The Real Story Of How 'Untouchable' Wall Street Execs Avoided Prosecution

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Submitted by sjk on January 23, 2013 - 10:10am

With a little help from the White House.

For you Obama people out there.....have a read...

Regards,

http://www.guardian.co.uk/commentisfree/...

PBS' Frontline program on Tuesday night broadcast a new one-hour report on one of the greatest and most shameful failings of the Obama administration: the lack of even a single arrest or prosecution of any senior Wall Street banker for the systemic fraud that precipitated the 2008 financial crisis: a crisis from which millions of people around the world are still suffering.

What this program particularly demonstrated was that the Obama justice department, in particular the Chief of its Criminal Division, Lanny Breuer, never even tried to hold the high-level criminals accountable.

What Obama justice officials did instead is exactly what they did in the face of high-level Bush era crimes of torture and warrantless eavesdropping: namely, acted to protect the most powerful factions in the society in the face of overwhelming evidence of serious criminality. Indeed, financial elites were not only vested with impunity for their fraud, but thrived as a result of it, even as ordinary Americans continue to suffer the effects of that crisis.

Worst of all, Obama justice officials both shielded and feted these Wall Street oligarchs (who, just by the way, overwhelmingly supported Obama's 2008 presidential campaign) as they simultaneously prosecuted and imprisoned powerless Americans for far more trivial transgressions.

As Harvard law professor Larry Lessig put it two weeks ago when expressing anger over the DOJ's persecution of Aaron Swartz: "we live in a world where the architects of the financial crisis regularly dine at the White House." (Indeed, as "The Untouchables" put it: while no senior Wall Street executives have been prosecuted, "many small mortgage brokers, loan appraisers and even home buyers" have been).

As I documented at length in my 2011 book on America's two-tiered justice system, With Liberty and Justice for Some, the evidence that felonies were committed by Wall Street is overwhelming. That evidence directly negates the primary excuse by Breuer (previously offered by Obama himself) that the bad acts of Wall Street were not criminal.

Numerous documents prove that executives at leading banks, credit agencies, and mortgage brokers were falsely touting assets as sound that knew were junk: the very definition of fraud.

As former Wall Street analyst Yves Smith wrote in her book ECONned: "What went on at Lehman and AIG, as well as the chicanery in the CDO [collateralized debt obligation] business, by any sensible standard is criminal." Even lifelong Wall Street defender Alan Greenspan, the former Federal Reserve Chair, said in Congressional testimony that "a lot of that stuff was just plain fraud."

A New York Times editorial in August explained that the DOJ's excuse for failing to prosecute Wall Street executives - that it was too hard to obtain convictions - "has always defied common sense - and all the more so now that a fuller picture is emerging of the range of banks' reckless and lawless activities, including interest-rate rigging, money laundering, securities fraud and excessive speculation."

The Frontline program interviewed former prosecutors, Senate staffers and regulators who unequivocally said the same: it is inconceivable that the DOJ could not have successfully prosecuted at least some high-level Wall Street executives - had they tried.

What's most remarkable about all of this is not even Wall Street had the audacity to expect the generosity of largesse they ended up receiving. "The Untouchables" begins by recounting the massive financial devastation the 2008 crisis wrought - "the economy was in ruins and bankers were being blamed" - and recounts:

"In 2009, Wall Street bankers were on the defensive, worried they could be held criminally liable for fraud. With a new administration, bankers and their attorneys expected investigations and at least some prosecutions."

Indeed, the show recalls that both in Washington and the country generally, "there was broad support for prosecuting Wall Street." Nonetheless: "four years later, there have been no arrests of any senior Wall Street executives."

In response to the DOJ's excuse-making that these criminal cases are too hard to win, numerous experts - Senators, top Hill staffers, former DOJ prosecutors - emphasized the key point: Obama officials never even tried. One of the heroes of "The Untouchables", former Democratic Sen. Ted Kaufman, worked tirelessly to provide the DOJ with all the funds it needed to ensure probing criminal investigations and even to pressure and compel them to do so.

Yet when he and his staff would meet with Breuer and other top DOJ officials, they would proudly tout the small mortgage brokers they were pursuing, in response to which Kafuman and his staff said: "No. Don't show me small-time mortgage guys in California. This is totally about what went on in Wall Street. . . . We are talking about investigating senior level Wall Street executives, even at the Board level". (The same Lanny Breuer was recently seen announcing that the banking giant HSBC would face no criminal prosecution for its money laundering of funds for designated terrorist groups and drug networks on the ground that the bank was too big to risk prosecuting).

As Kaufman and his staffers make clear, Obama officials were plainly uninterested in pursuing criminal accountability for Wall Street. One former staffer to both Biden and Kaufman, Jeff Connaughton, wrote a book in 2011 - "The Payoff: Why Wall Street Always Wins" - devoted to alerting the nation that the Obama DOJ refused even to try to find criminal culprits on Wall Street. In the book, this career-Democratic-aide-turned-whistleblower details how the levers of Washington power are used to shield and protect high-level Wall Street executives, many of whom have close ties to the leaders of both parties and themselves are former high-level government officials. This is a system, he makes clear, that is constituted to ensure that those executives never face real accountability even for their most egregious and destructive crimes.

The reason there have been no efforts made to criminally investigate is obvious. Former banking regulator and current securities Professor Bill Black told Bill Moyers in 2009 that "Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong."

In the documentary "Inside Job", the economist Nouriel Roubini, when asked why there have been no such investigations, replied: "Because then you'd find the culprits." Underlying all of that is what the Senate's second-highest ranking Democrat, Dick Durbin, admitted in 2009: the banks "frankly own the place".

The harms from this refusal to hold Wall Street accountable are the same generated by the general legal immunity the US political culture has vested in its elites. Just as was true for the protection of torturers and illegal eavesdroppers, it ensures that there are no incentives to avoid similar crimes in the future.

It is an injustice in its own right to allow those with power and wealth to commit destructive crimes with impunity. It subverts democracy and warps the justice system when a person's treatment under the law is determined not by their acts but by their power, position, and prestige. And it exposes just how shameful is the American penal state by contrasting the immunity given to the nation's most powerful with the merciless and brutal punishment meted out to its most marginalized.

The real mystery from all of this is that it has not led to greater social unrest. To some extent, both the early version of the Tea Party and the Occupy movements were spurred by the government's protection of Wall Street at the expense of everyone else.

Still, Americans continue to be plagued by massive unemployment, foreclosures, the threat of austerity and economic insecurity while those who caused those problems have more power and profit than ever. And they watch millions of their fellow citizens be put in cages for relatively minor offenses while the most powerful are free to commit far more serious crimes with complete impunity. Far less injustice than this has spurred serious unrest in other societies.

Update....Assistant Attorney General Breuer Gets DOJ Boot In "Untouchables" Aftermath

http://www.zerohedge.com/news/2013-01-23...

Submitted by The-Shoveler on January 23, 2013 - 10:27am.

What part of
“This is the way TPTB planned it”
Don’t you understand ?

Submitted by SD Realtor on January 23, 2013 - 11:30am.

It was Bushes fault. Can't you see, this administration is different.

Submitted by no_such_reality on January 23, 2013 - 11:44am.

Actually, IMHO, if someone really simplified conveying the complexity of the CDO fiasco, bailout and beneficiaries so that the average, barely able to balance their checkbook American could understand, we'd have riots in the street.

The only problem is when you start drawing the lines the audacity of the fleecing, sheer ineptitude of all the checkpoints and brazen cronyism leaves any one explaining it looking two belt loops short of being as crazy as a tin foil hat Area-51 conspiracy whackjob.

Submitted by CA renter on January 24, 2013 - 2:23am.

no_such_reality wrote:
Actually, IMHO, if someone really simplified conveying the complexity of the CDO fiasco, bailout and beneficiaries so that the average, barely able to balance their checkbook American could understand, we'd have riots in the street.

The only problem is when you start drawing the lines the audacity of the fleecing, sheer ineptitude of all the checkpoints and brazen cronyism leaves any one explaining it looking two belt loops short of being as crazy as a tin foil hat Area-51 conspiracy whackjob.

People did get it, and many tried to stir the masses to action. As the article notes, both the Tea Party and the Occupy movement began as the same thing: opposition to the bailouts and favors going to the elite at the expense of the masses.

Unfortunately, the counterintelligence community (yes, tin-foil-hat, but true) quickly mobilized and co-opted the Tea Party. They were aided and abetted by Obama who threw the Obamacare chum over the rails at a time when Tea Party anger was clearly directed at the bankers...thereby diverting attention from the original goals of the TP and turning it into an "anti-Obamacare" right-wing movement (it did not start out as anything close to being right-wing). Note that the insurance industry is what benefited most from Obamacare; the FIRE sector winning, once again.

The Occupy movement, started by many of the same people initially involved with the Tea Party, was co-opted, once again, but this time they used "left-wing" diversions. It went from being "Occupy Wall Street" with very clear goals about what they wanted to accomplish (contrary to other, later claims), and turned into some hippie anti-war, pro-immigration, anti-debt/favoring govt bailouts of deadbeats, pro-homesquatter nonsense that very few of the original members could get behind.

With both the Tea Party and the OWS movement, the FBI, DHS, CIA, and other intelligence agencies were on high alert. In the case of the Tea Party, they were preparing emergency procedures to deal with "domestic terrorism." In both cases, people were brought in from the outside who were paid to disrupt the movements.

http://www.economist.com/blogs/democracy...

http://www.cnn.com/2012/12/26/us/fbi-occ...

And possibly planned to assassinate leaders of the Occupy movement:

http://www.motherjones.com/mojo/2013/01/...
------------

It is clear that our law enforcement agencies are NOT here to protect average American citizens. They work for the same bosses that most of our politicians do: the elite who seek to preserve and grow their control of the world's resources and, as a result, their control over the people.

This is why police officers (and military personnel) are oddly left out of any anti-pension/anti-govt-worker bashing.

Submitted by CA renter on January 29, 2013 - 2:54am.

More "entitlement culture":

"Top executives at three major companies that received taxpayer-financed bailouts received excessively generous pay packages last year, in an apparent violation of Treasury guidelines aimed at restricting their compensation, a government watchdog asserted in a report Monday.

...Kenneth Feinberg, who preceded Geoghegan at the post, noted the pay czar was “under the constraint that his most important goal was to get the companies to repay and exit TARP" -- and often those companies argued limiting executive pay would lead to desertion, delaying the turn-around process. Throughout its tenure, Geoghegan said in her letter, “OSM has sought the appropriate balance between these sometimes competing considerations in making all our determinations.”'

http://www.huffingtonpost.com/2013/01/28/tarp-pay-czar-executive-pay_n_2569328.html?icid=maing-grid7|main5|dl1|sec3_lnk2%26pLid%3D262855

-----------------------

You know what's sad? Look at the number of comments responding to the many excellent threads posted by sjk...maybe 3-5, sometimes zero. Yet, when the subject matter is about cops, firefighters, teachers, senior citizens with their pitiful pensions or SS/Medicare benefits, etc. -- people who had absolutely nothing to do with the economic crisis, and those who perform services for the community that are far more valuable than what these Wall Street parasites do -- we get hundreds of ignorant, nonsensical posts trying to lay the blame on working people instead of where it belongs: at the top.

Time to wake up to what's really been going on, and start paying attention to who is behind the anti-worker message we've been bombarded with over the past few years and understand why they are doing it. It's a diversion tactic meant to divide and conquer. If we allow the elites who control our government to continue down the path we're on, there will come a point when it will be too late for a peaceful resolution to our nation's problems.

Submitted by livinincali on January 29, 2013 - 7:51am.

CA renter wrote:

You know what's sad? Look at the number of comments responding to the many excellent threads posted by sjk...maybe 3-5, sometimes zero. Yet, when the subject matter is about cops, firefighters, teachers, senior citizens with their pitiful pensions or SS/Medicare benefits, etc. -- people who had absolutely nothing to do with the economic crisis, and those who perform services for the community that are far more valuable than what these Wall Street parasites do -- we get hundreds of ignorant, nonsensical posts trying to lay the blame on working people instead of where it belongs: at the top.

Time to wake up to what's really been going on, and start paying attention to who is behind the anti-worker message we've been bombarded with over the past few years and understand why they are doing it. It's a diversion tactic meant to divide and conquer. If we allow the elites who control our government to continue down the path we're on, there will come a point when it will be too late for a peaceful resolution to our nation's problems.

The reality is nobody disagrees with this article. Nobody is saying we shouldn't prosecute the bankers so there's really nothing to debate and therefore it gets low interest. The issues where there are actually multiple view points are going to get comments and debate.

I suppose I could post yeah, I agree. Obama administration is exactly the same as Bush's see how republicans aren't different from democrats. Wee political thread jack, this should get interesting.

Submitted by all on January 29, 2013 - 9:51am.

CA renter wrote:

You know what's sad? Look at the number of comments responding to the many excellent threads posted by sjk...maybe 3-5, sometimes zero....

tl;dr?

Also, often from zerohedge. That place is in 'the world ends in 15 minutes' mode since at least 2007.

Submitted by SK in CV on January 29, 2013 - 10:12am.

craptcha wrote:

Also, often from zerohedge. That place is in 'the world ends in 15 minutes' mode since at least 2007.

Apologize for the thread jack....but yeah, they can find the turd in every silver lining.

Article this morning at theskyisfalling.com (zerohedge)

Case-Shiller Home Price Index Posts Second Consecutive Monthly Decline, Average Home Prices Back To Fall 2003 Levels

http://www.zerohedge.com/news/2013-01-29...

and referencing the exact same report 1 minute earlier at Calculated Risk:

Case-Shiller: House Prices increased 5.5% year-over-year in November

http://www.calculatedriskblog.com/2013/0...

Submitted by paramount on January 29, 2013 - 10:21pm.

craptcha wrote:

Also, often from zerohedge. That place is in 'the world ends in 15 minutes' mode since at least 2007.

I don't think zerohedge is that bad...

Let's revisit this statement in 5 years, besides I suspect many piggs are FIRE industries cronies anyway.

Submitted by paramount on January 29, 2013 - 10:32pm.

I have a feeling the markets are in for a steep correction sometime soon, at which time Obamamania should fade away.

Submitted by SD Realtor on January 31, 2013 - 11:21am.

Disagree entirely. Markets will stay strong with minor corrections here and there. Nothing changes until the reality of our national insolvency comes to pass. It will start with the bond markets and go from there.

Submitted by no_such_reality on January 31, 2013 - 2:31pm.

But we're not insolvent. We're just irrational.

We're having our cake and eating it too.

In essence, we're blithely consuming away while we're running our credit card on the introductory rate.

When that rate ends, we'll have to make a choice of cutting 35% of everything, or increasing collected taxes by 50% or a combination thereof.

Meanwhile, we're putting 5 Apollo Moon Programs on the credit card a year with I'm not sure what to show for it.

Submitted by The-Shoveler on January 31, 2013 - 2:44pm.

The Game can go on for a long time.

well at least until resources dry up.

Hint, the U.S.A. will be close to last on the list of insolvent countries that go BK if they start to call in the loans. there are a lot more countries a lot more insolvent than the usa (it is in no one’s interest to end the game).

Actually inflation and technology will most likely make this a non-event type of thing.

Submitted by SD Realtor on January 31, 2013 - 3:03pm.

That is the point, the game can go on a long time. How long? Who knows. However I do not see it tipping over soon.

Submitted by CA renter on February 1, 2013 - 1:31am.

SD Realtor wrote:
Disagree entirely. Markets will stay strong with minor corrections here and there. Nothing changes until the reality of our national insolvency comes to pass. It will start with the bond markets and go from there.

I tend to agree with this, SDR.

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