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And, yes, I DO take it personally: Yes, Virginia, the banksters are really indictable crooks
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Thursday, April 14, 2011

Yes, Virginia, the banksters are really indictable crooks

when will accountability and the rule of law that we so sanctimoniously preach to the rest of the world return to our shores...?
Fiscal Scandals: Goldman Sachs May Have Misled Investors, Banks Investigated for Collusion

At this point, news of big banks engaging in illegal and unethical activities is no real shocker, but that doesn't make it any less infuriating. And today, there are not one but two gems for you to gnaw on, via Daily Beast.

First, a two-year Senate Panel inquiry into Goldman Sachs has shown the firm may have misled both Congress and investors about housing market securities. Senator Carl Levin, D-MI, wants the Justice Department and the SEC to investigate 'whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value,' reports Bloomberg.

Last year, Sachs employees -- including CEO Lloyd Blankfein -- testified under oath that Goldman Sachs did not bet against the mortgage market for profit -- and if the probe finds otherwise, they could be indicted for perjury, as well. “In my judgment,” said Senator Levin in a press briefing, “Goldman clearly misled their clients and they misled the Congress.”

And in a separate matter, US investigators are looking into whether big banks worked together to alter interest rates during the financial crisis, reports the WSJ. The DoJ and the SEC suspect institutions such as Bank of America and Citigroup colluded to manipulate the London Interbank Offered Rate (Libor), by understating their borrowing costs and keeping the global loan rate artificially low -- knowingly affecting trillions of dollars around the world and putting global finances in peril.

amazingly enough, even booz and company, the ultimate insider "global management consulting firm," per their strategy + business newsletter, is waking up...
The Comp Problem at Big Banks

This paper shines a spotlight on billions of dollars’ worth of stock trades made by the CEOs of some of the top financial institutions in the U.S. in the years leading up to the 2008 economic crisis. Highly lucrative compensation programs encouraged many of the CEOs to sell their company stock for large short-term gains, researchers found, raising the possibility that they took their eyes off the long-term needs of their shareholders and embraced excessive risk.

The researchers studied the executive compensation structures between 2000 and 2008 at the 14 largest U.S. financial institutions at that time: AIG, Bank of America, Bank of New York, Bear Stearns, Citigroup, Countrywide Financial, Goldman Sachs, JPMorgan Chase, Lehman Brothers, Mellon Financial, Merrill Lynch, Morgan Stanley, State Street, and Wells Fargo.

Drawing on trading data from the Thomson Financial Insider database (now called Thomson Reuters Insider) and information from the U.S. Securities and Exchange Commission, the study focused on the CEOs’ buys and sells of company stock in the eight years before the downturn. During this period, the CEOs collectively exercised stock options 470 times, purchasing a total of US$1.66 billion in shares. They made direct purchases on their own 73 times, for $36 million. But they sold their shares nearly 30 times as often — on 2,048 occasions. Overall, the sales came to $3.47 billion, netting them $1.77 billion after the cost of their options and direct purchases was subtracted. That works out to almost $16 million per year, on average, for each of the CEOs. They also received cash compensation of $891 million during these years, or another $8 million annually, on average.

and, of course, glenn has been pounding away on our completely out-of-balance justice system for some time now...
The two-tiered justice system: an illustration

Of all the topics on which I've focused, I've likely written most about America's two-tiered justice system -- the way in which political and financial elites now enjoy virtually full-scale legal immunity for even the most egregious lawbreaking, while ordinary Americans, especially the poor and racial and ethnic minorities, are subjected to exactly the opposite treatment: the world's largest prison state and most merciless justice system.


The New York Times this morning has a long article so perfectly illustrating what I mean by "two-tiered justice system" -- and the way in which it obliterates the core covenant of the American Founding: equality before the law -- that it's impossible for me not to highlight it.

The article's headline tells most of the story: "In Financial Crisis, No Prosecutions of Top Figures." It asks: "why, in the aftermath of a financial mess that generated hundreds of billions in losses, have no high-profile participants in the disaster been prosecuted?" And it recounts that not only have no high-level culprits been indicted (or even subjected to meaningful criminal investigations), but few have suffered any financial repercussions in the form of civil enforcements or other lawsuits. The evidence of rampant criminality that led to the 2008 financial crisis is overwhelming, but perhaps the clearest and most compelling such evidence comes from long-time Wall-Street-servant Alan Greenspan; even he was forced to acknowledge that much of the precipitating conduct was "certainly illegal and clearly criminal" and that "a lot of that stuff was just plain fraud."

Despite that clarity and abundance of the evidence proving pervasive criminality, it's entirely unsurprising that there have been no real criminal investigations or prosecutions. That's because the overarching "principle" of our justice system is that criminal prosecutions are only for ordinary rabble, not for those who are most politically and financially empowered. We have thus created precisely the two-tiered justice system against which the Founders most stridently warned and which contemporary legal scholars all agree is the hallmark of a lawless political culture.

as i sit and talk with my afghan friends here in kabul, they communicate an increasing realization of just how hypocritical our american system is... around the world, the u.s. preaches all this good stuff but it is blindingly clear that we don't walk our talk...

the afghans totally understand that there are those of us who are here for them and are willing to take the risk to come here and help in any way we can but they also clearly see just how much of a mess our system is capable of creating and the good that some of us are doing most often is completely offset by that mess... i just wish the average person on the street in the u.s. could see just how evident our hypocrisy is from a vantage point like this... that said, there are also plenty of u.s. people right here in afghanistan who are either unwilling or incapable of seeing it either...

cognitive dissonance of this magnitude simply can't stand the test of time... a reckoning is long overdue...

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