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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWall Street Crimes: President Obama is "effectively encouraging future financial fraud"
Obama and Geithner: Government, Enron-Style
December 20, 2011
By Matt Taibbi
Strongly recommend this piece at the Huffington Post by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.
http://www.rollingstone.com/politics/blogs/taibblog
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Obama and the Rule of Law
By Jeff Connaughton
Mr. Connaughton served as Chief of Staff to U.S. Senator Ted Kaufman during the 111th Congress. He previously served as Special Assistant to the Counsel to the President (Abner Mikva) in the Clinton White House (1994-95) and as Special Assistant to then-Chairman Joseph R. Biden, Jr. of the Senate Judiciary Committee (1988-91).
December 19, 2011
Long silent and now contradictory, President Obama needs to deliver a clarifying speech about our financial markets and the rule of law. Speaking in Kansas on December 6, he said, "Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender." Just five days later on 60 Minutes, he said, "Some of the least ethical behavior on Wall Street wasn't illegal." Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?
Moreover, the President is misleading us when he says that Wall Street firms violate anti-fraud law because the penalties are too weak. Repeat financial fraudsters don't pay relatively paltry -- and therefore painless -- penalties because of statutory caps on such penalties. Rather, regulatory officials, appointed by Obama, negotiated these comparatively trifling fines. This week, the F.D.I.C. settled a suit against Washington Mutual officials for just $64 million, an amount that will be covered mostly by insurance policies WaMu took out on behalf of executives, who themselves will pay just $400,000. And recently a federal judge rejected the S.E.C.'s latest settlement with Citigroup, an action even the Wall Street Journal called "a rebuke of the cozy relationship between regulators and the regulated that too often leaves justice as an orphan."
For three important reasons, the President needs to explain why the Justice Department has filed away its investigations of big banks and Wall Street firms without indicting anyone. First, American confidence in the system is deeply shaken. Second, it strains credulity for millions of Americans -- and has impelled thousands of them to occupy public places in protest -- that no banking or insurance executive deserves criminal prosecution for the actions that brought on the financial crisis. Third, by failing to prosecute a single high-profile Wall Street actor today, the Administration is failing to deter financial fraud tomorrow.
In 1986, speaking about the failure of another president's Justice Department to vigorously prosecute white-collar crime, former Chairman of the Senate Judiciary Committee and current Vice President Joseph Biden said that "people believe that our system of law and those who manage it have failed, and may not even have tried, to deal effectively with unethical and possibly illegal misconduct in high places." Until this president stops calling Wall Street's deleterious actions "not illegal," he's failing to deter -- and therefore effectively encouraging -- future financial fraud. And until he gives a clear and full explanation of the inadequate response of his Justice Department and S.E.C., he and his appointees are helping to undermine the public's faith in equal justice under the law.
Read the full article at:
http://www.huffingtonpost.com/jeff-connaughton/obama-wall-street-laws_b_1157915.html
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ProSense
(116,464 posts)...doubt there is any truth to that.
http://www.stopfraud.gov/news.html
In fact, why is it that people can understand that the repeal of Glass-Steagall contributed to the crisis, but have trouble comprehending that repealing a law means that the activities it made illegal are no longer covered?
From the OP piece:
The Enron loophole and the repeal of Glass-Steagall address different issues.
From 1999 through 2009, there was no Glass-Steagall.
Also, how is it that people manage to ignore the massive re-regulation that constitutes Wall Street reform?
JackRiddler
(24,979 posts)ProSense
(116,464 posts)"The 'massive re-regulation' is ignored because it's mainly in your fantasy."
..it is. I'll wake up from the dream when the Republicans repeal it. The fantasy of new powers to the FDIC, new agencies, new rules for hedge funds, etc. will disappear.
MFrohike
(1,980 posts)Glass-Steagall was a statute that provided for the regulation of finance. It was not a criminal statute. Thus, its repeal has NOTHING to do with whether a given activity is illegal for the purposes of the criminal law.
Taibbi's point, which is a rehash of others I've read, is that difficult to prosecute is radically different from not illegal. Sarbanes-Oxley was a response to a different situation, but that doesn't make its provisions inapplicable to today's situation. Hell, RICO laws were passed in response to the difficulty of prosecuting the Mafia, but they've been found to applicable in very different situations from their original purpose. Many cases for fraud can be made, but DOJ is unwilling to try. There's a reason that the FHFA is working with the NY AG to investigate and prosecute systemic fraud: the administration has decided not to bother, thus it's up to other entities with relevant jurisdiction. The fact of a federal agency working with a state prosecutor because the federal prosecutor can't be bothered to deal with problems in its own jurisdiction is nothing but shameful.
SidDithers
(44,333 posts)keep trying.
Sid
Whisp
(24,096 posts)Wall St got all the rules in their favour by changing laws. We can all stomp our feet all day but if it's not illegal, it's not. The laws must be changed.
Saying this probably will get you thinking I'm siding with the Streeters, but I'm not, I hate them with a flying froth. but they had the money and influence during the last 30 or so years to change it all to their benefit.
Karmadillo
(9,253 posts)"Maybe if the bankers would become whistleblowers, the Justice Dept would go after them."
...maybe not.
Bank ordered to reinstate fired employee and pay $930,000
SAN FRANCISCO — The U.S. Department of Labor's Occupational Safety and Health Administration has found Charlotte, N.C.-based Bank of America Corp. in violation of the whistleblower protection provisions of the Sarbanes-Oxley Act for improperly firing an employee. The bank has been ordered to reinstate and pay the employee approximately $930,000, which includes back wages, interest, compensatory damages and attorney fees. The findings follow an investigation by OSHA's San Francisco Regional Office, which was initiated after receiving a complaint from the Los Angeles-area employee.
"It's clear from our investigation that Bank of America used illegal retaliatory tactics against this employee," said OSHA Assistant Secretary Dr. David Michaels. "This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same."
The employee originally worked for Countrywide Financial Corp., which merged with Bank of America in July 2008. The employee led internal investigations that revealed widespread and pervasive wire, mail and bank fraud involving Countrywide employees. The employee alleged that those who attempted to report fraud to Countrywide's Employee Relations Department suffered persistent retaliation. The employee was fired shortly after the merger.
"Whistleblowers play a vital role in ensuring the integrity of our financial system, as well as the safety of our food, air, water, workplaces and transportation systems," added Michaels. "This case highlights the importance of defending employees against retaliation when they try to protect the public from the consequences of an employer's illegal activities."
Both the complainant and Bank of America can appeal the monetary damages to the Labor Department's Office of Administrative Law Judges within 30 days of receiving the findings.
OSHA enforces the whistleblower provisions of the Sarbanes-Oxley Act and 20 other statutes protecting employees who report violations of various airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, health care reform, nuclear, pipeline, public transportation agency, railroad and maritime laws. Under these laws enacted by Congress, employers are prohibited from retaliating against employees who raise various protected concerns or provide protected information to the employer or to the government. Employees who believe that they have been retaliated against for engaging in protected conduct may file a complaint with the secretary of labor to request an investigation by OSHA's Whistleblower Protection Program. Detailed information on employee whistleblower rights, including fact sheets, is available at http://www.whistleblowers.gov .
Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA's role is to ensure these conditions for America's working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov .
http://www.dol.gov/opa/media/press/osha/OSHA20111351.htm
...maybe so.
http://www.salon.com/2011/05/16/whistleblowers_6/
Monday, May 16, 2011 2:17 PM 21:58:38 EST
Jane Mayer on the Obama war on whistle-blowers
By Glenn Greenwald
In a just released, lengthy New Yorker article, Jane Mayer — with the diligence and thoroughness she used to expose the Bush torture regime — examines a topic I’ve written about many times here: the Obama administration’s unprecedented war on whistleblowers generally, and its persecution of NSA whistleblower Thomas Drake in particular (Drake exposed massive waste, excess and perhaps illegality in numerous NSA programs). Mayer’s article is what I’d describe as the must-read magazine article of the month, and I encourage everyone to read it in its entirety, but I just want to highlight a few passages. First, we have this:
When President Barack Obama took office, in 2009, he championed the cause of government transparency, and spoke admiringly of whistle-blowers, whom he described as “often the best source of information about waste, fraud, and abuse in government.” But the Obama Administration has pursued leak prosecutions with a surprising relentlessness. Including the Drake case, it has been using the Espionage Act to press criminal charges in five alleged instances of national-security leaks — more such prosecutions than have occurred in all previous Administrations combined. The Drake case is one of two that Obama’s Justice Department has carried over from the Bush years.
Gabriel Schoenfeld, a conservative political scientist at the Hudson Institute, who, in his book “Necessary Secrets” (2010), argues for more stringent protection of classified information, says, “Ironically, Obama has presided over the most draconian crackdown on leaks in our history — even more so than Nixon.”
more...
"Monday, May 16, 2011 "
...maybe relying on information that predates the release I linked to by about four months doesn't debunk said release.
Still, what does an article by Glenn Greenwald have to do with the actual facts of the case in the release?
Oh, here's another release:
on September 22, 2011.
(Washington, DC) -- The Government Accountability Project (GAP) today praised Tuesday’s White House release of the U.S. National Action Plan that emphasizes intensified support for protection of federal employee whistleblowers. The plan is part of a new global transparency initiative by the Obama administration.
GAP Legal Director Tom Devine commented, “We welcome President Obama’s much-needed, renewed support for government whistleblower rights. The last election was supposed to be a voter protest against government fraud, waste and abuse. But the newly-elected House majority has not even introduced a bill to provide rights for whistleblowers who risk their careers for those goals.”
The White House commitment was as follows (italicized):
Strengthen and Expand Whistleblower Protection for Government Personnel
Employees with the courage to report wrongdoing are a government’s best defense against waste, fraud and abuse. Federal law clearly prohibits retaliation against most government employees who blow the whistle, but some employees have diminished protections, and judicially-created loopholes have left others without an adequate remedy. To address these problems, we will:
- Advocate for Legislation to Reform and Expand Whistleblower Protections. Recently, Congress nearly enacted legislation that would eliminate loopholes in existing protections, provide protections for employees in the intelligence community, and create pilot programs to explore potential structural reforms in the remedial process. The Administration will continue to work with Congress to enact this legislation.
- Explore utilization of Executive Branch Authority to Implement Reforms if Congress is Unwilling to Act. Statutory reform is preferable, but if Congress remains deadlocked, the Administration will explore options for utilizing executive branch authority to strengthen and expand whistleblower protections.”
http://www.whistleblower.org/press/press-release-archive/1506-gap-praises-white-house-commitment-to-whistleblowers
Greenwald is a one-note clown.
The Bush/Obama War Against Truth
December 21, 2011
<edit>
A new policy of domestic intelligence gathering has permitted not only law enforcement agencies, but intelligence agencies and the Pentagon to collect, store and analyze vast amounts of digital data on law-abiding U.S. citizens. Lawsuits that challenge improper eavesdropping have been met with challenges from the Department of Justice concerning “state secrecy” in order to prevent trials.
The Obama administration has resorted to the Espionage Act of 1917 and to state secrecy defense even more often than the Bush administration did.
The increase in domestic surveillance has often been illegal; the practice of warrantless eavesdropping has been unconstitutional. The FBI has wiretapped conversations between lawyers and defendants, challenging the legal principle that attorney-client communication is inviolate.
<edit>
A double standard is at work here. Officials at the highest levels of government can pass sensitive information to anointed journalists such as Bob Woodward, who typically receives sensitive and classified information for his books. However, lower-level officers must keep their mouths shut about government perfidy.
more...
ProSense
(116,464 posts)"The Bush/Obama War Against Truth "
...does that article have to do with financial fraud?
Still, if you must:
The ACLU just scored a big win for freedom of speech from the Department of Homeland Security (DHS). More than 2 years ago we filed a complaint with the DHS Office of Civil Rights and Civil Liberties (OCRCL) concerning an effort to collect and distribute information about lawful demonstrations. Earlier this month, we received a letter from OCRCL letting us know that they have resolved our complaint, and are adopting our recommendations!
In 2006, DHS Federal Protective Service (FPS) distributed a Protective Intelligence Bulletin to local law enforcement detailing information about dozens of peaceful activist groups. The bulletin was entitled "Civil Activists and Extremists Action Calendar," and provided information on over 70 demonstrations, almost entirely peace, environmental and social justice rallies and marches where no violence or other criminal activity was expected.
more
http://www.aclu.org/blog/free-speech-national-security/win-free-speech-aclu-recommendations-adopted-dhs
Got any other lame red herrings?
I'm wondering is why you're responding to my joke about the Justice Department's failure to go after Wall Street per the OP with post after post that doesn't involve the Justice Department. Are you arguing the Justice Department is going after Wall Street? Are you arguing the Justice Department isn't going after whistleblowers? Is Jane Mayer making things up? And here's another link in support of my #6 post, although, as you note, it has nothing to do with whatever distracting point you're trying and failing to make.
http://www.fair.org/index.php?page=4393
Extra! September 2011
Obama's DOJ Targets Whistleblowers
If they 'hate our freedoms,' maybe we need less of it
By Jim Naureckas
If you really believed, as many Americans claimed to after the September 11 attacks, that "they hate us for our freedom" (Extra! Update, 10/01), then it makes a certain kind of sense to protect against future attacks--by reducing our freedom.
That would seem to be the only kind of logic that could justify the erosion of freedom of the press manifested by the Obama Justice Department's concerted efforts to prosecute whistleblowers.
The first steps toward the criminalization of being a source for investigative journalism were taken by George W. Bush's administration, when those who revealed how the "War on Terror" restricted civil liberties were threatened with jail (New York Times, 2/12/06). But, as Salon blogger Glenn Greenwald (4/16/10) pointed out, "the Bush DOJ [Department of Justice] never actually followed through on those menacing threats; no NSA whistleblowers were indicted during Bush's term.... It took the election of Barack Obama for that to happen."
Since Obama took office, his Justice Department has arrested or indicted at least five individuals for allegedly passing classified information to journalists--compared to three such prosecutions in the previous 40 years (Politico, 3/7/11).
more...
It being?
You guys are killing me! 
SfromCanada
(44 posts)
tridim
(45,358 posts)
JoePhilly
(27,787 posts)
Old and In the Way
(37,540 posts)Can the DOJ/WH enforce legislation that doesn't exist?
I want to acknowledge your determined, yet ultimately futile, efforts to build an anti-Obama/anti-Democratic consensus on this board.
Better Believe It
(18,630 posts)If you'd rather engage in low-level personal attacks on DU'ers you disagree with rather than civil debate perhaps you can find a trash
talk board somewhere that encourages that sort of behavior.
But I won't be reading that kind of garbage on DU.
Bye.
Old and In the Way
(37,540 posts)And that was no personal attack...I was simply complimenting you on your tireless efforts to undermine Obama's re-election on this board.
girl gone mad
(20,634 posts)Oh good grief.
Old and In the Way
(37,540 posts)Unlike BBI, I don't consider that a personal attack. 
Glad to know you are supportive of his educational efforts here, though.
girl gone mad
(20,634 posts)
bhikkhu
(10,789 posts)Last edited Wed Dec 28, 2011, 11:55 PM - Edit history (1)
...spinning out a long anti-Obama narrative from two quotes taken out of context.
The Dodd-Frank bill is a good place to start, if one is interested in the banking reform that has been accomplished: http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act
While the lack of Wall Street prosecutions has been much in the news - geitner, 60 minutes and so forth - this is one of the more informative articles I've read lately: http://www.tnr.com/article/97963/SEC-banks-settlement
dflprincess
(29,341 posts)It protected us from the banksters for over 60 years before the "new" Democrat/DLC/Third Way crowd (whatever they're calling themselves these days) decided to sell us out.
bhikkhu
(10,789 posts)...and broader, in that it addresses more problems that weren't issues back then.
dflprincess
(29,341 posts)Last edited Thu Dec 29, 2011, 12:57 AM - Edit history (1)
and that is one of its major failings. It does nothing to protect us from "too big to fail" banks as G-S did.
An interesting comparison at:
http://www.wnyc.org/articles/its-free-country/2011/nov/30/explainer-glass-steagall-back-and-will-it-be-enough/
From the link:
Simon Johnson, former chief economist with the IMF and co-author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, says that the "resolution authority" granted by Dodd-Frank is an illusion. "The F.D.I.C. can close small and medium-size banks in an orderly manner, protecting depositors while imposing losses on shareholders and even senior creditors," Johnson writes in the New York Times "Economix" blog. "But to imagine that it can do the same for a very big bank strains credulity."
It's that strain on credulity inherent in Dodd-Frank that has brought Glass-Steagall back into the national consciousness. Dodd-Frank seems only to take action after the fact: more government agencies overseeing a largely-unchanged financial industry; the possibility of liquidation, albeit unlikely, only once a firm presents a clear and present danger to the economy. People are beginning to view the separations enacted by Glass-Steagall, on the other hand, as pre-emptive measures against "too big to fail."
Many people who would cheer the return of Glass-Steagall also caution that it is not a magic pill. Glass-Steagall alone could not prevent the next financial crisis, say Simon Johnson and his co-author, James Kwak, in 13 Bankers. In addition to separating commercial and investment banking activities, they argue, there should be a well-defined limit on how large any financial institution is allowed to get; if they're above the limit at the time it's set, then they should be broken up and forced to reconstitute as a smaller entity.
As a starting point, Kwak and Johnson recommend that the government consider limiting a bank's holdings to no more than 4 percent of GDP. Currently, the six largest banks collectively hold assets equal to 66 percent of GDP.
banned from Kos
(4,017 posts)too big to fail (G-S does not)
rating agencies (same)
shadow banking
consumer protection (Liz Warren)
derivatives
etc
Quit listening to Matt Taibbi - he is a fucking idiot.
dflprincess
(29,341 posts)and it does point out that Glass-Steagall was more preventitive while Dodd-Frank is set up to react after the damage has been done and does not do anything meainigful about too big to fail. G-S did more about that just by keeping investment & commercial separate.
bhikkhu
(10,789 posts)(current news of that progress: http://www.bworldonline.com/content.php?section=Finance&title=Regulators-OK-more-comments-on-Volcker-rule-implementation&id=43878 )
...I'm under the impression that it would be very much a game-changer in the banking sector.
dflprincess
(29,341 posts)but the article you linked to says it prevents them from making "risky trades" with their own funds. - Who's going to define what's "risky" before the investment is made?
And, the rule has yet to go into effect. We'll see what happens if it does.
SomethingFishy
(4,876 posts)and might be if they ever get around to implementing it. Out of the 400 new rules so far as of Dec 6 29 have been implemented and 13 more are on the way...
That's according to the Federal Reserve:
http://www.federalreserve.gov/newsevents/testimony/tarullo20111206a.htm
Looks like the "fucking idiot" knows more than you do.
bhikkhu
(10,789 posts)I had read that republicans had obstructed implementation of many parts by denying necessary funding for them, but things are moving along slowly. As the article concludes:
"For all the work that has already gone into implementing Dodd-Frank, both at the Federal Reserve and at the other regulatory agencies, there is still considerable work to do. Final regulations implementing some of the Act's most important provisions, such as the "living will" requirement and the Collins amendment, are now in place. Measures to implement other prominent provisions, such as the Volcker rule, have been proposed, but are not yet in final form. Still others, such as the section 165 requirements, have not yet been proposed. Whether completing work on proposed regulations, or moving forward with those yet to be proposed, the Federal Reserve will continue to pursue the four goals I noted earlier. "
It is impressive the amount of changes and work that the bill requires, and encouraging that things have moved along in spite of strong opposition. In 2010, its passage was a big fight and a big accomplishment for the president. Keeping in mind that its repeal is still prominent on the repug agenda, I hope we can gain a congress next year that will keep things moving in the right direction.
on edit - and going back to my actual objections to the OP - it lays blame for banking sector problems and lack of progress on Obama. The president worked very hard to get a strong reform bill passed, and many have worked very hard since (against all industry and repug opposition) to see it implemented. Putting the president on the "bad" side of the issue with the repugs is "asshattery" in my book.
Better Believe It
(18,630 posts)http://prospect.org/article/blowing-hole-dodd-frank
And also read: From Dodd-Frank to Dud: How Financial Reform May Be Going Wrong
http://www.propublica.org/article/from-dodd-frank-to-dud
bhikkhu
(10,789 posts)...not all of which I quite "get", but much of the fears of a clean derivatives exemption in the article you posted seem to have not taken place.
banned from Kos
(4,017 posts)So fine. He gets to Wank off in public.
SomethingFishy
(4,876 posts)you are reduced to calling him names on the playground.
Better Believe It
(18,630 posts)What a devastating rebuttal!
treestar
(82,383 posts)What case? What case of a violation is there that has not been prosecuted?
closeupready
(29,503 posts) 
hifiguy
(33,688 posts)How old are you, ten?
boppers
(16,588 posts)When an author is willfully ignorant of basic facts, there's really no point in paying attention to their ideas.
Better Believe It
(18,630 posts)I can't keep track of their numbers!
How many banksters that have been presecuted are serving time in the big house now?
Would it be zero?
I really don't know how President Obama hopes to get hundreds of millions of bucks from the Wall Street gang for his election campaign if he keeps persecuting them.
boppers
(16,588 posts)a: "no prosecutions"
b: "banksters that have been presecuted are serving time in the big house now"
Quite the difference there.
"Would it be zero?"
Nope.
Frank DiPascali, Scott W. Rothstein, David G. Friehling, Tom Petters, Marc Stuart Dreier, Raj Rajaratnam, (etc. etc. etc.)
People alleging that there have been "no prosecutions" are in error.
hifiguy
(33,688 posts)a much lower level than then were even in the Boosh years, as has been repeatedly noted here on DU. Tom Petters, FYI, was a local Minnesota scam artist. He was not a player in the bank meltdowns of the Great Implosion of 2008. All the people responsible for that are still ensconsed in their mansions or penthouses and are now counting their annual bonuses. Some people's kids, I tell ya....
boppers
(16,588 posts)"no prosecutions" was the claim.
Was that claim a lie?
SidDithers
(44,333 posts)Sid
xchrom
(108,903 posts)Better Believe It
(18,630 posts)treestar
(82,383 posts)Sorry but that law that controlled a lot about the banks was repealed. By a duly elected Congress.
Ergo, some things that were illegal now are legal.
girl gone mad
(20,634 posts)Read it and weep for the lost opportunities:
http://neweconomicperspectives.blogspot.com/2011/12/president-obamas-view-of-fraud-from.html
ETA excerpt:
Obama’s factual assertions about the failure to prosecute fraud are unresponsive to the question, false, and logically inconsistent. Note the artful manner in which Obama evaded answering Kroft’s question. Kroft asks why there are no prosecutions of the Wall Street frauds that drove the crisis. Obama answers that “some” unethical Wall Street actions were not illegal. Obama’s answer implicitly admitted that most Wall Street actions that caused the crisis were criminal. He simply argues that some highly unethical behavior by Wall Street that was not illegal contributed to that crisis. As David Cay Johnston emphasized in his column about Obama’s response to Kroft’s question, Obama’s answer is a non-answer. Why has he failed to prosecute any of the criminal conduct by Wall Street that drove the financial crisis? The (alleged) fact that “some” destructive Wall Street conduct was highly unethical, but not illegal, obviously provides no basis for not prosecuting what Obama concedes was primarily criminal conduct.
Obama claims that the purported legality of Wall Street’s (unspecified) “least ethical behavior” is “exactly why we had to change the laws.” He then describes the two specific changes in the Dodd-Frank law that he asserts make illegal that “least ethical behavior” for the first time. Obama claims that Dodd-Frank makes it illegal to “take wild risks with other people’s money” and for bankers to “expect a taxpayer bailout.” Obama is a lawyer and former law professor, so these are matters as to which he is capable of precision. Dodd-Frank does not make it illegal for bankers to take “wild risks.” Banks inherently take risks “with other people’s money” so that bit of rhetoric is superfluous.
Dodd-Frank does not make it illegal for a banker to “expect a taxpayer bailout.” Dodd-Frank does not make it illegal (and could not constitutionally do so) for bankers to lobby for a bailout. We have all seen the success of such lobbying with the Bush and Obama administrations. Both administrations have refused to order an end to the “systemically dangerous institutions” (SDIs) (inaccurately referred to as “too big to fail”). Both administrations asserted that when the next SDI failed it was likely to cause a global systemic crisis. (It is a matter of “when”, not “if” they will fail, or more precisely, when we will admit that they failed.)
(snip)
What Obama missed, and Kroft failed to call him on, is that “wild risk” by banks are typically frauds. I have explained these matters at length in previous posts, so I will provide the ultra short version here. Honest home lenders do not make liar’s loans. In particular, honest lenders do not make subprime liar’s loans. Honest home lenders do not make such loans because they create intense “adverse selection” and create a “negative expected value” (in plain English, they will lose money). No government (here or abroad), required any lender or other entity (i.e., Fannie and Freddie) to make or acquire liar’s loans. In fact, the government repeatedly criticized liar’s loans. The FBI warned of an “epidemic” of mortgage fraud in September 2004. The mortgage lending industry’s own anti-fraud body (MARI) warned every member of the Mortgage Bankers Association (MBA) in writing in the 2006 that “stated income” loans were “an open invitation to fraudsters,” had a fraud incidence of 90 percent, and deserved the term the industry used behind closed doors to describe them – “liar’s” loans. Despite these warnings, lenders massively increased the number of liar’s loans they made. [/div[\]
treestar
(82,383 posts)And some may not understand fraud. It's not just getting the better of a deal.
Fraud: Elements
Taylor v. State Compensation Insurance Fund, 175 Mont. 432, 913 P.2d 1242 (1996) To sustain a claim of fraud, insurer was required to plead and prove each of the nine elements of fraud: (1) a representation; (2) falsity of the representation; (3) materiality of the representation; (4) speaker’s knowledge of the falsity of the representation; (5) the speaker’s intent it should be relied upon; (6) the hearer’s ignorance of the falsity of the representation; (7) the hearer’s reliance on the representation; (8) the hearer’s right to rely on the representation; and (9) the hearer’s consequent and proximate injury caused by reliance on the representation.
http://wcc.dli.mt.gov/TOOLS/Fraud_Elements.htm
girl gone mad
(20,634 posts)First it's:
"No crimes were committed."
Then:
"Crimes were committed, but no proof exists."
Next it will be:
"Crimes were committed and proof exists, but too much time has passed."
or
"Crimes were committed and proof exists, but prosecuting is hard work!"
closeupready
(29,503 posts)crooks will be encouraged to do so. Very simple math there.
Quantess
(27,630 posts)So very sad, but true. Heartbreaking. I have been waiting for Obama to take some kind of definitive action, but it looks like it'll never happen.
Not that a repuke would have done anything about the banksters, either. Sigh. What a depressing realization. We're screwed no matter what. We're sitting ducks, waiting to be robbed by the banks all over again until the USA is literally in ruins.
You Obama cheerleaders can try to spray perfume all over this one, but there's no way you can cover up the stink.
Nye Bevan
(25,406 posts)I suspect that the author is mistaken about Obama using this phrase. Or does anybody have a link to the contrary?
gratuitous
(82,849 posts)"Not illegal" appears to be a re-phrasing of "wasn't illegal."
Better Believe It
(18,630 posts)That's incredible!
Whenever anyone sees a news article quoting Obama should they check with you to find out if in fact he said those words?
Autumn
(48,961 posts)I happen to agree with Matt Taibbi