Let Them Eat Task Forces

In his State of the Union speech, President Obama said and proposed many
reasonable-sounding things. One of them was this:

We'll also establish a Financial Crimes Unit of highly trained
investigators to crack down on large-scale fraud... financial firms
violate major anti-fraud laws because there's no real penalty for being a
repeat offender... So pass legislation that makes the penalties for fraud
count. And tonight, I'm asking my Attorney General to create a special
unit of federal prosecutors and leading state attorney general to expand
our investigations into the abusive lending and packaging of risky
mortgages that led to the housing crisis.

Now, how could you be against that? In his speech, and indeed as has been
true for his entire career, Mr. Obama deserves an A for rhetoric. But what
grade does he deserve for action? Alas, he flunks.

It has now been three and a half years since the financial crisis of
September 2008. Only a few months after that crisis -- three years ago now
-- President Obama took office. At the time, he had an overwhelming
popular mandate and huge majorities in both houses of Congress. The nation
was in crisis, with unemployment growing nearly half a percent per month.
The Bush Administration's policies (and the financial sector that those
policies had allowed to run wild) were utterly discredited. If ever real
change is possible in Washington DC, this was that time.

In that situation, and over the intervening three years, what did
President Obama do? Well, we got a stimulus package, and then a year later
a watered-down, absurdly complicated new law that addressed everything
except the most important issues. And that's about it. Consider the record:

President Obama's personnel appointments were heavily weighted towards
those who had sat by and done nothing as the housing bubble grew (Tim
Geithner, Ben Bernanke), former officials who had made major contributions
to causing it (Larry Summers), senior lobbyists for the worst of the banks
(Mark Patterson, Tom Donilon), a former board member of AIG (Richard
Holbrooke), and literally dozens of former executives of banks and hedge
funds that had played major roles in causing the crisis. The new chair of
the SEC, Mary Shapiro, was the former head of the investment banking
industry's self-regulation body, which brought not a single enforcement
action related to the bubble. Her new director of enforcement, Robert
Khuzami, was formerly general counsel for Deutsche Bank, which profited by
helping John Paulson create securities so that he could profit by betting
that they would fail.

We got the Financial Crisis Inquiry Commission, deliberately crippled
through its tiny budget (less than $10 million for its entire operation,
beginning to end), limited subpoena power, and publication date
conveniently just after the 2010 midterm elections. Even so, the FCIC
actually did a pretty decent job, and demonstrated that the housing bubble
had involved pervasive fraud on the part of the banks.

Moreover, there followed a huge wave of private lawsuits. The banks fought
them hard, and have tried extremely hard to prevent depositions and
testimony from becoming public. But many plaintiffs persisted, and there
has now accumulated a massive record of extraordinarily repulsive, and
clearly illegal, behavior. In a book that I have just finished, and which
will be published in May, grimly entitled Predator Nation, I go through
what is known in considerable detail, and make the case for large-scale
prosecutions and asset forfeitures.

This information is already public. So what has happened as a result?

Well, the SEC has filed some civil fraud cases -- not many, and not big.
Thus far, every single one has been settled with a minor fine, with
neither individuals nor banks required to admit guilt. Criminal
prosecutions of banks? Zero. Criminal prosecutions of senior financial
executives related to the bubble? Zero. RICO cases, such as were used
against Michael Milken and are routinely used against drug dealers and
other organized criminals to seize their assets and forfeit their
ill-gotten gains? Zero. Sarbanes-Oxley prosecutions, based on CEOs'
certification of obviously fraudulent financial statements? Zero. In Mr.
Obama's three years in office, not a single U.S. bank or senior financial
executive has been convicted of any crime (or even prosecuted), or had
their assets confiscated.

But now, it's re-election time, and Occupy Wall Street has shown simmering
anger among the population. So we create a task force. (There was another
one before, too, but never mind.) A week later, several bankers are
arrested. They're low level patsies, who worked for a Swiss bank, and who
didn't create or sell the toxic stuff; they just traded it afterwards. And
the task force? Its initial personnel: a whopping 15 people in the Justice
Department, and ten -- count them, ten -- FBI agents. Eventually, Justice
says, the task force will have an awesome 55 people. Goldman Sachs has
32,000 employees, there are several thousand financial industry lobbyists,
the FBI has a total of 14,000 agents -- but hey, I'm sure that those ten
agents are the very best.

So yes, it's absurd, and rather disgusting. But it must also be said that
President Obama is not alone in prostrating himself before the financial
sector. Congress is no better, and neither are Obama's likely opponents in
the presidential race. Newt Gingrich screamed about government
interference while he was being paid $1.6 million by Freddie Mac's chief
lobbyist for "conservative outreach." In Mitt Romney, we have someone who
thinks it's perfectly OK to have a tax rate of 14 percent on over $20
million per year in unearned income, and who wants to increase taxes on
the poor while reducing them further for the wealthy. Unfortunately, the
power of financial sector money has by now produced a pervasive,
bipartisan systemic disease in American politics, of which the president's
recent speech is merely one example among many.

http://www.huffingtonpost.com/charles-ferguson/financial-crimes-unit_b_1254274.html?ref=fb&src=sp&comm_ref=false
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On Nov 8 2011 2:11 PM, VegasJerry wrote:
Jerry (almonst worthless) 'n Vegas

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