If Citi thought there was potential for the SEC to go after every single CDO, they would fight it tooth and nail, because — to be honest — they most likely have a decent chance of winning based on the law in many cases. Disclosure cases aren’t easy cases. The SEC simply cannot afford to fight each and every case. So they agree to settle. It’s in the best interest of the SEC and the subject company. If that’s what you call collusion, then, yeah, it’s collusion.

It seems to me that at the moment the wrongdoers remain in their jobs, paid enormous sums of money whether the bank they ‘work for’ makes a profit or not out of their actions. There just isn’t enough culpability. In fact, there is in some cases no culpability at all.

Not prosecuting banks who have done wrong solely because they might go bust is crazy. Individuals don’t get such cute get out of jail free cards.

That might mean investors only get 50% or perhaps as little as 10% on the dollar, and that is a big haircut, but that would be better than nothing. The banks would be in the same position financially, but with all the loose ends tied up, and so could afford to make a settlement covering all of the issues, even admitting guilt (not that they would of course; they’re far too selfish). Investors would get two things back: cash, and a lesson learned.

Also keep in mind Khuzami comes out of the US Attorneys’ Office. Criminal fraud cases are regularly settled on single count informations. This makes great sense from a resources perspective, even if “morally” unsatisfying.

A regime that loses legitimacy has to resort to repression and force to protect its claim on power.

Thank you for pointing out the interests of the other defrauded parties in this. Parties which the SEC was created to protect after 1929. A free market requires truth in accounting and enforcement of the rule of law.

In any given case, the defendant can probably outspend the SEC 10:1 while mounting their defense. So is it really and surprise that the SEC settles for whatever it can get?

What is really needed in this case is some good class-action lawyers to take on the banks, not underpaid, resource-starved government prosecutors.

The article is almost a template for the usually crappy reporting scumbag “churnalists” have perfected since 2007.

Firstly, use your hindsight to criticise investment decisions. I mean if a asset when down in price then OBVIOUSLY it was always going to go down and OBVIOUSLY only banks could know this “fact” despite the fact they didn’t have access to any more information on the underlying than the buyers.

Secondly, don’t quote anyone competent. If you get some low-level monkey to say something incriminating then make sure it is “people say”, whilst quoting at length someone who has a vested interest in “backing up” your article.

Thirdly, show a fundamental misunderstanding of how the products you are “exposing” actually work. These were CDO squared deals whose remit was explicitly to invest in other CDO tranches.

Finally when all else fails, feel free to resort to lying. Citi couldn’t sell highly rated **vintage** CDO tranches in early 2007? Don’t believe it for a minute. Citi sold those tranches in early 2007 **knowing** they were going to head south? One quick glance at the hits those traders took on their bets, that were made at EXACTLY THE SAME TIME – quickly disposes of that assertion.

Again this shows just how much the field of “journalism” has declined to the state where mentally retarded, lying scum who don’t bother doing the slightest bit of fact checking like Eisinger are not laughed out of a job but rather taken seriously.

“Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that … helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis….While “deferred prosecution agreements” were used before the financial crisis, the Justice Department made them an official alternative in 2008 …
Defending the department’s approach, Alisa Finelli, a spokeswoman, said deferred prosecution agreements require that corporations pay penalties and restitution, correct criminal conduct and “achieve these results without causing the loss of jobs, the loss of pensions and other significant negative consequences to innocent parties who played no role in the criminal conduct, were unaware of it or were unable to prevent it.””

You know — we should all be robbing banks, cause for a while we’ll make a lot of money, and then when we’re caught, well, prosecuting me would cause significant negative consequences to my wife and kids, who are innocent and rely on my to support them; so it’s much better to let me pay back the robbery you caught me for with some penalties and set me free, right? Oh … you mean the law is different for the 99%?

It’s not like the banks aren’t used to packaging rubbish investments together…