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Forum Post: (((Matt Taibbi))) “The Notion that what Wall Street firms did was Merely Unethical & Not illegal is not just Mistaken but Preposterous"

Posted 12 years ago on Dec. 21, 2011, 12:03 p.m. EST by MonetizingDiscontent (1257)
This content is user submitted and not an official statement

Obama and Geithner: Government, Enron-Style


-December 20th, 2011-

Strongly recommend this piece at the Huffington Post... http://www.huffingtonpost.com/jeff-connaughton/obama-wall-street-laws_b_1157915.html?ref=email_share ...by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.

He takes particular aim at Barack Obama, who recently tossed that line out on 60 Minutes in what I thought was one of the real low moments of his presidency. Here’s Jeff’s take:

Speaking in Kansas... http://www.whitehouse.gov/the-press-office/2011/12/06/remarks-president-economy-osawatomie-kansas ...on December 6, [Obama] said, "Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender." Just five days later on 60 Minutes, he said... http://dealbook.nytimes.com/2011/12/12/president-obamas-take-on-wall-street-prosecutions/ ..."Some of the least ethical behavior on Wall Street wasn't illegal." Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?

The President is confusing "legal" with "difficult to prosecute successfully."

The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.

Banks and hedge funds routinely withhold derogatory information about the instruments they sell, they routinely trade on insider information or ahead of their own clients’ orders, and corrupt accounting is so rampant now that industry analysts have begun to figure in estimated levels of fraud in their examinations of the public disclosures of major financial companies

Beyond that, as Jeff points out, Obama is simply not telling the truth about the supposedly insufficient penalties available to regulators. Employing the famous "mistakes were made"... http://www.youtube.com/watch?v=mjfyu0rkAxM ...use of the passive tense, Obama copped out in his December 6 speech by saying that “penalties are too weak." As Jeff points out, what Obama should have said is that "the penalties my own regulators chose to dish out were too weak":

Moreover, the President is misleading... http://dealbook.nytimes.com/2011/12/12/the-limits-of-bigger-penalties-in-fighting-financial-crime/ ...us when he says that Wall Street firms violate anti-fraud law because the penalties are too weak. Repeat financial fraudsters don't pay relatively paltry -- and therefore painless -- penalties because of statutory caps on such penalties. Rather, regulatory officials, appointed by Obama, negotiated these comparatively trifling fines. This week, the F.D.I.C. settled... http://www.nytimes.com/2011/12/14/business/ex-bank-executives-settle-fdic-suit.html?_r=1&scp=4&sq=louise%20story&st=cse ...a suit against Washington Mutual officials for just $64 million, an amount that will be covered mostly by insurance policies WaMu took out on behalf of executives, who themselves will pay just $400,000. And recently a federal judge rejected the S.E.C.'s latest settlement with Citigroup, an action even the Wall Street Journal... http://online.wsj.com/article/SB10001424052970204449804577068111887428598.html?KEYWORDS=rakoff ...called "a rebuke of the cozy relationship between regulators and the regulated that too often leaves justice as an orphan."

What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud. Here’s how Jeff puts it...

In Ron Suskind's book, Confidence Men, he quotes... http://books.google.com/books?id=GYaZj3l0VDwC&pg=PT286&lpg=PT286&dq=geithner+suskind+disclosure+fraud+Lehman&source=bl&ots=NIEJ7EIDE_&sig=ghWxv8hjZ5Ew2ZYVCpmuyG5f6EU&hl=en&ei=Nb_oTsUKxre3B_LmoeoK&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCAQ6AEwAA#v=onepage&q&f=false ...Treasury Secretary Timothy Geithner as saying, "The confidence in the system is so fragile still... a disclosure of a fraud... could result in a run, just like Lehman."

The Obama Administration is pushing... http://www.forbes.com/sites/halahtouryalai/2011/12/13/not-even-a-19-billion-settlement-will-end-the-mortgage-mess/ hard for a 50-state settlement with the major banks for their fraudulent foreclosure practices, even though several state attorneys general have rejected this approach because, in their view, it would shield too much wrongdoing. Regrettably, Obama's top officials and lawyers seem more eager to restore the financial sector to health than establish criminal accountability among the executives who were in charge.

In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!

This is exactly the mindset that led Lehman to the abuses of the "Repo 105" accounting trick... http://dealbook.nytimes.com/2010/03/12/the-british-origins-of-lehmans-accounting-gimmick/ ...in which loans were disguised as revenues in order to prevent the outside world from knowing the dire state of the bank’s balance sheet.

Now Obama and Geithner are engaged in the same sort of activity, only they’re trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer – and suffer, incidentally, on Barack Obama’s watch.

Better, apparently, the Band-Aid the problem now, and let the real mess happen later on, on someone else’s watch, or at least in a second term, when there’s no need to worry about re-election.

Of course, this is exactly the wrong way to go about things. If Geithner and Obama really wanted to convince the world that America’s markets weren’t broken, they would effectively police fraud, and by extension prove to everybody that at the very least, our regulatory system is not broken.

But by taking a dive on fraud, and orchestrating mass cover-ups like the coming foreclosure settlement fiasco, what they’re doing instead is signaling to the world that not only are our financial markets corrupt, but our government is broken as well.

The problem with companies like Lehman and Enron is that their executives always think they can paper over illegalities by committing more crimes, when in fact all they’re usually doing is snowballing the problem so completely out of control that there’s no longer any chance of fixing things, thereby killing the only chance for survival they ever had.

This is exactly what Obama and Geithner are doing now. By continually lying about the extent of the country’s corruption problems, they’re adding fraud to fraud and raising such a great bonfire of lies that they probably won’t ever be able to fix the underlying mess.

If they looked at the world like public servants, and not like corporate executives, they’d understand that the only way out is to come clean. That they don’t look at things that way should tell people quite a lot.

(((Continue reading this article Here))) http://www.rollingstone.com/politics/blogs/taibblog/obama-and-geithner-government-enron-style-20111220#ixzz1hBnrRXvy



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[-] 2 points by shadz66 (19985) 12 years ago

For further insight into the subject of this post (and indeed, Forum !), please also avail : http://topdocumentaryfilms.com/category/economics/ ."radix malorum est cupiditas" !


[-] 2 points by DKAtoday (33802) from Coon Rapids, MN 12 years ago

This is why we are here this is why you are needed.


Share, circulate, educate, inspire.

[-] 2 points by PublicCurrency (1387) 12 years ago

good post - thank you

[-] 3 points by shadz66 (19985) 12 years ago

Ditto + bumping this important forum-post with : http://topdocumentaryfilms.com/super-rich-greed-game/

[-] 1 points by RedJazz43 (2757) 12 years ago

I'd go further than that. It really doesn't matter if Wall Street firms or all corporations for that matter, are totally ethical and operate completely within the law. Even if that were the case, the fact is the interests of corporate power and the interests of the vast majority are antithetical and we should oppose them on that basis, not because they are unethical or even illegal, but because their material interests do not correspond to the interests of the vast majority.

Which is to say, from that point of view, that the most ethical and the most strictly legal corporation is as bad as the most unethical and criminal corporation from the point of view of the vast majority.

[-] 1 points by DKAtoday (33802) from Coon Rapids, MN 12 years ago

Take action. See samples of how below.

183,361 signatures so far for Bernie Sanders petition as of 10:15am central time 01/15/2012


The petition to save abandoned houses has 15 signatures. We picked one up at around 9:50pm 01/13/2012. Were just rolling right along.


Here is a place where you can directly address change. Take part, it does not hurt and may very well heal/help. Forward the cause of reform and rebirth.


Sierra Club has some good things to take part in as well. Set-up and ready for you to take part in. http://sierraclub.org/

[-] 1 points by DKAtoday (33802) from Coon Rapids, MN 12 years ago

Here is a place where you can directly address change. Take part, it does not hurt and may very well heal/help. Forward the cause of reform and rebirth.


[-] 1 points by Anachronism (225) 12 years ago

The same shit is going on in Europe - the whole banking system is bankrupt and lying about everything. When the "market" finally figures it out - it's depression time. Credit will contract, many countries will finally go bankrupt, unemployment will spike globally and then we are in a new world. Obviously this would be wonderful for Occupy.

[-] 1 points by valfather (286) 12 years ago

Obama is the Wall Streetest President in history.

[-] 1 points by WatTyler (263) 12 years ago

Great post. Think you should e-mail to the Office of The President and request comment. Not that it will be worth much, but its not bad to let them know someone is paying attention.

[-] 1 points by DKAtoday (33802) from Coon Rapids, MN 12 years ago

You think The Bold are getting Restless over perhaps overestimating their position and what they could get away with? and Now they're twisting every media arm that they can to help them minimize the damage their error in strategy/judgment is causing?

[-] 0 points by ZenDogTroll (13032) from South Burlington, VT 12 years ago

There is no excuse for covering up the fraud perpetrated by Wall Street.

[-] 0 points by shoozTroll (17632) 12 years ago


So was Reagan, Bush I, Clinton, and Bush II.

This is not new stuff. It's been years in the making.

Where have you been?


[-] 1 points by MonetizingDiscontent (1257) 12 years ago

You are correct. And I have said the very same thing myself.

~Left-Right~ Whats the difference. For the most part, it doesn't matter in the least whether Left or Right occupy the presidential office, because they both want to grow the debt, they both want to fund ever more war. The majority of law makers want military to police america and arrest citizens... It goes on and on and on... Its beyond misrepresentation.

The Office keeps the powers that presidents empower with unconstitutional executive orders. The OFFICE retains the power. The OFFICE doesnt care about party colors/flags. Presidents come and go.

[-] 0 points by vets74 (344) from New York, NY 12 years ago

That's the core of it.

Prosecutorial Capture - the key to the Depression of 2008.

$7.3-trillion total scam.