SEC allowed Wall Street bankers who created the global economic crisis get away with it all.

[Octafish]

Money does strange things to people.
And the larger the amount, the stranger the thing.



Matt Taibbi and Amy Goodman report:

Matt Taibbi on the Explosive Investigation Revealing the SEC's Cover-Up of Wall Street's Crimes

In an interview with Amy Goodman, Matt Taibbi explains how the SEC has let the Wall Street bankers who created the global economic crisis get away with it all.

EXCERPT...

(AMY GOODMAN:) How are they doing it, Matt?

MATT TAIBBI: Well, the SEC had a number of different levels of investigation. They had a thing called a MUI, which is a "Matter Under Inquiry," and this is basically any preliminary investigation, any tip that came in from a whistleblower or from a self-regulating organization like the Stock Exchange or FINRA, if they—suspicious trades, anything like that. If they investigated it and they did not get permission from the people up above in the SEC to proceed to a full-blown investigation, they then shredded all that evidence they gathered in the preliminary stage. So they destroyed all the evidence of all MUIs dating back to 1993, and that might be as many as 18,000 cases.

AMY GOODMAN: Under whose authority?

MATT TAIBBI: Under the authority of the enforcement division. Now, this—there’s no legal authority to do this. And, you know, apparently, according to my sources, this was illegal. You can’t just unilaterally shred any government document, no matter how insignificant. And these are significant law enforcement investigatory files that they were unilaterally destroying.

CONTINUED...

http://www.alternet.org/story/152144/matt_taibbi_on_the_explosive_investigation_revealing_the_sec%27s_cover-up_of_wall_street%27s_crimes/

Gosh. To think I was angry before...

[Donnachaidh]

1. when do we get the torches and pitchforks out? n/t

[Octafish]

4. It's weird. I dialed '9-1-1' to report a robbery and the cops came and took me away.

What William K. Black, the former government forensic economist who helped prosecute the S&L crooks, said:

The Entire Government Strategy Is To Cover Up Fraud

EXCERPT...

Black says that massive fraud is what caused the economic crisis. As one example, he explains that everyone involved knew that the CDOs which packaged subprime loans were not AAA credit-worthy (which means that they are completely risk-free). He also said that the exotic instruments (CDOs, CDS, etc.) which spun the mortgages into more and more abstract investments were intentionally created to defraud investors.

Moreover, Black says that the government's entire strategy in dealing with the economic crisis is a massive cover-up:

(They) don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up....

Geithner is ... covering up. Just like Paulson did before him....

CONTINUED w LINKS...

[coalition_unwilling]

27. AAA does not and has never meant that a given debt instrument

is "oompletely risk-free". 'AAA' means a given debt instrument has relatively less risk than lower-graded debt instruments. But there are still two principal risks in buying the bonds of any issuer: 1) that the issuer will fail and the holder of the debt instrument will not receive a return of some or all principal and 2) that the issuer will be unable to make timely interest payments and go into default.

[Octafish]

28. Thanks for the clarification. Here's more about the AAA fraudsters at work from William K. Black...

...from the Bill Moyers interview:

EXCERPT...

BILL MOYERS: Is it possible that these complex instruments were deliberately created so swindlers could exploit them?

WILLIAM K. BLACK: Oh, absolutely. This stuff, the exotic stuff that you're talking about was created out of things like liars' loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That's why it's toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it's scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I'm quoting Fitch, the smallest of the rating agencies, "the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined."

BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.

WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars' loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.

SNIP...

Then, there's AIG's role as a Hitchcock MacGuffin...

[coalition_unwilling]

29. I think it is fair to say now that the AAA ratings given to these

instruments were not based on an accurate assessment of the risk of default by the issuers.

More telling in my mind is the fact that ratings agencies receive fees from the very issuers whose debt instuments the ratings agencies were supposed to (objectively) rate. Thus, for example, an Enron or WorldCom might issue bonds and pay a fee to S&P (the biggest and most well known of the rating agencies) to have the bonds rated. With the highest prices (lowest interest rates) and greatest liquidity reserved for bonds rated AAA, there is a strong likelihood that the ratings agencies would have turned a blind eye to anything that might result in lower ratings, so as to keep fees coming from the issuers (who needed their bonds rated AAA).

The stench of corruption thus pervades the entire process.

[closeupready]

2. Very disappointing.

:mad: Sheez. :puke:

[Octafish]

5. Top Government Officials Created the Conditions In Which Fraud Would Flourish

Top Government Officials Created the Conditions In Which Fraud Would Flourish

Washington's Blog

EXCERPT...

It is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud.

Here are just a few of many potential examples:

•The government-sponsored rating agencies committed massive fraud (and see this)

•The Treasury department allowed banks to "cook their books"

•Business Week wrote on May 23, 2006:

"President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations."


•Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks

•Tim Geithner was complicit in Lehman's accounting fraud, (and see this), and pushed to pay AIG's CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was "very much in the center of the action" regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: "Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth"

•The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted

CONTINUED w links...

There's a big reason the Founders wanted transparency to keep the republic.

[slipslidingaway]

11. And some wondered why people spoke out against Geithner when Obama appointed him...

Kissinger was happy with the picks of Obama's financial team. There is a video of Kissenger on the floor of the NYSE in early January 2009.

[Octafish]

16. Here's William Black on Bill Moyers' show...

The guy was the government's chief investigator of the S&L criminality. From 2009, he explains the affects of deregulation on our current dilemma like no one else:

The Best Way to Rob a Bank Is to Own One.

Thanks for the reminder regarding Henry the War Criminal. Rather than co-chairing the 911 Commission, he decided to keep his client list secret and turned down the opportunity to serve his country. The guy really loves to turn a buck and once employed Tim Geithner.

[slipslidingaway]

30. Thanks for the link and ...

Geithner's father serves with Kissinger on the board of directors of the National Committee on U.S.-China Relations. They rang the opening bell on the NYSE in early 2009 when Kissinger was asked what he thought of Obama's economic team.

:shrug:


NCUSCR President Rings NYSE Opening Bell

http://www.ncuscr.org/?q=programs/ncuscr-rings-nyse-opening-bell

"...Accompanying Orlins at the opening were Henry Kissinger, National Committee director and former secretary of state; Zhang Yesui, China's ambassador to the United Nations; Peng Keyu, China's consul general in New York; David Stern, commissioner of the National Basketball Association; Duncan Niederauer, CEO and director, NYSE Euronext, Inc.; and Jan Berris, vice president of the National Committee.

"We are celebrating how far the United States and China have come together in the past three decades and the wisdom of those who laid the foundation for this relationship. The 45 PRC companies with a market capitalization of $802 billion that are listed on the NYSE are emblematic of the economic integration of the two countries," said Orlins. "As we celebrate the past, we need to further improve this most important relationship for the 21st century in order to deal with the problems that jointly confront our two nations."

http://en.wikipedia.org/wiki/Stephen_Orlins

Stephen A. Orlins has been President of the National Committee on United States-China Relations<1> since May 1, 2005. Prior to becoming president, Mr. Orlins was the managing director of Carlyle Asia, one of Asia’s largest (USD 750M) private equity funds. Since its founding in 1999, he has been and remains the chairman of the Board of Taiwan Broadband Communications (TBC). TBC is now one of the three largest cable television companies in Taiwan with over 640,000 subscribers. Prior to joining Carlyle, Mr. Orlins was a senior advisor to AEA Investors Inc., a New York based leveraged buyout firm, with responsibility for AEA’s business activities throughout Asia.

From 1983 to 1991, Mr. Orlins was with the investment banking firm of Lehman Brothers where he was a Managing Director from 1985 to 1991. From 1987 to 1990, he served as President of Lehman Brothers Asia. Based in Hong Kong, he supervised over 150 professionals with offices in Hong Kong, Korea, China, Taiwan, Thailand, Manila and Singapore. Prior to joining Lehman Brothers, Mr. Orlins practiced law with Coudert Brothers and Paul, Weiss, Rifkind, Wharton & Garrison in New York, Hong Kong and Beijing.

From 1976 to 1979, Mr. Orlins served in the Office of the Legal Advisor of the United States Department of State, first in the Office of the Assistant Legal Advisor for Political-Military Affairs and then for East Asian and Pacific Affairs. While in that office, he was a member of the legal team that helped establish diplomatic relations with the People’s Republic of China..."


http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3808690&mesg_id=3809124

"Geithner oversaw the Ford Foundation's microfinance programs... being developed by... Obama's mother
During the early 1980s, Peter Geithner oversaw the Ford Foundation's microfinance programs in Indonesia being developed by S. Ann Dunham-Soetoro, President Barack Obama's mother..."

[amborin]

3. incredible...and Obama is pushing for amnesty, as well

[Octafish]

6. Darcy Flynn is one whistleblower to pay attention to...

Thank You Darcy Flynn. Shame on Robert Khuzami and Adam Storch.

Posted by Luke Hornblower
Aug. 20, 2011

The SEC's credibility took another serious hit this week when veteran SEC enforcement attorney Darcy Flynn blew the whistle on document destruction at the SEC (see Rolling Stones article here). Since at least 1993 the SEC has allegedly been destroying files relating to matters that did not reach the status of a full investigation.

By way of background, in 2001 the SEC abandoned an inquiry into Deutche Bank just months before former Enforcement Director Richard Walker left to join Deutche. In 2004, Walker hired Robert Khuzami, who then left Deutche in 2009 to become the new SEC Enforcement Director. It is amazing that despite this history Flynn had the courage to send Khuzami a letter excoriating Walker's conduct in quashing the Deutche investigation. Flynn, after all, was an investigator on that case and his allegations relating to document destruction were about to become public. The document destruction allegations led to Sen. Grassley's office making inquiries to the SEC to ascertain the number of referrals the SEC received from FINRA about insider trading at SAC Capital. Not surprisingly, Khuzami rejected the request.

Khuzami is not the only SEC official embarrassed in this story. Adam Storch's comment that "(t)here are implications to admit what was destroyed" clearly indicates that he cares about his personal reputation more than he cares about the truth. His reputation is what is going to carry him to his next job on Wall Street. The truth is a minor inconvenience. If "18,000 MUIs (were) destroyed, including Madoff," that is clearly a practice that has to stop. It has to stop not just to preserve what remains of the SEC's integrity, but also to enable the SEC to comprehensively evaluate complaints of wrongdoing. It is also against the law.

The destruction of MUI files appears to be a coverup by the SEC. The destruction enables political appointees at the SEC to quash legitimate investigations without fear of consequences. If the documents are gone, no one can hold the person who quashed the investigation responsible. This power enhances top SEC officials' cozy relationships with regulated entities, thus paving the way for soft landings on Wall Street.

CONTINUED...

http://www.hornbloweronwhistleblowers.com/2011/08/thank-you-darcy-flynn-shame-on-robert.html

MUIs destroyed include Madoff's.

[girl gone mad]

7. We don't even have the illusion of democracy anymore.

[kas125]

8. at this point, there's nothing at all incredible about him pushing

for amnesty. I thought I voted for someone who would uphold Democratic ideals and values and fight to help real people in need, but every day it's more evident that that's just not the case.

[hifiguy]

10. They certainly are getting their money's worth

out of the Current Occupant. :banghead: :grr:

[woo me with science]

18. He is corrupt. The administration is corrupt. Our government is corrupt.

Both parties are working for the bankers.

[woo me with science]

19. We enabled them.

We just have to make a decision to un-enable them.

[Initech]

9. I'll repeat until I'm blue in the face: they don't care. They dont care. They don't care.

[TheKentuckian]

12. Nope and since there are no consequences and lots of rewards

Matters will grow worse and the ramifications for those that must bear the brunt of the shit storms will grow more severe.
That would be us. It is getting time to make them care or we're all going to get sucked under.

[Octafish]

13. True. Perhaps one day they'll be in jail.

If enough Americans get around to reading Taibbi. For instance, more from another DemocracyNow! interview with Taibbi:

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

EXCERPT...

MATT TAIBBI: Governor Kasich, yeah, and he was intimately involved with selling — getting the state of Ohio’s pension fund to invest in Lehman Brothers and buy mortgage-backed securities. And of course they lost all that money. And this, broadly, was really what the mortgage bubble and the financial crisis was all about. It was essentially a gigantic criminal fraud scheme where all the banks were taking mismarked mortgage-backed securities, very, very dangerous, toxic subprime loans, they were chopping them up and then packaging them as AAA-rated investments, and then selling them to state pension funds, to insurance companies, to Chinese banks and Dutch banks and Icelandic banks. And, of course, these things were blowing up, and all those funds were going broke. But what they’re doing now is they’re blaming the people who were collecting these pensions — they’re blaming the workers, they’re blaming the firemen, they’re blaming the policemen — whereas, in reality, they were actually the victims of this fraud scheme. And the only reason that people aren’t angrier about this, I think, is because they don’t really understand what happened. If these were car companies that had sold a trillion dollars’ worth of defective cars to the citizens of the United States, there would be riots right now. But these were mortgage-backed securities, it’s complicated, people don’t understand it, and they’re only now, I think, beginning to realize that they were defrauded.

CONTINUED...

Thanks for being in the know, Initech.

[Initech]

14. All the Wall St. criminals should just fry. I hate them so much.

[Octafish]

15. Hey! If an innocent guy can get zipped because a Texas guvner said so...

We should be up in arms over this -- not to hurt anyone -- but to get them ALL under arrest.

Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans

EXCERPT...

Larger Than TARP

Goldman Sachs Group Inc. (GS), which in 2007 was the most profitable securities firm in Wall Street history, borrowed $69 billion from the Fed on Dec. 31, 2008. Among the programs New York-based Goldman Sachs tapped after the Lehman bankruptcy was the Primary Dealer Credit Facility, or PDCF, designed to lend money to brokerage firms ineligible for the Fed’s bank-lending programs.

What happens after they're safely behind bars is for the courts to decide. I hope my brother-in-law, a guy who missed one day in 24 years at his now-closed company and who's been looking for work for three years now, is on the jury.

[HCE SuiGeneris]

21. You rock.

Thank you for sharing your storehouse of knowledge.

:thumbsup:

[Octafish]

24. Here's a real hero: Gary J. Aguirre

From Wikipedia:

Gary J. Aguirre is an American lawyer, former investigator with the United States Securities and Exchange Commission (SEC) and whistleblower. After working in a law firm briefly, he became a public defender, then worked as a trial lawyer in California. Having reached his professional and financial goals, he took an extended break in 1995. In 2000, he decided to go into public service and went back to law school, focusing on international and securities law. After earning his second law degree, he applied for a job with the SEC, where he became the lead investigator on an insider trading case involving Pequot Capital Management. Suspecting the leaked information came from John J. Mack, a Wall Street titan and major contributor to the 2004 campaign contribution of George W. Bush, Aguirre wanted to subpoena Mack, but supervisors told him Mack had too much "political clout" and would not be pursued. Aguirre complained to a superior about the preferential treatment being given Mack and was fired without warning. A Senate investigation later found his termination to have been an illegal reprisal.<1> In May 2010, Pequot Capital settled its insider trading charges with the SEC for $28 million<2> and a month later, the SEC settled the wrongful termination suit filed by Aguirre for $755,000.<3> Aguirre returned to private practice in San Diego in 2008, specializing in securities law. He has emerged as a major critic of the SEC, calling it an agency that was set up to protect the public from Wall Street, but now protects Wall Street from the public.<4><5> He represents Darcy Flynn, also an SEC whistleblower, who in summer 2011, was interviewed by staff from three congressional committees. He said that the SEC had destroyed thousands of records of preliminary investigations and that SEC investigators trying to pursue a case against Deutsche Bank were thwarted by Richard H. Walker, then SEC director of enforcement, who shortly thereafter, took a job at Deutsche Bank as general counsel.<6>

SOURCE: http://en.wikipedia.org/wiki/Gary_J._Aguirre

PS: Thank you for the kind words, HCE SuiGeneris! Like for you, Truth and Justice mean the world to me.

[WillyT]

17. HUGE K & R !!! - Thank You !!!

:hi:

:kick:

[Octafish]

22. Sometimes, our 'Betters' have got to break the law to protect the 'System.'

William K. Black, said the reason for the bailing-out and covering-up and and protecting criminality was to prevent "the banking system" from collapse. Black campaigned for Obama in 2008. I wonder if he will in '12?

How can the Architects of the Crisis Investigate it?

EXCERPT...

The Republican commissioners’ desire to ban the use of the word “deregulation” in the Commission’s report is understandable. There was no chance that they would support a report that explained the decisive role that deregulation and desupervison played in making the crisis possible. Wallison was a major architect of three successful anti-regulatory pogroms (primarily, but not exclusively, led by Republicans) that created the criminogenic environments that led to our three most recent fraud epidemics and financial crises (the S&L debacle, the Enron era frauds, and the current crisis). The Republican congressional leadership appointed Wallison to the Commission in order to place the nation’s leading apologist for deregulation in a position where he could defend it. President Bush appointed Harvey Pitt to be SEC Chairman because he was the leading opponent in America of the SEC Chairman Levitt’s efforts to make the SEC a more effective regulator. In each case, “mission accomplished.”

PS: You are most welcome, WillyT! Thank YOU for all you do to bring the workings crimes of these banksters and their enablers in government to light.

[woo me with science]

20. K&R nt

[Octafish]

23. We are dealing with criminality of the highest order. As many are in govt., they include traitors.

Take the de-regulation crew, led by Sen. Phil Gramm (D R-Texas). After spearheading the repeal of Glass-Steagall the guy got a gig as vice chairman of UBS, the Swiss banking giant.

UBS was under investigation for many things, from money laundering to protecting American tax dodgers.

UBS was fined $500 million for one of its transgression.

UBS -- a Swiss bank -- received $5 billion from US Treasury as part of the secret Fed bailout package.

Gosh. I should look on the bright side: We only gave them $4.5 billion.

SOURCE William K Black (check transcript where he brings up AIG and how its bailout was used to bailout the favored institutions): http://www.pbs.org/moyers/journal/04032009/watch.html

[Festivito]

25. Gee, that's almost the entire Bush term that also had the FBI drop white collar crime.

Fun with the Bushs' never seems to end.

[Octafish]

26. Toss in Poppy's term and Pruneface's stretch and it's a 20-year run of regulatory 'nonfeasance.'

That's just the BFEE. Who knows who they "left behind," Gladio-like, to, uh, oversee things in their "absence."

Almost forgot: Guess who helped "computerize" the oversight function at SEC?



Know your BFEE: Goldmine Sacked or The Best Way to Rob a Bank Is to Own One