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Wall Street crooks crushed the economy, so "Why isn't anyone in jail?" Matt Taibbi asks....

Wall Street crooks crushed the economy, so "Why isn't anyone in jail?" Matt Taibbi asks. Financial crimes are the worst kind, he says, "crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let’s steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy.”
Comments (66)
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    There need to be better laws.

     

    The reality is that much of what went on, while obviously "wrong" in principle, is arguably "legal" per the letter of the law.

     

    And even if it wasn't, the government lawyers will be outnumbered by the bank lawyers at least 10 to 1 in numbers and 100 to 1 in pay. And with the debt as big as it is, it's tough to argue for more funding to put up a decent fight, even for something as "right" as tossing multi billion dollar crooks in jail.

     

    The middle east is increasingly revolting against their governmental dictators -- perhaps soon western nations will revolt against their financial dictators? One can only hope.
    16 Feb 2011, 06:24 PM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    The lawyer cost is nonsense, once the government goes after you, your life is over. These people need to be punished. Heads of citibank, Aig, Merrill should be put away , they are a threat to society.
    16 Feb 2011, 07:55 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    I suspect that many of these white collar thugs could be indicted under the RICO statutes but the Justice Department is loathe to kick to hornet's nest. The banksters have tremendous clout and they own the Fed. They are TBTP: Too Big To Prosecute.
    16 Feb 2011, 06:29 PM Reply Like
  • Gary A
    , contributor
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    I have called for Rico prosecutions a long time ago. Jailtime is a must. But remember, just outlawing securitization for mortgages would go a long way in stopping their behavior in it's tracks.
    16 Feb 2011, 09:41 PM Reply Like
  • wyostocks
    , contributor
    Comments (8028) | Send Message
     
    Simple answer. The bankers own Washington......Pure and simple..............It is only when the theft is so egregious like a Madoff that Washington acts.
    16 Feb 2011, 06:29 PM Reply Like
  • Gary A
    , contributor
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    It blows my mind that 12 people could vote against your comments. Of course the banks own Washington. It is not communism when the profits are privatized.
    16 Feb 2011, 09:42 PM Reply Like
  • alphaman991
    , contributor
    Comments (94) | Send Message
     
    I truly believe that Mr. Dimon and the other bank CEOs had the interest of the American public at heart by extending mortgage loans to all so that all could own their own homes.
    16 Feb 2011, 06:35 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Did they have the interest of the American public at heart by buying those mortgage loans from the original lenders, thereby removing all incentive to make good loans?

     

    Did they have the interest of the American public at heart when they bundled those mortgages up and leveraged them to the hilt?

     

    Did they have the interest of the American public at heart when they sold those fragile securities to investors and claimed they were safe?

     

    No, no, and no.

     

    They knew exactly what they were doing -- they just hoped to get out at the top.
    16 Feb 2011, 06:42 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    Why would you expect a CEO of a corporation that is privately held and has offices all over the world, to "act in the best interest of the American public" ? When did that become the job description of a CEO?

     

    The mentality you suggest here, and that many other posters have, seem to be to blame the CEOs. Your blame is misplaced. The blame should be on the regulators. The *job* of the CEO is to act in his own corporation's best interest. Its similar to a fan becoming upset with a football player who is marginal accepting a big contract from a team. Sure, its easy to get mad at the player - but his job was to take the biggest contract possible - get mad at the team who gave it to him. You should be ranting about the regulators acting in the best interest of the American public - because that is their job - and not the CEOs. Now, yes, you can argue that it wasn't in the best interest of the corporation, and that fine, but the bottom line is that no CEO has a duty to the "American public" - the regulators do. This expectation that private banks should be altruistic is insane. You should be angry at the government for allowing it to happen, not at the bankers for being self-interested.
    16 Feb 2011, 06:46 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    When they have access to the American coffers at reduced interest rates, then yes, they have a responsibility to act in the best interest of, or at least NOT to the detriment of, the American public.

     

    And since when is JPM a privately held company????

     

    At a minimum, defrauding shareholders is a crime.
    16 Feb 2011, 06:53 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    By "privately held" I meant "not government held". I didn't mean privately traded.

     

    Please explain how they have access to "American coffers". Could you elaborate? Do you think that the Fed discount window is funded through the US treasury? Read "Secrets of the Temple". Its a great book about how the Fed discount window actually works. It is a common myth that the discount window is funded from the equity of the US government.

     

    You did not mention defrauding shareholders once in your earlier post to which my comment responded. In what way were shareholders defrauded? And what does that have to do with CEOs acting for the benefit of the "American Public" ? Of course companies should be honest with their shareholders - that isn't at issue here.
    16 Feb 2011, 06:58 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > In what way were shareholders defrauded?

     

    Easy, from the article if you like, though there are many examples:
    "Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose."
    16 Feb 2011, 07:05 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    Right, yes, but that wasn't what we were talking about. You said "They have a duty to the American public". I said "Why?". You said "But they defrauded shareholders!"

     

    I return to the original question that started this. I'm not saying they committed no crimes. I'm saying your idea that they owe a duty to the American public is silly. They may or may not have misled shareholders. Read back through our exchange. Thats not the point.
    16 Feb 2011, 07:10 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > your idea that they owe a duty to the American public is silly

     

    I will look for your book this weekend to dispel all "myths", but through whatever means, these banks are clearly extended cheap credit by the nation, and their actions in using that credit resulted in severe hardships for the nation.

     

    If not by the letter of the law, that is certainly wrong by the spirit of any law with any sanity.

     

    If they're going to be screw-ups, they need to be cut off.
    16 Feb 2011, 07:38 PM Reply Like
  • davidbdc
    , contributor
    Comments (3158) | Send Message
     
    Your correct that a CEO doesn't have a stated goal of acting in the best interest of the USA.

     

    And thats one of our problems.

     

    German companies are run by aggressive men and women. They are also German to their core. They will outsource..... when there is zero profits left in Germany. But not when its "well if we outsource we could make 27% GP instead of 23% GP". They would never do it. They would keep on making 23% GP and look to how else they could earn additional money.

     

    To say that we should only be angry at the government (which we should be) but not the bankers is misplaced. We should also be angry with them. Why? Because they were crooks. They lied. They cheated. They cost millions of people their careers. Men on the second shift at Deere, women with their own small business, the list is long. People who worked hard, played by the rules, contribute to their communities were slammed against the wall not due to their own failings..... but due to the unbridled greed of crooks. And I say, yes blame those who should have caught the crooks - but they are still crooks and still deserving of punishment and disgrace.

     

    And finally, we don't have private banks - they get their raw material from the government - so yes, there should be some social benefit to the resulting products that get produced. If they want to be private - great - borrow money from investors and pay the going rate.

     

    I'm all for people doing as well as they can - make as much as they can....... but not by stealing and destroying! This country has been sold out and taken over by the triumvirate of the bureaucrats, politicians and the financial elite. They are all our enemy.
    16 Feb 2011, 07:46 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    I agree with everything you wrote but you, like the article, speak in huge generalities - they must have stolen or lied, look at all the destruction they caused!

     

    Thats my problem with all this. You assume there were crimes because the result was so horrible. I'm not saying there were no crimes. Of course I'm not saying those who committ crimes should not be punished. Thats ridiculous. What I am criticizing is the article's premise that because there was a financial collapse someone should go to jail - without more to back it up.

     

    If the article had said "Joe Greene caused the financial crisis by violating USC X section X, and this is the evidence, and they didn't prosecute" I'd also be screaming mad. But it didn't. It said "Look at this horrible result, look at all these suffering people... quick, put someone in jail!" That isn't right, and it isn't American. Show me the crime, and the evidence, and I'll throw away the key myself. However, this article, and all the comments, are huge generalizations about "Wall Street" and "the financial system" - my point is that this way of thinking - a bad result means someone goes to jail - is the heart of tyranny, and it should not be taken seriously.

     

    The burden of proof is on the accuser - in this case, the author of this article. And the only proof offered in the article for a crime is "Look how many people got hurt". My argument is that when we start accepting that as proof of a crime, we open the door to a parade of horribles.
    16 Feb 2011, 07:54 PM Reply Like
  • bryantjulian
    , contributor
    Comments (104) | Send Message
     
    You are right. Most of those at the helm in the time before the crisis are guilty of one thing- being too optimistic. If my years on earth have taught me anything, it is that if things go well enough for a while, most people just lose all sense of proportion, no matter how good their intentions.

     

    Calls for blood at best muddy the waters, and at worst drown out the more serious discussion, which is, how to make the system sturdy enough to produce positive outcomes on a regular basis.
    16 Feb 2011, 08:45 PM Reply Like
  • radicall
    , contributor
    Comments (534) | Send Message
     
    I agree with bmcpic. I don't think the guys who did this were criminals - they were short sighted, greedy and stupid.

     

    What did Lehman employees gain by their company going bankrupt? nothing! I think these guys were just as stupid as the guys who bought the homes they could not afford. I know a lot of people who bought houses they couldn't afford, using interest only loans - they just thought someone else would buy the house for more. It would keep going up because it has kept going up.

     

    Everyone blames the banks - when everyone from the bottom to the top was at fault. The homeowner who bought a home they couldn't afford, the mortgage broker who told them to put in a "stated income" higher than their real income, the appraiser for appraising it for more than it was really worth, the bank that believed that a farm worker really makes 20,000 a month, and those brilliant quants with PHDs who couldn't figure out that the trend was unsustainable. Even Bush - the most powerful man in the world at the time, with all the resources at his disposal said in 2006 that we were going to have a "Soft Landing".

     

    Was any of that illegal - No! Was it stupid - yes. Does market reward stupid - quite often - at least in the short term. Look at Netflix or Molycorp stock or any stock with a pie in the sky story and crazy valuations.
    16 Feb 2011, 09:28 PM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    Lol, Alphaman. I needed a laugh today and you gave it to me. It was God's work too, lol.
    16 Feb 2011, 09:43 PM Reply Like
  • bob adamson
    , contributor
    Comments (4558) | Send Message
     
    D_Virginia and bmcpic –

     

    D_Virginia makes a key point early on in your exchange of comments by observing that the real mischief began when the financial industry began systematically collateralizing and securitizing loan portfolios without due diligence as to the quality of the underlying loans on the assumption that they could sell these securities to others before significant defaulting occurred. This was sharp practice the cumulative effect of which was the 2008 meltdown and all that ensued.

     

    bmcpic, you are correct to observe that the regulatory officials were derelict in their duties to monitor compliance with the laws they were charged to enforce. That said, this doesn’t absolve the officers of financial institutions of responsibility to comply with both the letter and spirit of the laws that apply to their industry. It is not sufficient for corporations to do anything they believe they will get away with. This only encourages the creation of more onerous regulations and more invasive regulatory monitoring, all of which is costly in time, money and effort for all concerned.

     

    Even if regulators are well resourced and act diligently, they will catch only a fraction of actual violations. There must be a culture of basic compliance with the law or we all pay the price as described above.
    16 Feb 2011, 10:15 PM Reply Like
  • thopaine
    , contributor
    Comments (474) | Send Message
     
    They were crimes and they were/ are criminals.
    14 Apr 2011, 10:16 PM Reply Like
  • pdtor
    , contributor
    Comments (1491) | Send Message
     
    CANNOT BELIEVE YOU GOT 14 ++++++
    15 Apr 2011, 08:42 AM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    I found out yesterday that Erin Burnett is a member of the CFR. These minions of the central banksters are very sophisticated even when they look like bozos on TV.
    30 Apr 2011, 11:42 AM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    I read the article. I'm not convinced.

     

    If there was financial fraud, then yes, people should go to jail. There is no doubt about that. However, the article cites four specifics crimes: three of which for overstatement of company earnings, and one for failure to disclose the actual compensation of an executive at Lehman Brothers. The article then leaps to the fact that the economy was destroyed, and that "millions" were forced into foreclosure. I fail to see the link between the crimes mentioned at the start of the article and the effects (foreclosure, etc...) mentioned at the end of the article. The article is very long on populist, mob-inciting rhetoric, and very short on actual statutes that were violated to cause the meltdown. Basically, the author says "there were some crimes committed, and the economy melted down" and calls for punishment.

     

    Further, the author forgets that there *were* several attempts to arrest and jail individuals in connection with the financial crisis. The CEO of AIG recieved a target letter and was investigated by a grand jury, who found no evidence of crime, just horrid mismanagement, and declined to charge that CEO. In two separate trials, two mortgage CDO "pumpers" were tried for fraud and host of author charges. Both juries acquitted both defendants 12-0, and said in post-trial comments that while they thought that the actions were unethical, they "didn't come close" to violating the criminal laws with which the defendants were charged.

     

    There is no "res ipsa loquitor" in criminal law, and that is a very good thing. That is a legal principle that states that you can infer certain conduct from the result - i.e. if you are walking down the street, and a piano hits you in the head (the classic law school case), you can assume that because you were hit by a falling piano, the person who owns the property the piano came from was negligent - that is, by definition, letting a piano fall out your window is tortious. That doesn't exist in criminal law - and it is dangerous to start thinking "OK, something bad happened, so somebody has to go to jail".

     

    The reason I post this is because it is a very slippery slope to start punishing people for doing a bad job. There have been plenty of companies that have collapsed due to incompetent management - should they all go to jail? After all, they cost employees paychecks, and probably led to those employees getting foreclosed on. How do you tell the difference between a bad job of work and a crime? Its very difficult, and the idea that because something bad happened people need to be jailed is extremely dangerous.

     

    Had the author cited some actual crimes that led to the crisis, I would agree with him. But he didn't. He basically said "Bad stuff happened to good people, so someone (doesn't say who) should go to jail." That is ridiculous. If you can prove a criminal act, prove it. If not, nobody should go to jail. Even though its inconvenient, that is what makes America great.
    16 Feb 2011, 06:39 PM Reply Like
  • davidbdc
    , contributor
    Comments (3158) | Send Message
     
    What do you say the guy from AIG is if not a crook?

     

    He basically was writing insurance contracts with no assets to back them up. If you or I do that its called a scam and we go to jail for 10-15 years. He walks away with 300 million. Its called fraud.

     

    I believe what the article correctly points out is that the bureaucracy is just as bad (in a different way) as the crooks on Wall Street. They look the other way and will later get cushy jobs that will set them up for life. Those that work for them get cushy government jobs and pensions and health care and life is good. This is the situation across all the federal and much of the state/local public work force. Just keep producing paperwork and regulations - whether or not it actually does anything.... justify your existence and live better than your neighbors who are out there slaving away 80 hours or more a week to better their lives. And the cycle goes on and on and its reached the point where public workers are systemically helping to bankrupt our country - it is a huge transfer of wealth from the private sector to the public sector - mandated by backroom deals between politicians and public unions.

     

    I think the article does a decent job of showing the connection between the politicians, bureaucrats and financial elite - they all benefit and the hell with America!
    16 Feb 2011, 07:54 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    Actually, insurance companies do this all the time - its standard practice. Most insurance companies have way more policies in effect than assets in reserve. The minimum for most State regulators is 12% - that is, you need 12% in assets for each dollar of policy liability you write. It would be impossible for an insurance corporation to make money if they were required to hold a 1-for-1 correlation between assets and potential claims.

     

    The AIG insurance policies were well within regulatory limits - the problem was, nobody expected them to all go bad at once. Lets look at a company I am very familiar with, Louisiana Citizens Property Insurance Corporation. The company used to write policies in Louisiana to protect from hurricanes, and all over the Gulf South, until it became a ward of the State. In 2004, Ivan destroyed the Alabama coast. In 2005, the double impact of Katrina and Rita within 60 days of each other caused multiple billions in damages in Louisiana. There has never been three hurricanes in that close proximity within 12 months before, and in fact the next closest, 1964, was roughly 1/4 the size. As a New Orleanian, you betcha I was pissed off when I got letter saying my insurance company was insolvent and might not be able to honor my claim on my destroyed house. And you know what? If emotion was allowed to take over, I would have jailed all those executives in a heartbeat I was so mad - I paid premiums for 10 years! However, is that how justice should be run?

     

    As a result of the claims, LPIC became insolvent and was taken over by the State. Nobody yelled for the heads of the executives because they wrote policies they couldn't back because insurance is based on probability. Those claims did not go unpaid because the Louisiana, Mississippi and Alabama State governments backed them up and now LPIC is a ward of the State, but had they gone unpaid, millions in the gulf south would have lost everything with no recourse.

     

    Lets look what happened there. We had a horrible result (a huge insurance company went bankrupt while owing trillions in claims to ordinary Americans). This jeopardized millions of people in the South. Should those executives go to jail? Should they have forseen the unprecendented triple hurricanes that hit the South w/n 10 months of each other?

     

    Now, yes, thats an act of nature, not of man, but the *principle* is the same - if the AIG gentleman violated a criminal statute, send him to jail. But we can't start sending people jail because companies fail or because executives miscalculate. Its not how we do things, and it would lead to a horrid place to live. I know someone who was high up at LPIC, and he was no criminal - they've had a 15% reserve policy for 40 years and never got in trouble before.

     

    I'm NOT trying to excuse AIG, and I'm NOT saying no crime was committed. I'm saying the article's premise - that because alot of people were hurt someone needs to go to jail - is dangerous and wrong. It happens all the time, and if we start jailing people for bad business decisions, there'll be noone left willing to run anything.
    16 Feb 2011, 08:07 PM Reply Like
  • davidbdc
    , contributor
    Comments (3158) | Send Message
     
    I believe that if you research you'll find its been proven that the London division of AIG did not have any assets to back up the paper they were writing. The rest of AIG had assets that were within regulatory limits for their insurance businesses in each state.

     

    I see companies going bankrupt all the time and I don't notice any public outcry to jail failed executives. These men aren't failed executives. They are men that committed fraud. Fuld lied about Lehman's leverage. AIG London guy ran a large scam. The countrywide organization committed numerous acts of fraud as a matter of corporate policy - all signed off on by Mozillo and his cronies.

     

    All fraud needs to be prosecuted. I'm for prosecuting the executives that lied. I'm for prosecuting the people that lied about their incomes when applying for mortgages. I'm for prosecuting the mortgage brokers that lied to the elderly to get them to take on debt on their homes. Unless we vigorously prosecute the fraud that happened in this crisis it will happen again. The S&L crisis was vigorously prosecuted and notice that we haven't had any issues with small S&L banks since then!

     

    And I'm not holding my breath for the day when we won't have people willing to lead organizations for 1 million, 5 million, 10 million, 20 million, 100 million and 1 billion dollars a year.

     

    What we will end up with is far too few small businesses and far too few manufacturing firms in the USA to support a middle class. But hey, as long as all is well on Wall Street who cares....
    16 Feb 2011, 11:00 PM Reply Like
  • radicall
    , contributor
    Comments (534) | Send Message
     
    good writeup bmpic! Nobody went to jail for peddling junk dot com stocks in '99/2000 either.

     

    Everyone knew these companies had no earnings and no business model, yet they put buy ratings on them, huge price targets and pushed it out to investors (a lot of whom should have known the same information). Investment banks, analysts and companies themselves were all guilty of knowingly peddling junk that would hurt people. People did get hurt - but nobody went to jail.
    15 Apr 2011, 03:13 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > The reason I post this is because it is a very slippery slope to start
    > punishing people for doing a bad job.

     

    Not really.

     

    Whether caused by self-interest or simple incompetence, when someone does such a bad job that other people suffer, in most scenarios they are charged with criminal negligence.

     

    If you hit a pedestrian with your car because you were typing an email on your smartphone, you go to jail for your negligence. You did a bad job, and someone got hurt because of it.

     

    These guys oversaw and facilitated the largest destruction of wealth in the history of the world -- I think at least a little jail time is warranted.
    16 Feb 2011, 06:49 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    "Whether caused by self-interest or simple incompetence, when someone does such a bad job that other people suffer, in most scenarios they are charged with criminal negligence.

     

    If you hit a pedestrian with your car because you were typing an email on your smartphone, you go to jail for your negligence. You did a bad job, and someone got hurt because of it."

     

    No, you go to jail because you violate a criminal statute. There is a law that criminalizes negligent homicide, so the person who committs it, as in your example, goes to jail. There is no law the criminalizes negligent business practices. Once a society starts jailing on the result, rather than the action, they become a tyranny. This is my point - show me the statute that was violated, and I'll agree with you.

     

    I'm not saying they should or should not go to jail. I'm saying the idea that *because* bad things happened, *someone* needs to go to jail is dangerous and silly. You can't infer crime because of a bad result. You can infer civil liability because of a bad result, but not criminal. Thats my point.
    16 Feb 2011, 07:03 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Once a society starts jailing on the result, rather than the action,
    > they become a tyranny.

     

    And yet, astonishingly, every result is caused by an action.

     

    Also, this is already the case with most crimes. We frequently adjust crimes and penalties based on intent and result, separately.

     

    You did not /intend/ to hit the pedestrian, but the result was that you did hit him, because of the conscious choices you made, and you should have known better. So you go to jail.

     

    Is this tyranny?

     

    Note that if you got caught texting while driving (same intent) and didn't hit anyone (less severe result), the penalty is much less: just a minor fine, maybe some points on your license.

     

    Also, if it is proven to a jury you /intended/ to hit that pedestrian, the penalty is much greater than if it were merely negligence.

     

    Similarly the penalty for first degree (planned, willful) murder is much greater than for attempted murder -- yet the intent behind both crimes was the same.

     

    Different intent = different punishment, independent of result.

     

    Different result = different punishment, independent of intent.

     

    Still tyranny?

     

    I agree that there must be an actual law to violate, so the lack thereof is a problem that should be remedied.

     

    Of course, it is difficult to objectively determine intent: did that CEO /intend/ to run his company into the ground for the sake of his own personal compensation, or was he just a crappy CEO?

     

    There is certainly a lot of circumstantial evidence that much of the actions that led to the crisis were done with full knowledge of (and full intent not to disclose) the likely eventual result. Enough to convict someone?

     

    Maybe not with our current laws.

     

    But if we, as a society, agree that someone should be locked up for negligence because of their operation of a car, I think it is shameful not to think the same of their operation of a publicly traded, systemically critical company.
    16 Feb 2011, 07:32 PM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    There was widespread breach of 1) fiduciary duty to shareholders and 2) fraud in relation to disclosures to debt holders.

     

    As someone who has worked in the industry, there is no question these crimes were committed by virtually the entire financial industry but they were so pervasive the authorities have apparently decided not to pursue it for fear I imagine as to where it might lead...the halls of congress.

     

    Anyone who works on Wall Street knows exactly what these crimes are and knows exactly when they are committing them. Shame on us as a society for not prosecuting.

     

    Just as an aside....during the S&L scandal several decades back...over 1000 people were tried and convicted and many of them served time behind bars. This simply shows that in the time since the financial lobby has gained so much power and influence that they are legally untouchable.
    16 Feb 2011, 06:53 PM Reply Like
  • davidbdc
    , contributor
    Comments (3158) | Send Message
     
    Actually I believe it was 3000. And notice we haven't had any more problems with those that run little S&L banks.
    16 Feb 2011, 07:56 PM Reply Like
  • joe kelly
    , contributor
    Comments (1755) | Send Message
     
    Who would be lefy to finance pacs and political parties?
    16 Feb 2011, 07:02 PM Reply Like
  • Hendershott
    , contributor
    Comments (1558) | Send Message
     
    Jail?....heck they all went to Davos and proclaimed yhat they were actually good people and the public anger is unjustified.....
    16 Feb 2011, 07:03 PM Reply Like
  • BerkeleyBob
    , contributor
    Comments (490) | Send Message
     
    Ken Hasner has it right. There was fraud on a massive scale in real estate/S&L. There were grossly inflated appraisals and greasy characters like Charles Keating and the politicians he bribed (oh, excuse, exercised his 1st amendment right to contribute). But the end game did result in some jail terms, and the RTC did a pretty good job of cleaning up the mess. I doubt the lesson was learned and agree that the regulators and the AG failed and continue to fail. Some of the smelly transactions are being unwound in civil court, but consider that Angelo Mozillo's settlement is a fraction of his annual compensation and may well be paid by insurance.
    16 Feb 2011, 07:22 PM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    The banker knew perfectly well that securitization was a scheme in which they could turn manure into gold. Moreover the credit agencies went along for the fees.
    They were very aware of this alchemy , and exploited it to the limit. They were also stupid enough to keep these securities on their books.
    16 Feb 2011, 08:02 PM Reply Like
  • beaux
    , contributor
    Comments (104) | Send Message
     
    I am equally dismayed that the borrowers who submitted false financial information on mortgage applications remain free of prosecution. This outcome is odd given the written legal warning immediately before the signature line on every mortgage application.
    16 Feb 2011, 08:06 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > borrowers who submitted false financial information on mortgage
    > applications remain free of prosecution

     

    This is absolutely false.

     

    Perhaps few are in jail, but most have at least suffered appropriate financial fallout. They have been evicted, foreclosed on, and forced to declare bankruptcy -- or will be very soon.

     

    The people at the bottom are facing the consequences of their actions.

     

    The people at the top are getting rewarded (quite handsomely) for destructive behavior.
    17 Feb 2011, 07:22 AM Reply Like
  • radicall
    , contributor
    Comments (534) | Send Message
     
    @D_Virginia, I don't think people who speculated on housing have been appropriately punished.

     

    I could have taken a no money down, interest only loan, then took out a line of credit against it as the paper value went up, used it to splurge as I wished and then walked away with no issues other than impact on my credit score - where is the punishment?

     

    The pension funds who bought the loan tranches and the banks (or hedge funds/investors) took the hit for it.They were punished for what was supposed to be AAA paper. Losing a house which you didn't deserve vs losing your retirement savigs... hmmm. Wonder which ones constitutes as biger punishment.
    18 Feb 2011, 07:30 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    radicall,

     

    In all but a handful of states (which get all the press), you don't just get a credit score hit, you get a deficiency judgment too: the bank sues you for what you owe that was not recovered from the foreclosure sale.

     

    So in your example above, you'd still be paying the piper. You'd have your wages garnished, some of your assets seized, etc.

     

    No free lunch here -- unless you work on Wall Street.
    20 Feb 2011, 05:06 PM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    Your position is ridiculous for the simple reason that the ponzi lending scheme and the ability to get those loans, was permitted by the banks on purpose. You don't actually think those banks were victims do you? Allstate doesn't think they are victims: www.zerohedge.com/arti...
    22 Feb 2011, 12:07 PM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    They aren't suing much I don't think. How can you sue someone who had his entire wealth tied up in a house? You can sue but you can't collect a significant amount. Even if you garnish income, it is a drop in a bucket. And a lot of these people are unemployed and moved back home with their parents.
    22 Feb 2011, 12:09 PM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    Banks as victims ? Now THAT's funny !
    22 Feb 2011, 12:11 PM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    It is amazing to me how many people have bought into the propaganda that the banks were the victims of the borrowers.

     

    It is perverse and pathetic. It is funny, except that it is also a tragedy.
    22 Feb 2011, 12:30 PM Reply Like
  • radicall
    , contributor
    Comments (534) | Send Message
     
    It wasn't banks.. it was the clients that were victims.

     

    Take for example GS Global Alpha which lost 70% in 2008 - most of that loss impacted OPM (other people's money) not GS

     

    So banks made loans, sold off the loans to Investment banks who sold to investment funds which had people's retirement money. People who default steal from Grandma and Grandpa.
    24 Feb 2011, 02:49 AM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    Nice that you get negative feedback for speaking the truth. I think bankers are getting to be afraid of America. I think they need to be. I advocate peace, but our government has to start clamping down on the financial system and asserting national sovereignty.
    27 Feb 2011, 02:25 AM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    Whenever a government advocates policies that disproportionately benefit a favored class or segment of the population to the detriment of all others.....it is a recipe for social unrest.
    27 Feb 2011, 08:37 AM Reply Like
  • Gary A
    , contributor
    Comments (3156) | Send Message
     
    Unfortunately that is true Ken.
    27 Feb 2011, 11:45 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2055) | Send Message
     
    Sounds like a "No Win" situation.
    16 Feb 2011, 08:37 PM Reply Like
  • Hoopono
    , contributor
    Comments (246) | Send Message
     
    If we really want better laws and more or better enforcement of those laws, we need to re-structure our government so that can happen. Problem is, none of us really want that.
    16 Feb 2011, 08:56 PM Reply Like
  • mbill
    , contributor
    Comments (16) | Send Message
     
    They created a product almost impossible to value and mislead their clients about the risk. There must be some fraud in there somewhere.
    16 Feb 2011, 10:03 PM Reply Like
  • Jasper M
    , contributor
    Comments (1652) | Send Message
     
    THESE financial crimes were committed by the advantaged elite. Plenty get carried out by those on the other end of things. ACORN-esque taxpayer fund rip-offs come to mind.

     

    Whom we give a pass to depends on the 'heroes' of the times. In the 70's we felt bad for the downtrodden, so we coddled them, and allowed all sorts of nonsense. In the 'go-go' finance era, the best bright billionaires were revered.
    What we are seeing now is not really the continuation of that reverence, but rater its end, as what was "business as usual" (however illegal) is finally noticed with revulsion. History tell us that Serious re-criminalization will not be far behind. SOMEone will go to jail .
    16 Feb 2011, 10:18 PM Reply Like
  • Paine in America
    , contributor
    Comments (20) | Send Message
     
    Government forced banks to make BAD LOANS.
    This was not a free choice of the American people...

     

    These were choices inflicted by Government...
    youtu.be/ivmL-lXNy64

     

    When we, as American investors, retain the choice of a free market; we are able to protect our economy...
    16 Feb 2011, 10:32 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    The government forced /some/ banks to make higher risk loans.

     

    Many banks made positively absurd loans of their own accord, because they knew they could just sell them off and run with their profits before the loans inevitably went bad.

     

    And the government forced no one to securitize and leverage those loans. This turned a linear problem (but a problem nonetheless) into an exponential one.

     

    Also, while government was certainly part of the problem, how can it be the only problem when every other developed nation had a nearly identical housing and financial crisis, yet none were subject to the direction of the U.S. government?
    17 Feb 2011, 07:19 AM Reply Like
  • radicall
    , contributor
    Comments (534) | Send Message
     
    @Paine - that is horse doo doo. Bankers did what they thought would make them most money. Short treasuries/Long AAA rated Junk and lever it up 30 times.

     

    Nobody forced anyone to make stated income, non-conforming or interest only loans. When enought subprime segment wasn't borrowing (translation higher rates) Bankers started making Synthetic CDOs and CDO squared to meet the investment demand.

     

    Government just told bankers not to discriminate between people if their income/credit scores were the same.
    18 Feb 2011, 07:39 PM Reply Like
  • al9000
    , contributor
    Comments (53) | Send Message
     
    It's simple. No one went to jail because no crimes were committed. Taibbi's "crimes of intellectual choice" is utter nonsense.

     

    The mortgage meltdown was the of unintended consequences of actions [and in some cases in-actions] of everyone involved including: Govt. Legislators, Govt. Regulators, Banks [Commercial, Regional, Mortgage & Investment], Insurers [CD Swaps], House Flippers, and everyday people sick and tired of paying rent and embellishing their mortgage applications.

     

    I haven't read Taibbi's article but heard him on radio this morning. All his ranting seems to be just "blaming the rich" - and this NEVER has led to a good resolution.
    16 Feb 2011, 10:44 PM Reply Like
  • Duke LLC
    , contributor
    Comments (14) | Send Message
     
    I will tell you why not one of these people is jailed. They are rich and they donate monies to the people that are looking into their actions. How does the federal government use our monies to bail out the banks and then in return let the banks continue to screw joe public to make more money. THEY DONATE money to the parties that they keep in office. These politicians talk big but at the end of the day they take care of those who take care of them and its not us joe public, its the fat cat bankers.
    16 Feb 2011, 10:50 PM Reply Like
  • mdmrjsds
    , contributor
    Comments (502) | Send Message
     
    One problem is that illegality is at the heart of our financial system. We give legal sanction to the Federal Reserve to counterfeit. And we give legal sanction to the banks to commit fraud, otherwise known as fractional reserve lending. They have thus been given great privilege without a corresponding legal responsibility to balance it. It might be justified to lend fraudulently for productive purposes, but housing is consumption. It produces no wealth.

     

    Another problem is that it is difficult to prove mental crimes, especially where legitimate actions are also criminal. Because that requires being inside people's head. Of course, the really smart criminals will gravitate to the area where crimes can be committed without punishment. Welcome to our financial system.

     

    Given the privilege, the systemic importance, and the lack of balance, I would like to propose a regulatory alternative that I think would be very effective. ;-)

     

    If a financial entity has to be rescued by the taxpayers because it poses a risk to the financial system and the economy, we hold a lottery. The position of CEO and Chairman of the Board are given five tickets each. Everyone else on the board and in the top three layers of executives is given one ticket. We draw at least one, and possibly as many as ten, tickets. We then borrow the guillotine from France, set it up in Times Square, invite little old ladies to knit in front of it, and video tape the lucky winners being decapitated. Thereafter, at every board meeting and every official meeting of the CEO with his subordinates the video is shown before the meeting starts. This will set the proper mood for people who think only of their self interest while entrusted with the public good. For that is what being entrusted to create money is. Do you think all those liar loans would have been made if someone's head was on the line? Do you think financial firms would police each other if they thought the actions of another firm might lead to decapitation for them?

     

    And to make matters fair, this happens on the regulatory side as well. The Chairman of the Fed gets five tickets, as do the chairman of the SEC and the chairmen of the House and Senate regulatory committees and the Secretary of the Treasury. The voting members of the Fed get a ticket, as do the members of the top three levels of regulatory executives and the members of the House and Senate. They face the same lottery and the same consequences. Every session of congress opens with the viewing of the last decapitations of representatives and senators to set the mood.

     

    As it stands now, we are in the position of fulfilling Einstein's definition of insanity, doing the same thing over and over and expecting a different outcome. The same people are running our financial system with the same incentives and privileges in place. Can we expect a different outcome?

     

    :-^, sort of.

     

    PS There are financial systems that don't have illegality at their heart. But they also don't offer as much opportunity for looting and pillaging, so they are unlikely to be put in place without force.
    17 Feb 2011, 11:28 AM Reply Like
  • wyostocks
    , contributor
    Comments (8028) | Send Message
     
    "As it stands now, we are in the position of fulfilling Einstein's definition of insanity, doing the same thing over and over and expecting a different outcome. The same people are running our financial system with the same incentives and privileges in place. Can we expect a different outcome?"

     

    Well said. We can only hope.
    17 Feb 2011, 11:45 AM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    At least give me an email stating what policy I violated before pulling my comment:-)

     

    I thought I made a good crack at the Thumbs down trolls that have been attacking good constructive discussion around here.

     

    I expect much better from SA...
    17 Feb 2011, 11:55 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    I used to expect much better, but lately I am convinced that the trolls rule.
    17 Feb 2011, 12:01 PM Reply Like
  • alphaman991
    , contributor
    Comments (94) | Send Message
     
    Agreed, there are too many trolls on SA as of late.
    17 Feb 2011, 12:11 PM Reply Like
  • thopaine
    , contributor
    Comments (474) | Send Message
     
    I confess ignorance: what is a troll; in this context?
    thanks
    20 Apr 2011, 05:54 PM Reply Like
  • radicall
    , contributor
    Comments (534) | Send Message
     
    basically highly politicized people who are here just to bash anyone with an opinion that is along certain lines. i.e the hard right/hard left people who just want to promote certain political viewpoints.
    20 Apr 2011, 09:48 PM Reply Like
  • thopaine
    , contributor
    Comments (474) | Send Message
     
    Thank you
    21 Apr 2011, 08:25 AM Reply Like
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