There's No Recovery Because the Government Made it Official Policy Not to Prosecute Fraud

[Ichingcarpenter]

There's No Recovery Because the Government Made it Official Policy Not to Prosecute Fraud


Fraud caused the Great Depression and it has caused the current financial crisis. But fraud is not not being prosecuted, and so it will occur again and again, and prevent a sustainable economic recovery.

Numerous economists have been saying this for years. As I pointed out in March:

Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals - and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Indeed, William Black notes that we've known of this dynamic for "hundreds of years".
Now mainstream journalists are starting to catch on.

Market Watch senior columnist Brett Arends writes:
No one has been punished. Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide, along with many others, cashed out hundreds of millions of dollars before the ship crashed into the rocks. Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains. But they aren’t in jail. They aren’t even under criminal prosecution. They got away scot-free. As a general rule, the worse you behaved from 2000 to 2008, the better you’ve been treated. And so the next crowd will do it again. Guaranteed.



More and fuck the
Obama's DOJ

http://www.washingtonsblog.com/2011/07/theres-no-recovery-because-government.html

[FreakinDJ]

1. DING DING DING - We have a Winner Folks

Those Pesky Facts about confidence in the markets

[saras]

2. Damn right! +1googolplex

And "punish" in these cases really does mean "make an example of" in a way that is pretty much meaningless for the powerless. The penalties need to be severe enough that

A. They prevent the convicted fraudster from acquiring a similar position of power in the future. Day jobs only.
B. They prevent anyone associated with the fraud (except defense attorneys) from making or keeping a profit.
C. They scare the royal shit out of other businesses, so that they treat the line between "legal behavior" and fraud the same way the rest of us treat the line between "appropriate behavior" and child molesting - that is, there should be a really wide DMZ where everyone says "you're not breaking the law - YET - but you're a creep and if you cross the line you'll die in agony before the police get here."

And we can do this with only our current laws, if we just enforce them. Felony convictions can keep these people out of positions of financial responsibility in the future. Hard jail time scares even financiers.

A president who went after them could have, if they chose to cultivate it, the support of the vast majority of Americans. Progressives and liberals because they want to see these changes, the dumber conservatives because they want to see people suffer, and everyone in the mainstream who's been screwed over by any of the financial crimes of the last couple of decades, because they want justice, regardless of whether they understand the financial big picture or not. With that kind of populist support, they could safely ignore the financiers' peer group completely.

[KoKo]

16. +!!!! ...and the Tea Partiers Seized the Moment in 2010 and Don't Count them Out in 2012!

because whatever we Dems do they ARE ONTO OUR "New Democrat" think Tanks THEOLOGY! They are ALWAYS MANY STEPS beyond us..because they have the Skills and the Money.

Our Dem Money mostly comes from Hedge Funders who "think they are Liberal" because they have Hospital Wings, and University Chairs and Libraries and Other Places in the "Public Space" Named After Them...but they are the same scum as the Repugs.

WAKE UP PEOPLE! We've BEEN HAD!

[bluesbassman]

3. Not entirely true. Lee Farkas of Taylor, Bean & Whitaker just got 30 years.

I don't believe they've done enough, and there are fr too many high level execs like Fuld and Mozilo who'll never see the inside of a jail cell, but the DOJ is not completely turning a blind eye.

Lee Farkas, the former chairman of failed mortgage lender Taylor, Bean & Whitaker, was sentenced to 30 years in prison and forced to forfeit $38.5 million Thursday for orchestrating a $2.9 billion fraud scheme over the last decade.

The U.S. District Court for the Eastern District of Virginia convicted Farkas of 14 counts of bank, wire and securities fraud in April. But the sentencing was a fraction of the 385 years requested by the Justice Department.

http://www.housingwire.com/2011/06/30/ex-tbw-chief-farkas-sentenced-to-30-years-in-prison

[Ichingcarpenter]

4. Check out the big boys like JP morgan Chase

they had 9 felony counts against them and paid a fine.

Your guys are small potatoes.

[bluesbassman]

5. Mozilo paid $65m to stay out of jail.

A fraction of what he's worth I'm sure, but still a significant fine. He still should do some time, but it won't happen, too many layers beneath him. Same at JP Morgan, Goldman Sachs, etc.

Howerver, the sentencing of Farkas does send a message. He may have not been in the same league with Fuld and Mozilo, but he was pretty well connected and is still doing time. That has got to send a chill through the corporate stucture.

[The Magistrate]

7. And He Should Have Gone To Jail, Sir, and Had All Proceeds Of Fraud Confiscated

One waits eagerly for the day a man sticks up a bank, flees with fifty thousand in cash, and when caught is allowed to return ten thousand, keep forty thousand, and go on his merry way....

[bluesbassman]

8. Seems to be the modus operandi in the corporate world.

If more of these ececs went down like Farkas did, we may yet be able to get out of this mess.

[The Magistrate]

11. Farkas, Sir, is Off To One Side Of the Main Bankster Gangs

He has no more effect on their perceptions than the arrest of an unaffiliated corner dealer has on members of the Gangster Disciples.

No deterrent effect will be had until the chiefs, or at least the chief lieutenants, of the major firms are swept into gaol.

[banned from Kos]

10. Which laws did Mozilo and Fuld break? While the sleazy Mozilo

was unloading stock during Countrywide's peak the SEC was watching him the whole time but could never find a statute he violated. That is why they settled with him for that $65 million.

Our legal system requires that for a crime to occur there must already exist a defined statute that is violated.

Was Mozilo guilty of insider trading? Possibly, but the many other insider trading convictions recently (like Raj at Goldman Sachs) involved taped evidence that clearly involved an executive tipping off an outsider. Raj Rajaratnum (formerly on the Board at Goldman) will get many years when sentenced in September - guilty on all 14 counts.

[The Magistrate]

12. Mozilo Made Fraudulent representations To Investors, Sir, And Did Trade On Inside Knowledge

Never, ever, mistake a failure by the S.E.C. to press crimina charges for criminal for an abscence of evidence sufficient to secure conviction. The agency is at present a classic example of a 'captured' policing body.

[KoKo]

17. +!!!!! to you... "The agency is at present a classic example of a 'captured' policing body."

HELL YEAH! :puke:

[girl gone mad]

14. Mozilo committed several crimes.

He was promoting Countrywid­e and its "high quality loan portfolio" over a period of time during which he was simultaneously discussing the poor quality of Countrywide's loan book with managers. He was lying to investors and potential investors. Worse, through his "Friends of Angelo" program, he was providing cash bribes to overseers in the form of below market mortgage loans.

Everybody on the Street knows the dirty details. Therein lies much of the problem. It's called Gresham's dynamic. When financial crimes go unprosecuted and regulatory capture prevails, the least ethical players have a huge financial advantage. Driven by the perverse incentives of outsized bonuses and impotent regulators, a criminogenic environment is created, in which rampant fraud proliferates and ill-gotten money chases legitimate money out of the market. In addition to the overhang of un-indicted fraud still in place from the financial crisis, distorting normal market clearing, the economy remains massively unbalanced, with an overgrown financial sector extracting excessive rents from the productive sector.

[iemitsu]

6. not only have these fraudsters not been prosecuted

they continue to be rewarded with out sized salaries and huge bonuses.

[Demeter]

9. Political appointments, Medals of Honor

continuous hot and cold running bailouts, etc, etc.

[KoKo]

18. Another +!!!!!!!!!!!! TO YOU...Yes they GOT AWAY WITH IT ALL!

Like the Gitmo Torturers and the Drone Manipulators in basements all over the Southeast USA. VIDEO GAME WARFARE...killing Innocents.....just because you can...and your ORDERS TO KILL by USA will Protect you from EVER being Prosecuted! Push a Button (on orders) and you TAKE OUT ...COLLATERAL DAMAGE...Your GOVT. COVERS UP ...and YOU ARE COOL..MAN AND WOMEN!

We really need to think more about where our America is going. It's seeming to be very "unhinged" these days...

[Kablooie]

13. Not prosecuting fraud will actually increase fraud because it becomes a quick viable road to wealth.

[girl gone mad]

15. Precisely.

[KoKo]

19. The money these folks are raking in is atounding. But, you have to find the truth

from places beyond the "WaPo, WSJ and NYT's...and sadly even some of the "Light Liberal Sites" like the NATION, ATLANTIC, NY Magazine, New Yorker and even Harpers...who try...but need to keep subscribers and it takes months before they can vet enough to put out something.