Opinion

Felix Salmon

Looking for financial-crisis criminal prosecutions

By Felix Salmon
December 9, 2010

Jonathan Weil and Jesse Eisinger wrote very similar columns yesterday, about the way in which the latest batch of white-collar-crime prosecutions is seemingly an attempt to occlude the fact that none of the main culprits in the financial crisis have been prosecuted of anything. Meanwhile, Janet Tavakoli has come out with a presentation listing just some of the people who might be liable for prosecution here:

FHFA1282010.jpg

Much as I love the idea that Christopher Cox could be prosecuted as an accessory and accomplice, it’s probably easier to start with the bankers. Or maybe “easier” isn’t exactly the mot juste:

By all outward appearances, it seems the Justice Department either doesn’t want to prosecute systemically important frauds, or doesn’t know how. Or maybe it’s both.

It wasn’t always this way. More than a thousand felony convictions followed the savings-and-loan scandal of the 1980s and early 1990s. Some of the biggest kingpins, such as Charles Keating of Lincoln Savings & Loan, went to jail. With this latest financial crisis, there’s been no such accountability.

That’s Weil. Here’s Eisinger:

The most common explanation from lawyers for this bizarre state of affairs is that it’s hard work. It’s complicated to make criminal cases in corporate fraud. Getting a case that shows the wrong-doer acted with intent — and proving it to a jury — is difficult.

But, of course, Enron was complicated too… WorldCom’s Bernie Ebbers and Tyco’s Dennis Kozlowski are wearing stripes…

The most popular reason offered for the dearth of financial crisis prosecutions is the 100-year flood excuse: The banking system was hit by a systemic and unforeseeable disaster, which means that, as unpleasant as it may be to laymen, it’s unlikely that anyone committed any crimes.

Or, barring that wildly implausible explanation (since, indeed, many people saw the crash coming and warned about it), the argument is that acting stupidly and recklessly is no crime…

Just as it’s clear that not all bankers were guilty of crimes in the lead-up to the crisis, it strains credulity to contend no one was. Corporate crime is usually the act of desperate people who have initially made relatively innocent mistakes and then seek to cover them up. Some banks went down innocently. Surely some housed bad actors who broke laws.

There’s an irony here: the financial crisis was so sudden and so devastating that no one really had the opportunity or incentive to cover up their crimes. Cover-ups are always easier to prove and prosecute than the original crimes, after all. But in this case the crimes all happened more or less in plain sight: Tavakoli, for one, has been shouting “fraud” for years. And the bankers just say “oh no it isn’t” and carry on.

I tend to agree with Eisinger that the doomed prosecution of the two Bear Stearns hedge fund managers does not mean that prosecutions are impossible: it just means that if you’re going to try to prosecute, you’ll need a much more carefully-constructed case than the U.S. attorney’s office managed to cobble together. “You worked in a bank and you went bust” isn’t enough — but with time and subpoena power, it doesn’t have to be.

I suspect that we will see a criminal prosecution of Dick Fuld at some point, although as Eisinger points out it’s certainly taking long enough. A criminal prosecution of Angelo Mozilo is much less likely now that he’s settled his civil suit with the SEC. Stan O’Neal? Chuck Prince? Martin Sullivan? Going after those guys would require a degree of testicular fortitude which simply doesn’t exist anywhere in the Obama administration. There might be a handful of mid-level executives eventually — people higher up the food chain than Fabulous Fab, but well below CEO level. The top cats are sitting comfortably in a cloud of impunity, and they all have very good lawyers.

I’m reminded of a passage from Too Big To Fail:

Several weeks after Merill’s board had named Thain CEO, he was faced with an especially delicate task. Placing a call to his predecessor, Stan O’Neal (who had just negotiated an exit package for himself totaling $161.5 million), Thain asked if they might get together…

Thain knew that if there was one person in the world who could explain what had gone wrong at Merrill Lynch, why it had loaded up on $27.2 billion of subprime and other risky investments — what, in other words, had gone wrong on Wall Street — it was O’Neal.

“Well, as you know, I’m new, and you were the CEO for five years,” Thain said carefully. “I’d like to get your take, any insight on what happened here. Who everybody is, and all that. It would be very helpful to me and to Merrill.”

O’Neal was silent for a moment, picking at his fruit plate, and then looked up at Thain. “I’m sorry,” he said. “I don’t think I’m the right person to answer that question.”

Was O’Neal afraid that anything he said might be used against him in some kind of lawsuit? I daresay he was. He might have been greedy, but he wasn’t stupid.

Comments
41 comments so far | RSS Comments RSS

It is amazing how much damage holder and obama are doing by avoiding any perp walks here.

-people won’t put their money in the market if they don’t think the laws will be enforced
-I end up thinking that both of them are so scared of the bankers that whatever regulation is passed won’t be enforced
-Obama is losing any claim to represent ordinary people
-people are staying out of the housing market because they are afraid that servicer abuse will continue (not to mention fear of bad titles)

A few Keating trials really would help all of us “put the past behind us.” The failure to see this happening (and the current BS from Holder) indicates that the past is prologue, and our President is weak or corrupt.

Posted by Dollared | Report as abusive
 

The person I’m dying to hear from is Warren Spector, Bear Stearns’ fixed income chief until he was fired a few months before the firm’s collapse.

To my knowledge Spector has said nothing about the events and years immediately preceding Bear’s collapse, which has justifiably upset chroniclers, like William Cohan (with whom Spector did NOT cooperate):

http://opinionator.blogs.nytimes.com/201 0/02/04/mystery-men-of-the-financial-cri sis/

At least people like Citicorp’s Tommy Maheras provided testimony to the Financial Crisis Inquiry Commission.

http://www.bloomberg.com/apps/news?pid=n ewsarchive&sid=a5An7tqNsOw4&refer=news

But Warren Spector has said nothing about his tenure, and he took home far more money than many other recognizable Wall Street names, like Stanley O’Neal.

http://www.bloomberg.com/apps/news?pid=n ewsarchive&sid=a6a7kbyqFJsc

Spector ought to be compelled to talk. I want details.

Posted by dedalus | Report as abusive
 

Dollared, “people won’t put their money in the market if they don’t think the laws will be enforced” – I assume then you haven’t been checking stock prices….

Posted by Danny_Black | Report as abusive
 

dedalus, Spector earnt more than others mostly through luck. BSC had long-term stock compensation, so instead of taking cash he most of his bonuses over the years in this fund. Before the crisis hit, BSC shut down this fund – apparently because they were worried about the optics of someone like Spector retiring and getting a hundreds of millions “payoff” – and Spector in a huff sold most of his shares. Had this not happened then he would have been sitting on the same magnitude of losses as the rest of the board.

Posted by Danny_Black | Report as abusive
 

I have enormous respect for Ms Tavakoli and own all of her books, which are very popular with Fixed income and structured products professionals. Unlike the other two you quote she actually knows what she is talking about.

That said the presentation she gave was a very mixed bag. At least through 2005 to beginning of 2006 there was absolutely no issue with investor demand, as the quote on slide 6 said the demand was on the deals where the underlying was lower credits, for the simple reason they had higher yields. Also in ANY boom, risk managers lose out to traders. You can cry wolf in 2003, 2004 and 2005 but usually people who try and sit out a bubble get bought at a discount. As for slide 10, all of this would be referenced in the deal docs describing the underlying. She is also being disingenuous about the risks described, most of the investments expect some losses on the underlyings. The point was meant to be that either there was excess collateral or interest paid to cover the coupons and principal of the bonds. An example would be this deal if it was priced 30 cents on the dollar then you would be getting ANY interest or principal on the “dodgy” parts for free. As it turned out if you bought it at 40 you did rather well.

Slide 17 is just false. The drying up of credit had nothing to do with banks, it was the wholesale CP market that dried up – ie institutional investors refused to extend more than the very shortest of credit.

Slide 18 is also a lie. No one thought “house prices would always go up”. They also did not think there would be an across the board decline in house prices nor that it would be of the magnitude it was. This event last happened in the Great Depression. Again it wasn’t declines that killed the investments it was correlations in those declines.

As for slides 32-34, lying about assets on a loan application IS a crime – and actually is Fraud. Perjury isn’t fraud and presumably the mid-level execs will get prosecuted. That said the claims by the Washington Independent reporter are clearly false. In the atmosphere of a couple of months ago, the banks could not afford anything less than a perfect affadavit and as we now know, JPM has started foreclosing again. The “whopping” extra 2.3billion works out to 20k per affadavit or a few months legal fees.

Thought she was a bit light on Frannie, given most of the government’s actual losses have stemmed from that bailout and that the bailout of the creditors was a massive bailout of the Russian and Chinese Central Banks and SWFs – they held over a trillion dollars of paper at time of “conservatorship”.

As for NRSROs, not sure why credit risk has this priviledged position over other investment risks. Strikes me as a hold over from a buy and hold era. Surely they should simply be abolished. Rather than have trigger lines which bring in positive feedback loops use continuously varying CDS prices to price the risk. You can collapse expected credit losses into a single figure – the loss… Correlation is not a good measure because alot of the correlation in losses was BECAUSE they were in the same investments – ie investing in “uncorrelated” underlyings CAUSED them to become correlated and make it more likely if one pin goes the others lose funding too.

Posted by Danny_Black | Report as abusive
 

John Lewis’s book “The Big Short” is a good insight to just how little the banking/investment cartel knew about the financial instuments they created and their downside exposure. What they did know was if things went south that the taxpayer would be on the hook for the bailout. Privatize the profits and socialize the losses has always worked as their business model. We cannot expect any real justice for these white collar terrorist as the politcal system works for them not us.

Posted by TimEC | Report as abusive
 

White collar crime is not easy to punish under current American pradigm – but if evidence is overwhelming Justice will eventually prevail.

However it seems Congress is more inclined not to punish white collar crime on WS.

Posted by hariknaidu | Report as abusive
 

The intricacies of financial activities make it difficult to prosecute by ordinary law enforcement agents unless they are trained in commercial crimes. I doubt if they are well versed with swap, HIBOR, option or hedge trades which may take place outside U.S.

No wonder Madoff was only netted after about 20 years of unnoticed fraud, if not his son put him on the spotlight by self-incrimination. We didn’t see any proactive effort from regulatory bodies to uncover this. Are they not incompetent ? God knows.

Posted by Jocomus | Report as abusive
 

So, a thousand felony convictions follow the S&L scandal of the 80′s, but today, convictions are too difficult to win? Bullocks. Observing that the last time a financial crisis was properly investigated, five members of the US senate were reomoved from office (but for some reason escaped jail time), I’ll have to conclude that the reason we aren’t aggressively investigating today is because (a) the trail leads to Washington DC and (b) our politicians see themselves as rulers that need not be punished for their transgressions; only the common people are subject to and punishable by law. Not only are they not subject to the rule of law, they are not responsible for their actions, e.g. Barney Frank, Chris Dodd. Now, where are the tar and feathers?

Posted by Soothsayer | Report as abusive
 

TimEC, you mean Michael Lewis and how did it show that any banker thought the taxpayer would bail them out.

“socialize the losses” – try explaining that to the shareholders in LEH and BSC, a significant portion of whom were senior management.

Posted by Danny_Black | Report as abusive
 

Come on, Salmon, be your age. No one is going to go after the culprits and everyone knows who they are. The closest we get in this country anymore is the occasional Parade of Arrogant Pricks in front of the US Senate. And that has gotten to be not much fun anymore. You have to wonder though if we shouldn’t be enjoying this unbridled hubris while it lasts; eventually our economy while be dominated from abroad ..

Posted by Woltmann | Report as abusive
 

From the perspective of this old trench rat, it’s not surprising. Number one rule (of an infinite series of number one rules) of military planning: Amateurs talk Strategy, Professionals talk Logistics.

Do the various agencies responsible have sufficient trained staff to conduct these operations? Investigators, Prosecutors, Activity Coordinators, Systems Administrators for the technology, Secretaries, et al.

The leaders for these guys are doing well. Past well, Excellent. They started with demoralized understaffed organizations. They are now off the training ground and on the beachhead. They are starting small, and just by the way doing well, smacking around small fry like the bottom feeders in insider trading. Their clock is not your clock; their clock is the statute of limitations (and the political calendar).

I think an Obama Justice Department would be just pleased as heck to roll out a large number of prosecutions/convictions of major bank management starting in say, January 2012.

Posted by ARJTurgot2 | Report as abusive
 

Point the second:

The baddies here enjoy:

No double jeopardy (Prosecutor gets one shot)
Presumption of innocence (prove me a baddie)
For criminal: Beyond a reasonable doubt (standard: smoking guns)
For civil: Preponderance of evidence (standard: lots of hinky emails)

Moral: Make the case, Make it well, Make it civil. Civils are Fines and Sanctions. Deals are Fines and Sanctions. Civils cost more.

You want blood, play rugby.

Posted by ARJTurgot2 | Report as abusive
 

Woltman, you are so right!
It’s not just this country, it’s the big money men everywhere. The really big dogs really ARE above the law.
It probably has something to do with the fact that they did not get the top of a financial pinnacle by themselves.

Posted by 2pesos | Report as abusive
 

Danny Black: I suspect you are a paid shill, but just to correct the record I will point out that executives at Bear and Lehman were paid huge cash bonuses and cashed out large amounts of stock options. Dick Fuld for instance got $5m cash just in 2007, owned about ten houses, and sold almost $500m worth of stock. Professor Lucian Bebchuk has made a study of this issue which is informative reading and counters your made-up facts.

http://papers.ssrn.com/sol3/papers.cfm?a bstract_id=1513522

You don’t get to the top of a billion dollar company by being anybody’s fool, and the “Oh gee, poor me, I didn’t see it coming, I’m broke now” bit is an act for the benefit of Congress and the cameras. Almost every high-level executive with millions in annual comp is heavily diversified into real estate, art, Swiss bank accounts, and other assets that are not so related to the performance of the company he manages, harder to tax, and easier to hide from the media.

Posted by najdorf | Report as abusive
 

WOW – I’m so relieved to hear that it’s all someone else’s fault. In 2006, I bought a home that was larger than I ever dreamed, after putting no money down. Just six months later I leveraged it further with a HELOC, and was able to afford things I could never have dreamed of – all on an income that wasnt neccessarily stable. At the same time I demanded that my 401k provider give me mutual funds that yielded 20%+ (I never knew that was above the historcial average – nor did I have any idea what they invested in – and as long as the returns were better than my buddies, I didnt care). I bought stock on margin (hey – my neighbor was doing it) with no real experience in investing, and demanded the cheapest brokerage firm through which to do it. I financed other parts of my life with credit cards and bought a new car every year.

Those crooks ruined my life – they caused this beutiful amazing system to crash on top of me – my sales broker, my mortgage broker, my bank, my stock broker – all of them took advantage of me. PROSECUTE THEM ALL!!!

Posted by PortlandMP | Report as abusive
 

I think the government quite well understands that you don’t prosecute your business partners. The charter of the various regulatory agencies is to promote the objectives of banks and other owners of the apparatus of government first and foremost. If people are hurt as a result of fraud or other malfeasance, then the government’s role today is to protect those individuals and institutions who are committing the fraud, provided those individuals and institutions have contributed sufficient funds to sundry members of Congress.

It really is that simple. This is how corruption works. Get used to it.

Posted by JackMack | Report as abusive
 

Whatever the reason – it is a form of a government that no longer works.

In times like this – there are 2 solutions.

Long term – vote for changes
short term – vigilante justice.

No jury will convict you for taking back what was stolen from you. You just need a good posse to manage the physical security from the institution and the personal residents of those you are going after.

Posted by Butch_from_PA | Report as abusive
 

Portland you are talking about some sleazeball and yes there are many of those as well. Everyone does want to take advantage of others, of systems and are selfish.

Those guys certainly are part and parcel of a free for all, unregulated financial mess. BUT if there is fraud, let it be charged as such, outlaw the practices, close the loopholes, make regulation that has teeth to stop it and above all, get the regulators in place to enforce.

Take the Madoff case; while you can feel less pity for the victims, the perpetrator of fraud still must be prosecuted.

Posted by hsvkitty | Report as abusive
 

Has everyone forgot the fact that the government encouraged the housing boom through the Community Reinvestment Act, the FHA, Freddie and Fannie (purchased securitized mortgates) and perhaps the fact that these safe banks were regulated?

Perhaps the government won’t regulate because the government played a part…

surely all parties were to blame (banks, lenders, poor regulation, etc) but why would someone (holder) investigate what will lead to government involvement.

haha, hsvkitty just posted that hte markets are unregulated. What a joke! Regulated poorly maybe…

Posted by BHOlied | Report as abusive
 

@portland,

thanks for the laugh! well said!

Posted by BHOlied | Report as abusive
 

I invest in Chinese stocks not only because it’s growing economy. They actually executed financial crooks. This is perhaps the mother of all deterrent.

Posted by bkhjon | Report as abusive
 

Isn’t it obvious?

If you bring the crooks to trial they will finger their accomplices in congress and the White House!

Oh Goodness, we can’t have that, now can we?

Posted by Paracelcus | Report as abusive
 

bkhjon, I must have missed the mass execution of all the communist party members and their family members along with every single government official and every single senior manager of a state owned company.

Posted by Danny_Black | Report as abusive
 

najdorf, from the abstract:

“Overall, we estimate that the top executive teams of Bear Stearns … derived cash flows of about $1.4 billion… from cash bonuses and equity sales during 2000-2008″ – Jimmy Cayne lost a 900mn in stock alone due to the BSC crash so the claim that BSC senior management somehow cashed out more than they lost is clearly and obviously false. Even with just Jimmy Cayne, he lost 900mn in stock, got paid 90million cash in 2000-2008. Including sales of equity he got 289mn. Would love to know in what world 380mn is greater than 900mn. In fact, they don’t claim that they simply compare what his shares were worth in ***2000*** – when both LEH and BSC were being punished for sitting out the dot.com bubble. I would call this “research” borderline dishonst. Would be like me saying that we should ignore 2007-2010 and just look at up til then.

Finally, yes Jimmy Cayne knew sweet FA about fixed income. Firstly he was a salesguy not a trader, secondly he was equities and thirdly he was a sales guy to High Net Worth individuals.

Posted by Danny_Black | Report as abusive
 

PortlandMP, you should have lied on your loan application then you could have had a bigger party and been a bigger “victim” now.

Posted by Danny_Black | Report as abusive
 

BHOlied, to be fair to hsvkitty she was suggesting those regulations be enforced.

Posted by Danny_Black | Report as abusive
 

Love the cynicism JackMack. I only discovered the work of Janet Tavakoli last week – and am not sure whether Danny_Black’s demolition job on aspects of her latest presentation stands up to scrutiny. However what I am sure of is the reason there have been so few trials and prosecutions so far is that
1) Governments don’t want to admit that regulators such as Fed, SEC, FSA etc turend a blind eye to malfeasance, corruption, money laundering and fraud on a massive scale in 2000-08
2) Governments don’t want to admit they are complicit in that they too turned a blind eye to malfeasance, corruption, money laundering and fraud in the financial sector 2000-08 (instead they sought to divert attention from it by going after smaller players)
3)Governments are reluctant to shed much light on the complicity of other important entities such as ‘big four’ accountancy firm in turning a blind eye to (and indeed actively encouraging) malfeasance, corruption, money laundering and fraud in the financial sector 2000-08
4) Government fears that to prosecute those responsible for these crimes might be harmful to “financial stability”

So, as Charles Ferguson seems to have pointed out, there has been an “Inside Job” here, and it is really up to dedicated journalists, whistlblowing sites such as Wikileaks and others such a William K Black and Janet Tavakoli to overturn this nauseating and corrosive culture of denial and complacency. I have written more on these themes here:-

http://www.qfinance.com/blogs/ian-fraser  /2010/12/06/fsas-attempt-to-rewrite-his tory-over-rbs-lacks-credibility-bank-reg ulation
http://www.qfinance.com/blogs/ian-fraser  /2010/12/06/if-the-fsa-wanted-a-whitewa sh-pwc-was-well-placed-to-deliver-it

Unexpurgated versions from my own website
http://www.ianfraser.org/the-accountancy -profession-is-in-urgent-need-of-an-over haul/
http://www.ianfraser.org/the-fsa-wanted- someone-to-whitewash-rbs-and-sure-enough -pwc-obliged/

Posted by IanFraser | Report as abusive
 

Sorry about all the typos above. My broad point is that politicians including Bill Clinton, George W Bush, Tony Blair, Gordon Brown put their faith in an Ayn Randian, laissez-faire, “light touch” approach to financial regulation, as promulgated by the likes of Alan Greenspan, and following bullying from bankers. In the short term this worked a treat — it enabled the financial services sector to produce an illusion of prosperity, complete with soaring house prices etc. Now the s**t has hit the fan, governments face a dilemma particularly with respect to the banks and other financial institutions they have bailed out. Even by seeking to prosecute their former bosses (some of whom appear to have been responsible for malfeasance and fraudulence on a vast scale) they risk destablizing the surviving institutions, perhaps necessitating further bailouts. In the end of the day their denial and apparent desire for further cover ups only prolongs the agony.

Posted by IanFraser | Report as abusive
 

IanFraser, firstly was hardly a demolition job on Ms Tavakoli, rather that she seemed to me to over egg the cake which I think unfortunately is par for the course if you want people to take notice of your work these days. She did seem to be rather light on Frannie where most if not virtually all of the public sector losses have been realised and cash has gone.

It also seems a bit weird that you seem have gone for RBS – as did the politicians when they were trying to drum up some votes – when you yourself covered a massive apparent fraud in the commercial banking arm of HBOS. As far as I can tell THAT actual fraud has got zero traction. Maybe going after commercial bankers just isn’t as sexy as trashing Goldmans.

PS Ms Tavakoli’s “Structured Finance and Collateralised Debt Obligations” is a superb, relatively non-technical intro to the field. Personally, I think any journo wading into this field should read it first.

Posted by Danny_Black | Report as abusive
 

Moderator – if possible please can you delete comment above, which was submitted in error before completion. Here’s the correct version:-

I am sorry about the use of OTT language in my first comment above, Danny_Black (however note I did say “aspects of her latest presentation”).

Re: HBOS vs. RBS – the main sin of the RBS board was that they were naive and misguided; however there were clearly corporate governance failures on a massive scale as well, as well as possible fraud.

These include overpaying for circa 27 deals; a blindness to risk; massively over-gearing the balance sheet; pursuing the €71bn takeover of ABN AMRO even after the credit crisis had erupted; deceiving shareholders with a negligent or fraudulent rights issue prospectus in April 2008, etc.

For the FSA to attempt to airbrush these facts from recent financial history (perhaps out of desperation to cover up its own past failures with regard to RBS) is farcical and deeply damaging to Britain.

I agree with you about HBOS. The behaviour there was far more egregious. In fact I would venture to say that it is increasingly clear that the bank was riddled with corruption and fraud from top to bottom.

And to me at least it is extraordinary that the man who led it to its doom – Andy Hornby – is now running a major pharmacy chain.

Examples of things I have identified include encouraging people to defraud it when applying for home loans, encouraging retail customers to take out equity release loans on condition they invested the funds in the Vavasseur ‘Ponzi’ scheme, and the HBOS Reading scandal which you can read about here:- http://www.ianfraser.org/re-examining-hb os/ I suspect the latter will gain traction in early 2011.

The fact the bank, even since the Jan 2009 acquisition by Lloyds, has continued to persecute the victims of its own frauds makes it a morally bankrupt institution.

If the FSA were to attempt to whitewash HBOS as it has sought to do with RBS (and by the way the FSA’s “review” of HBOS has been outsourced to one of the more devious members of the ‘Big 4′, Ernst & Young, the very firm that believed Lehman Brother’s use if Repo 105 was an acceptable accounting practice)then the UK regulator will risk becoming an absolute laughing stock.

For an overview, here’s just a few of the things HBOS got up to in its seven-year life, read this http://www.ianfraser.org/a-brief-history -of-halifax-bank-of-scotland/

Danny, I am now going to study Janet’s work in greater detail. I’ll start with “Structured Finance and Collateralised Debt Obligations” as you suggest.

Posted by IanFraser | Report as abusive
 

Ah, make sure you get the latest edition:

http://www.amazon.co.uk/Structured-Finan ce-Collateralized-Debt-Obligations/dp/04 70288949/ref=sr_1_1?ie=UTF8&qid=12921573 02&sr=8-1

As for RBS, Natwest was generally considered a successful deal. I have not heard otherwise – also not really bothered following. ABN was I think was where RBS really lost the plot, that said in Oct 2007 most people were expecting a major turndown in the property market but I think anyone who says they foresaw what happened in Sept/Oct 2008 then is almost certainly a liar. By the way, the feasting on toxic crap for a while was how ABN made money and made a killing for their shareholders, which goes to show sometimes timing is everything.

Posted by Danny_Black | Report as abusive
 

Saving and loans had regulators that made detailed investigations and repercussions public and on record. people knew what happened and what the repercussion were.

What do the people know about white collar criminals involved the great recession? White collar looting with impunity is the message and taxpayers are the fall-guys.

Every promise of shaming the banks, investigations and prosections from Obama down have been a sham. No, more then a sham… criminal negligence.

Posted by hsvkitty | Report as abusive
 

Impunity. Just like a banana republic.

Posted by lambertstrether | Report as abusive
 

For perspective, remember the man who got 8 years for stealing cheese and the man who got 26 years for stealing golf clubs.

Taibbi reminds us why it’s all a sham…

“In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would “demean the seriousness” of the offenses.”

Awww, there’s law enforcement at it’s finest…

And here is Taibbi’s take:
http://www.rollingstone.com/politics/new s/why-isnt-wall-street-in-jail-20110216? page=6

Posted by hsvkitty | Report as abusive
 
 

This theory may have far too much merit. What a tangled web greed weaves…

http://www.cjr.org/the_audit/the_sec_tan gled_up_in_madoff.php

http://www.cjr.org/the_audit/one_for_the _whistleblowers.php

Posted by hsvkitty | Report as abusive
 
 

From insider trading to CDOs … The 2011 enforrcement priority for the SEC. Why do I not believe him when he says

“If there’s crime there, we’re going to find it and we’re going to pursue it,” Garcia said at an American Bar Association meeting in San Diego. Investigators won’t be deterred by the complexity of the financial instruments …

http://www.bloomberg.com/news/2011-03-03  /cdo-cds-fraud-probes-to-be-2011-priori ty-new-york-u-s-prosecutor-says.html

Posted by hsvkitty | Report as abusive
 

And although the fines alone should be able to pay for the cost of investigations (and if they do not, WHY NOT?) here is the latest news to ensure financial fraud is not prosecuted.

http://blogs.reuters.com/financial-regul atory-forum/2011/03/11/u-s-budget-cut-se en-threatening-state-local-financial-cri me-fighting/

Posted by hsvkitty | Report as abusive
 

bkhjon, how are those chinese stocks working out for you? Would love to know who you are blaming now.

Posted by Danny_Black | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •