Judge grudgingly approves Citi's $285M fraud settlement with the SEC

"That Court has now fixed the menu, leaving this Court with nothing but sour grapes," says Judge Jed Rakoff, not sounding terribly happy after giving a green light to the Citigroup (C -0.5%) settlement in which it will not be forced to admit to wrongdoing in the 2007 sale of certain MBS.

"The settlements reached by the governmental regulatory bodies and enforced by the judiciary's contempt powers will in practice be subject to no meaningful oversight whatsoever."

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Comments (4)
    , contributor
    Comments (5167) | Send Message
    TFB judge. Just do your job and shutup !
    5 Aug 2014, 02:08 PM Reply Like
  • Dudley
    , contributor
    Comments (8) | Send Message
    Europe slept and a vengeful Germany raped the continent within 6 weeks. America slept and the commercial banks robbed 40% of every homeowner's equity. Citigroup was one of the worse offenders.


    Paraphrasing "Horace Rumpole's" reference "She whom must be obeyed," Judge Rakoff pins the tail on the donkey ... "They who must be obeyed have spoken, FN1" Judge Rakoff correctly observers: at FN 5 "The Court of Appeals gave no indication of how a facial review of such a limited record, joined in by both parties, could raise a suspicion of collusion, nor did it offer any other example of where
    a fuller inquiry would be appropriate."


    The Court of Appeals is remiss; its understanding of history; the reasons why the SEC was formed (to protect the public). The appeals court is woefully uninformed or blind to the SEC testimony during Congressional investigation of the economic collapse caused by the commercial and investment banks. SEC officials DENIED oversight responsibility --- its G15's declared the SEC "lacked the funding necessary to investigate;" "it lacked manpower to 'oversee;'" and in the ultimate avoidance of responsibility in regulating securities (investment contracts) of whatever type "it did not regulate the commercial banks."


    At FN 4 Rakoff directs those who can see the Ivory Tower in which the insulated, isolated Court of Appeals dwells; in utter astonishment the Appeals court declares "... the S.E.C. is the entity charged with representing the victims, and is politically liable if it fails to adequately perform its duties." WTF --- gasping for breath ... the SEC's enabling charter declares it to be free of political influence. One must ask this otherwise brilliant panel "To what electorate is the S.E.C. politically liable?"


    Rakoff correctly concludes " ... this Court fears that, as a result of the Court of Appeal's decision, the settlements reached by governmental regulatory bodies and enforced by the judiciary's contempt powers will in practice be subject to no meaningful oversight whatsoever. FN 8 Rakoff laments " .. That Court (Appeals) has now fixed the menu, leaving this Court with nothing but sour grapes." What has the Appeals decision done in reality? It gave commercial banks backhand approval for the wholesale theft of home equity.


    It is debatable whether the country will ever be able to govern itself. The NY Appeals Court has declared the public can rely on bureaucrats for protection. In our system, it is the Courts (particularly non removable Federal Judges) who guard us from the guardians. Here the NY Court of Appeals has stuck its head in the sand and sends us a tune from its collective behind --- " ... the world turned upside down."


    Under Bush I the S&L's collapsed and War was waged. Under Bush II the Commercial Banks collapsed and two Wars are waged by corporations with no cut, cost plus contracts. War has gone on longer than any War this country has ever been engaged.


    One's HOME is the only place where true liberty lives --- "... to every man a home, to every man a castle, to every man a place to be free from intrusion and usurpation of the wolves who circle his larder ... "


    Yes, Judge Rakoff, you are right; there is no entity charged with guarding us from the guardians. History reveals to us what comes next.


    Skepticism is healthy --- Congress passes a law to "find out what is in it ... "
    Reading it now, the public finds that law does not apply to Congress or the bureaucrats who will administer it. Reading it now, the public finds taxes are not to be called taxes. Reading it now we find that at age 76 we are mandated to attend "end of life" seminars and that medical care is for the young and healthy.


    Through the haze of the tears in my eyes do I see --- to paraphrase Churchill " ... the beginning of the beginning of the end?"
    5 Aug 2014, 03:02 PM Reply Like
  • starcorral
    , contributor
    Comments (1743) | Send Message
    Once again here is a justification fo my "bad attitude" toward Citi. Yeah, Yeah, Yeah, I know everybody was raping and pillaging when the economy took the dive in 2008, but the Citi 0f the 1970's is ancient history.


    I tend to be awfully wary of a bank whose deals are closer to escapades and whose philosophy begins with "A sucker is born every minute".
    5 Aug 2014, 03:30 PM Reply Like
  • Dudley
    , contributor
    Comments (8) | Send Message
    You are correct. The FED lowered the FED rate to commercial banks to ZERO. Commercial banks were spawned out of many finance, insurance and other financial services companies capable of putting the paperwork together.


    The attitude has not changed. A direct quote "We will be gone by the time they figure this out." Can you imagine the indignant argument that one's bonus should be greater than $100M? (5 years in a row for some).


    The statute of limitations is tolled during the period of the fraud and that toll continues until their is actual knowledge of the fraud and who committed it. An individual officer or director cannot hide behind the corporate shield where fraud is perpetrated. All the government has to do to bring the miscreants to disgorgement is to authorize actions by "Private Attorney Generals."


    The callous thievery from those who really knew no better is shameful. "We will lower your payment" (and steal your equity) was the ruse. The blame is always put upon the voiceless.


    The collapse of the Republic by those who legislate and who knew the disaster would come (they became richer than Midas) is treasonous. Their identity is known. Start with those Senators and Congressmen who did not stand for re-election.


    Trace the legislative history of the "Commodity Futures Modernization Act" paying particular attention to the representatives who introduced the legislation and how it passed in three days. If you know that can be done then you are familiar with the legislative process. It not only can be done, it was done. That act and the rescission of Glass-Steagall opened the door for trading CDO's; MBS; CDS etc. and can you believe the legislation authorized insuring the uninsurable. In order to insure there must be an insurable interest. There was none yet the legislation not only approved the insurance but boldly declared that insurance was not to be classified or categorized as "insurance." It is still hard to believe that AIG remained clueless as the claims came pouring in.


    Commercial Banks --- break them up --- the individual States do a better job policing banks than Federal regulators. See Simon Johnson's article http://theatln.tc/1v7FvTZ and his testimony before the
    "Joint Economic Committee" - http://bit.ly/1anK8Mk
    5 Aug 2014, 04:07 PM Reply Like
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