Wednesday, January 12, 2011
Failing to Prosecute Financial Fraud - On Either Side of the Atlantic - Is Extending Our Economic Crisis
As numerous experts have pointed out for years, failing to prosecute financial fraud is extending our economic crisis.
This continues to be a key, ongoing story.
For example, the Telegraph reports today:
The EU's financial watchdog has systemically "sabotaged" investigations and caved into intimidation from countries including France and Italy to cover up fraud, according to a senior official.
And Bloomberg noted on Monday:
I will keep hammering on this until people get it: The economy will not recover unless fraud is prosecuted.The U.S. Securities and Exchange Commission’s internal watchdog is reviewing an allegation that Robert Khuzami, the agency’s top enforcement official, gave preferential treatment to Citigroup Inc. executives in the agency’s $75 million settlement with the firm in July.
Inspector General H. David Kotz opened the probe after a request from U.S. Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned letter making the allegation. Khuzami told his staff to soften claims against two executives after conferring with a lawyer representing the bank, according to the letter….
According to the letter, the SEC’s staff was prepared to file fraud claims against both individuals. Khuzami ordered his staff to drop the claims after holding a “secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend” of his and “who was counsel for the company, not the individuals affected,” according to a copy of the letter reviewed by Bloomberg News.
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Why is the US government so in bed with the TBTF banks? Is it because they help sell US debt? Is it because their colleagues also cabinet members and presidential advisors? It can't just be lobbying dollars else other industries would be equally immune to prosecution, so what is it exactly?
ReplyDeleteWhy can't it be just lobbying dollars? I don't recall a lot of prosecutions of many major moneyed corporate folks. Of course a lot of them serve in the cabinet and as advisers. When did a major defense contractor or oil co. get prosecuted? BP's been killing employees and poisoning the environment for decades. Enron, Madoff, Martha and the hotel lady all were charged with fraud or taxes.
ReplyDeleteBlurtman, Good question. My answer is thus.
ReplyDelete1. Banks hold a gun to governments’ heads in the form of: “If we go under, the economy collapses, so give us some taxpayer money”. No other industry has that power.
2. The whole question as to how the banking system should ideally work is EXTREMELY complicated. In contrast, the arguments as to whether say the motor industry should be subsidised are pretty simple: don’t subsidise anything unless there is an overwhelming social argument for the subsidy.
This complexity suits banks. They have hundreds to top economists, accountants, etc to plead their case with politicians, who are economic illiterates by comparison: lambs for slaughter. As for Obama, he can be knocked over with a feather.
3. Re the UK, there is a good description here of the way in which former British premier Gordon Brown was mesmerised by bankers here: http://www.guardian.co.uk/commentisfree/2009/jan/21/treasury-banking-keynes-demand
Failure to prosecute fraud, blah, blah, blah. I've been reading that line on here for what seems like forever.
ReplyDeleteIt will never happen. The banks committing the fraud own the government and the judicial system.
Solution:
Step 1 - End the Fed.
I will keep hammering on this until people get it: The economy will not recover unless fraud is prosecuted.
ReplyDeleteThis would be govt. and corp. I hope since it's just one big game as pointed out by Blurtman
NOTE: This building is in the tony neighborhood of Coconut Grove in Miami, Florida. It is mere blocks from LeBron James' new waterfront mansion. This is insane.
ReplyDeleteJudge holds bankers in contempt, threatens jail
Jose Pagliery
2011-01-13 12:00:00 AM
Representatives from six major banks that skipped a hearing in a Miami condo association receivership case could face the wrath of Miami-Dade Circuit Judge Jennifer Bailey today if they fail to show up a second time.
The judge already has declared lenders that own or are foreclosing on units at Bird Grove Condo are on the hook for $105,999 in expenses for the court-appointed receiver for the association. She also held the six in contempt of court.
.... the remainder of the article in the link here: http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1202477854431&hbxlogin=1