Why Isn't Wall Street in Jail? Matt Taibbi

[don]

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.


"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."


I put down my notebook. "Just that?"


"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."


Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.


The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.


Invasion of the Home Snatchers


Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."


To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."


But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.
Just ask the people who tried to do the right thing.


For the rest: http://www.rollingstone.com/politics...0110216?page=2

[mr_fibuli]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

I think the reason that the powerful have not paid the price is that the system is thoroughly corrupt and this will lead to economic collapse.
This has happened before and I don't think there is any easy way out.

Read the passages below and substitute our current situation. interesting don't you think?

- plus ηa change, plus c'est la mκme chose..........

From the Wikipedia page on the decline of the Roman empire:

Overexpansion and inflation

One of the most enduring types of evidence left behind by the later Roman Empire is its coinage. A set of coins from the later years of the Western Roman Empire shows significant evidence of numismatic adulteration, particularly in coins originally minted in silver. In later years, similar coins came to be minted out of base metal, often with only a thin cladding or coating of the precious metal.
Many historians argue that the rapid growth of the empire over a relatively short time and the economic inflation that followed contributed substantially to the empire's decay. Due to the vast size of the empire, it required an enormous budget to maintain the infrastructure necessary for its survival, including roads (essential for communication, transportation, and the moving of armies) and aqueducts (many cities relied on the water thus provided). Moreover, the empire faced enemies on all sides due to its expansion into their territories, and huge sums of silver and gold were required to keep up its armies. To cope with both problems, the empire was forced to raise taxes frequently, and also to adulterate its coins, causing inflation to skyrocket into hyperinflation. This in turn caused major economic stresses that some historians regard as central in Rome's decline.

Also:
"as Roman agricultural output slowly declined and population increased, per-capita energy availability dropped. The Romans solved this problem in the short term by conquering their neighbours to appropriate their energy surpluses (metals, grain, slaves, etc.). However, this solution merely exacerbated the issue over the long term; as the Empire grew, the cost of maintaining communications, garrisons, civil government, etc., increased."

[iyamwutiam]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

same argument was made for British and other empires.

[mr_fibuli]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

Yep - same cause, this is why people like EJ are able to predict in general terms what will happen, human societies are susceptible to the 2nd law of thermodynamics like everything else.

The American empire has peaked and will (slowly) decline. the good news is that the world won't come to an end, we'll just have to get used to a new set of circumstances.

[Thailandnotes]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

This was the core of the RS article...

"But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers.

As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. "The betrayal that this represents by Obama to everybody is just — we're not ready to believe it," says Budde, a classmate of the president from their Columbia days. "He's really ******* us over like that? Really? That's really a JP Morgan guy, really?"

Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would "demean the seriousness" of the offenses.

So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero.

[Southernguy]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

Well, if I am right this system is called CAPITALISM, not inmigrationism or lying motherism, does it.

[jneal3]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero.

This is exactly the frame of mind I'm in when I'm debating my fellow engineers (metric-driven types all) about the 'crimes' of teacher salaries, union work rules and general sloth, and welfare bums; sure, it's all bad, but for god's sake we have lost all perspective. The scale of the bankers' crimes and lack of punishment for them absolutely dwarfs the costs of the above. We have no hope of righting our society if we can't come to grips with the distortions of justice in it.

[Serge_Tomiko]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

Well, if I am right this system is called CAPITALISM, not inmigrationism or lying motherism, does it.

You'd be wrong.

It doesn't matter what the economic system is. Corruption and evil exist everywhere. Just look at one what happened to the Soviet Union.

[oddlots]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

I particularly like this bit of "colour": here Taibbi recounts Khuzami - new SEC director of enforcement - announcing a new program at a conference on financial law enforcement:

"We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client."

Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department."

That is a day-glo bordello.

[c1ue]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

And as Dr. Hudson noted: by the federal government settling in all those cases with TBTF banksters without admission of guilt, any civil follow-on suits are basically shot in the head.

[jk]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

i was struck by something jesse wrote yesterday:

The US resembles post Soviet Russia just prior to its currency collapse and the rise of the oligarchs who sought to monopolize productive assets which they bought with paper and financial manipulation. Communism died, and it ended in oligarchy. Democracy is dying, and it too will end in oligarchy, unless something is done to change the outcome.

i would add that although democracy is dying, its appearance is being maintained, zombie-like, to obscure what's happening.

[DSpencer]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

"If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."

That pretty well sums it up. This is in addition to the "privatize profits, socialize losses" system where the banks were rewarded for screwing up so badly.

[flintlock]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

All nations have corruption. It's the attitude of people towards it that makes the difference. In some countries its just seen as business as usual. In other's its seen as shocking and unacceptable. The US has moved from the latter to the former.

[zoog]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

nobody goes to jail...

Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to a $67.5-million [civil] settlement against him — did not amount to criminal wrongdoing.

la times

[c1ue]

Re: Why Isn't Wall Street in Jail? Matt Taibbi

Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to a $67.5-million [civil] settlement against him — did not amount to criminal wrongdoing.

And yet again, the possibility of a civil suit for malfeasance - shot in the head.