Forum Post: Covering Up Massive Financial System Fraud
Posted 13 years ago on Dec. 20, 2011, 7:28 p.m. EST by enough
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Taibbi on Obama and Geithner:
He explains why Wall Street bankstas always get a pass and why they aren't being prosecuted and put in jail.
I like Matt Taibi a lot but some of the stuff about wall street not breaking laws is true---OK let me rephrase that Wall street lobbied and laws were rewritten to favor some of the reckless trading and outcomes. AIG is the perfect example. There was an effort to regulate derivatives inn 1998 but it was successfully opposed by opposed by Federal Reserve chairman Alan Greenspan, and by Treasury Secretaries Robert Rubin and Lawrence Summers.( Those names sound familiar ?) Then there was a law passed in 2005 that gave derivatives priority in a bankruptcy. So AIG's casino wing was able to sell as many CDS as they wanted and when they went bad they would be by law the first priority in the inevitable AIG bankruptcy if the tax payer didn't come up with a bailout. With X Goldman exec Paulson as treasury secretary and Goldman as one of the main counter-parties AIG got the bailout. AIG did not break any laws ----------wall street changed the laws. The end result is our banking system is now a giant welfare program for billionaire gambling addicts whose bets get priority over bondholders stockholders and the taxpayer (FDIC) gets to protect our bank deposits. (http://syntheticassets.wordpress.com/2009/08/15/the-no-derivative-left-behind-act-of-2005-1-5/)
I agree with your summary sentence. I believe Taibbi's contention that Wall Street is being actively shielded from criminal prosecution by the POTUS and the U.S. Secretary of the Treasury is evident for all to see. The results bear that out. Not one Wall Street executive has been indicted. Our regulators continue to hand down petty penalties for massive fraud and they do so in the face of massive and growing public outrage. That is how a plutocracy works and, until the bankstas are held to account, there will be no rest. America is not amused. Everybody knows Geithner is in the tank for Wall Street as have almost all Treasury Secretaries (and Federal Reserve Governors) before him. In effect, Wall Street committed mass financial rape of Main Street Americans. They behaved like a financial lynch mob. The mob always walks away with impunity but the victims are left swinging in the breeze. The scale of their fraud was so big that they became invulnerable. They are too big to jail. If the Justice Department indicts one of them, it has to indict all of them. The numbers are staggering. Further, these particular bandits can hire the best lawyers to defend them, thus outgunning and overwhelming the prosecutors. Thus, the best thing is to just let it go. Move on.
The POTUS and his lieutenants do not have the courage to do the right thing and uphold the law. Worse, they insult our sensibilities by saying what the bankstas did may have been unethical but not necessarily illegal. This is sheer unadulterated bullshit to protect their cronies who pony up big bucks to their campaign coffers. Politicians like Obama are trying to convince the public that they just don't understand the nuance. That is a slap in the face to anyone with half a brain by a punk politician.
Prosecution of the Atlanta VA loan guarantee officer SHORT CIRCUITS all roadblocks. There is NO other direct path. This is a gift, should we demand it! http://4closurefraud.org/2011/10/05/unsealed-complaint-wells-fargo-bank-of-america-j-p-morgan-chase-and-gmac-mortgage-engaged-in-a-brazen-scheme-to-defraud-our-nations-veterans/
You really should look at the law changes that took place from 1999 til 2005 While I agree with your end result sentiment, it's going to keep going like this until we find a way to change some laws back around. http://en.wikipedia.org/wiki/Brooksley_Born ------------------------ http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act ------------------- http://syntheticassets.wordpress.com/2009/08/15/the-no-derivative-left-behind-act-of-2005-1-5/
The laws are already on the books. It is called criminal fraud. Since 1934 the Securities Exchange Act has been in effect, which makes it a crime to fraudulently manipulate our capital markets. The laws just need to be enforced. The same is true with the SEC and the CFTC. We don't need more regulations. We need to enforce the regulations already on the books. The problem is our government is hopelessly compromised by lobbyists and special interests. Pay-to-play rules. Jail sentences are not allowed for those who pony up. The laws only apply to honest Americans like those getting their heads bashed in on the streets when they exercise their right of self expression.
The CME is suing Corzine for his personal funds I hope they win and bust him. What case in particular would you like to see prosecuted? I don't think we need more regulations I think we need different ones. I don't think we should hold onto the laws that turn our banking system into a giant welfare program for billionaires and hold our bank deposits hostage to the whims of a bunch of reckless gamblers.
Totally agree. I would like to see all of them busted and so would most other Americans. Kerry Killinger ex - WaMu crook CEO, Angelo Mozilo - ex-Countrywide CEO crook, Joseph Cassino - ex-AIG executive, to name a few. There are so many of them that you would literally have to put crime tape around lower Manhattan and financial centers across the nation. Don't forget the high-frequency traders who manipulate the markets 24/7 to make statistically impossible profits almost every single trading. You would have to incarcerate them all in huge detention centers set up for the purpose. Of course, the crooked congressmen and their staff who trade on inside information need special attention as the Capital police round them up.
line em up and pepper spray em. I wish that high seed trading was illegal It serves no purpose but to scoop nickles out of your 401k. I don't think it should be legal for any bank or insurance company that holds the funds of the public to originate credit default swaps. The risk on those can be 200 to 1. I don't think it should be legal for firms like MF Global that have control of customer funds to use 44X leverage to trade with, actually I don't think it should be legal for them to do trading within the same company, I think they need a separate isolated company to do trading in so that all the risk is there. My rules would be draconian ---they would put wall street into the free market to do whatever they wanted but with no fed loans no bank loans and no bailout options.
Absolutely agree. Where are the cops? The biggest theft is high-frequency algorithmic trading. That's where Wall Street makes the lion share of their profits. All of the other fraudulent schemes pale in comparison. Yet they get away with it because the SEC deliberately looks the other way and most people's eyes glaze over when they hear about computer trading. Making nickels and dimes in huge volume from honest investors 24/7 is a money machine and the biggest scandal, bar none, on Wall Street. The investment bankers are laughing their tails off that they are allowed to pick investors' pockets for easy money. That's why high-speed trading accounts for over 70% of exchange volume and is growing exponentially. High-frequency trading has effectively cornered the market. It's like shooting fish in a tank risk-free and police-free.
Do you think it's provable that high-frequency algorithmic trading is illegal as the laws stand now?
Yes. It is a violation of the 1934 Securities Exchange Act that prohibits market manipulation if high frequency trading is used to defraud investors.
Pardon me for paying devils advocate here. Does high speed trading manipulate market or just take advantage of the swings like any trader can do legally but a little more quickly? I don't know if you trade I do. you can see those trades when they come in. Sometimes they show up when a stock has gotten some sort of up or downgrade by one of the big houses that probably is using the programs ---if you could prove that you would have something.
Traders at investment banks and hedge funds, who are making statistically impossible profits 24/7, have to be using algorithms to manipulate market. There are many front-running and pump-and-dump methods used to accomplish this. High-speed also assists in getting buy and sell orders executed. That is why co-location is growing exponentially to shave a few micro-seconds off the time needed for the computers to execute each trade. If the market watchdog; i.e., the SEC, who is the only entity authorized to monitor trading actively would only do its job, it could easily discern manipulation by tracking time and tape. It would blow the top off the whole pervasive mega-scandal. Other than that it would take rogue traders to violate non-disclosure agreements and, therefore, lose their jobs and go public with their knowledge of illicit trading.
http://4closurefraud.org/2011/10/05/unsealed-complaint-wells-fargo-bank-of-america-j-p-morgan-chase-and-gmac-mortgage-engaged-in-a-brazen-scheme-to-defraud-our-nations-veterans/
Great website. Thanks.
That's a great site I've seen it before. I wish I could find the one I saw the other day. One of the problems with suing over these crappy mortgage bonds is that you can only sue if you hold the majority of a bond and these bonds are so hacked up.There are groups of investors who are getting together and suing. It's on that site somewhere.
We msut press the DOJ to prosecute the Atlanta VA loan guarantee officer. This prosecution will SHORT CIRCUIT all the roadblocks