the whole system collapsed, the only people who were essential to fixing it were the people who broke it in the first place!
Sure, these people may have created the byzantine structure that led to the collapse, but that's all in the past. We're here to move forward and look beyond that.
God forbid any harm should ever befall a bank, even as a due consequence of its own actions.
(amen)
Last edited by Winehole23; 02-17-2011 at 02:48 PM.
"from all the idiots that the government made banks loan money to"
Shill, You Lie.
The govt can't force the banks to do anything.
The CRA bull was a VRWC "it wasn't us".
A vast majority of the toxic loans were made by non-bank, non-regulated lenders who were in the game to make the closing fees, then sell the , in perfect bad faith, into the MBS/derivatives casino.
(pass the grits, please)
Where you been? I miss posts like that one...
Big Banks Face Fines on Role of Servicers
A review of mortgage-servicing practices by U.S. regulators found serious problems with internal controls and staffing levels at the companies, which are likely to result in formal enforcement action against more than a dozen major financial ins utions, according to people familiar with the situation.
The penalties against Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co. and 11 other home-loan servicers being investigated since last fall over breakdowns in procedures for payment collection, loan modifications and foreclosures could include fines and changes in how the companies operate, these people said.
While regulators haven't agreed on exact ...
http://online.wsj.com/article/SB1000...202500304.html
Short-term Delinquencies Fall to Pre-Recession Levels, Loans in Foreclosure Tie All-Time Record in Latest MBA National Delinquency Survey
http://www.mbaa.org/NewsandMedia/PressCenter/75706.htm
The criminal mortgage crisis will go on for years, and none of perps will go to jail, "settlements" will be round-error hand-slaps, and the next financial bubble is certainly already in the planning stages.
But be black and lie about getting your kids into a public school, you go to jail.
btw, the MBA walked away from an underwater mortgage on their HQ building, but the MBA and the financial that says homeowners have a moral obligation not to walk away from their underwater mortgages.
Do as I say, not as I do.
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