Recent Items

Can the Schneiderman-Infused Financial Fraud Unit Prosecute Vikram Pandit?

Posted on by

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at@matthewstoller.

There are two underlying structural problems with the new(ish) Federal task force on financial fraud.  One, it is the policy of the administration to protect the banking system’s basic architecture, which means the compensation structure and the existing personnel who run these large institutions.  Any real investigation into the financial collapse will inevitably lead to the collapse of this architecture.  Thus, any real investigation will be impeded when it begins to conflict the basic policy framework of the Obama administration.  And this framework is set by Obama.  It’s what he believes in.  He made this clear in his first State of the Union, when he said a priority of the administration was to ensure that “the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.”

Two, Obama personally believes in the legitimacy of the existing banking institutional framework and he strongly suspects that no crimes were committed.  He has hired a raft of people – including Jack Lew, Tim Geithner, Eric Holder, Larry Summers, and so on and so forth – who agree, and has implemented policies such as Dodd-Frank that assume as much.  His administration genuinely believes that mortgage fraud has been a top priority of theirs, as I showed this morning.  These people aren’t stupid, they aren’t without principles, and they aren’t electorally driven.  They are ideologues.  They really believe in a neoliberal political economy, where government throws money at the economy through private channels and private channels do with it whatever they think best.  As Jonathan Alter, who is as close as you can get to the administration’s emotional spokesperson, explains in a column titled “For Obama, Pro-business Populism is no Oxymoron”:

The president, channeling John F. Kennedy’s famous inaugural address, framed it almost as a patriotism question: “Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”

The response to this is often: Who is the president to tell me where or how to run my business? But he’s not. He’s simply saying he’ll offer you tax advantages when your interests are aligned with the nation’s, and he won’t when they aren’t. (italics are mine)

The Obama administration’s posture is not passive because Obama is weak, it is passive because President Obama and his administration believe passivity towards business interests is the appropriate role of government.  Schneiderman does not believe this, he wants to govern.  And that’s why he wants this Federal task force, because the Federal government has more resources and tools (including legal authority, personnel, jurisdiction, and documents) that he needs to do a reasonable job explaining to the country through the use of the Justice system what happened in the multi-trillion theft and why.  But he is coupled, as co-Chair, with several of these people who, as Matt Taibbi puts it, might “in an ideal world… be targets of their own committee’s investigation.”  This makes it very difficult to consider how they could possibly work well together, with such misaligned interests.

There is a possible a collision coming, because the two parties have contradictory objectives.  For now, the administration probably believes that this is a good political talking point, and nothing more.  Perhaps the task force will go after a few mid-level people, or not, but it isn’t really going to cause any major problems for them.  Schneiderman for his part has already said he’d walk away publicly if he is impeded in his investigation, as Dave Dayen noted in his terrific series of articles on the whole episode.

As just one example, Jonathan Weil keeps wryly pointing out that Vikram Pandit at Citigroup may be guilty of violating Sarbanes-Oxley.

In February 2008, two months into his job as CEO, Pandit certified in Citigroup’s 2007 annual report that the company’s internal controls were effective. Eight days before he did that, the U.S. Office of the Comptroller of the Currency had sent him a seven-page letter detailing all sorts of ways in which Citigroup’s controls were inadequate.

The statute seems pretty clear to me, though I’m not a lawyer.  The criminal statute says that CEOs must certify financial statements of their companies, and “that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer”.  If a CEO certifies false statements it’s a million dollar fine and up to 10 years in jail.  If a CEO willfully certifies false statements it’s a five million dollar fine and up to 20 years in jail.

There are many details of the task force that are as of yet not public, so it is not clear to me that doing a case like this is possible.  But it’s quite obvious that mega-bank officials and regulators lying about the perilous state of various financial institutions to the public was a key part of the crisis, and that accountability on this front is probably critical to restoring faith in the system.  It would certainly be a big statement upfront if this is what this task force attempted to take on.  Will it?  That’s a very good question, and one I hope we get answers to, soon.

Print Friendly
Twitter19DiggReddit0StumbleUpon0Facebook11LinkedIn2Google+1bufferEmail

66 comments

  1. Walter Wit Man

    Good post but you are too kind to Schneiderman.

    We don’t know his true intentions.

    If we must speculate, the opposite conclusion than the one you reached is the appropriate conclusion: like Obama, Schneiderman doesn’t want to rock the boat too much.

    Schneiderman already has a lot of resources and power. Where are the charges? Where is the serious civil case? Where are the subpoenas, grand juries, and investigations?

    I don’t buy this excuse that the crimes are too complicated or there aren’t enough resources (we live in the biggest police state in the world, and NY is leading the way).

    No, who benefits from Harris and Schneiderman “holding out?” This is yet another delaying tactic and yet another version of Mr. Good Progressive Goes to Washington.

    I’ve learned from my mistakes and liberals need to wake the heck up–the Democrats are NOT your friends.

  2. F. Beard

    They really believe in a neoliberal political economy, where government throws money at the economy through private channels and private channels do with it whatever they think best. Matt Stoller

    Sounds like pure fascism to me … because it is?

    But government could do plenty of good by throwing money – to the entire population to compensate them for the damage the banks have done to them.

      1. F. Beard

        My definition of fascism is government privilege for private interests such as exists with the banks – which should be purely private businesses (assuming they could survive as such).

        Benito Mussolini said “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”.

        Fascism is just the same ole corrupt business monopoly via government force model. It’s detestable to any believer in fair competition.

        1. Historicaecon

          I’m with F Beard on this one. The symbol of fascism is not the swastika, it’s the fasces – bundled rods and axes carried by Roman lictors. That’s where the word comes from. The implication of the symbol is this: “we are all in this together.” In a fascist system corporations are work hand in glove with the goverment, each furthering the other’s ends. And yes that is what Obama is proposing.

    1. Walter Wit Man

      There is such a wide variety of laws, state and federal, it’s almost criminal (ha) that there have been ZERO prosecutions. I mean they have SO MANY possible laws and theories to choose from.

      They are still having co-chaired panels to prepare to investigate whether to prosecute people . . . years after the fact.

      I think this most recent iteration of these fake task forces/panels will recommend that the U.S. AG file charges, no? And it will take 2 out of 3 votes to make this ‘recommendation’? No?

      I’m guessing about the procedure from the little I’ve read because I see this whole exercise as a criminal (no ‘ha’ this time) sham and see no need to entrap myself going into to much detail.

    2. Walter Wit Man

      So instead of Schneiderman using his considerable powers as the AG of NY to go directly after the titans of Wall St., he will instead become co-chair of a task force (where he will be the minority), that could recommend to the U.S. Attorney General that he prosecute Vikram Pandit under Sarbannes-Oxly.

      Is this right? Will he have prosecutorial powers?

      And we are assured (via leaks in the “press”) that Schneiderman has personally guaranteed that he will walk away if it’s not on the up and up.

      Ha.

    1. Aquifer

      Because Vikram Pands happens to be the name of the CEO of Citigroup, a particularly egregious actor in this mess – if the CEOs name was John Smith, he’d be talking about going after John Smith …

  3. JTFaraday

    “These people aren’t stupid, they aren’t without principles, and they aren’t electorally driven. They are ideologues. They really believe in a neoliberal political economy, where government throws money at the economy through private channels and private channels do with it whatever they think best.”

    Being a pro-business ideologue is one thing. Being an enabler of unprofessional and criminal conduct in finance and real estate is another.

    Obama, and many other people working in the US government, have become the latter, ie., they are criminal accessories, obstructing justice.

    There is really no reason we shouldn’t also be prosecuting them. If nothing else, this should grounds for impeachment and removal from public office.

    Is there no one in the government who can get these people out of here?

    1. different clue

      Probably not. The filthy little Bush-collaborator Pelosi
      took impeachment “off the table” to keep Bush and Cheney in power till the very last moment, and I don’t doubt that equally Pelosoid scum, perhaps Pelosi itself, would keep impeachment “off the table” where Obama is concerned.

  4. JamesW

    “The president, channeling John F. Kennedy’s famous inaugural address…”

    Hold on there, President Kennedy actually stood up to GE for the workers there while President Obama has appointed their CEO, Immelt, as his “jobs czar” — speaking of Obama’s Council on Jobs and Competitiveness” — aren’t all most every one on it on the BoD of a bank, or formerly an MD with one?

    Jeffrey Immelt, General Electric chief executive
    ***(see “Secret History of GE”)

    James W. Owens, head of Caterpillar
    (On boards of the Peterson Institute – whose long-time agenda has been the offshoring of all American jobs, the privatization of Social Security, Medicare/Medicaid, and is the baby of Peter G. Peterson, LBO pirate, and on board of Business Roundtable)

    Robert Wolf, chairman and CEO of UBS Group Americas
    (Oh great, a guy from the major Swiss bank!)

    Mark Gallogly, founder and managing partner at Centerbridge Partners L.P.
    (formerly with Blackstone Group, world’s largest private equity LBO firm, Centerbridge is also a private equity, leveraged buyout firm)

    Penny Pritzker, chair and founder of Pritzker Realty Group and Classic Residence by Hyatt
    (Member of the ultra-rich Pritzker family, questionable bank ownership w/involvement in subprime industry, and you do know about all the anti-labor and criminal behavior at Hyatt, right?)

    John Doerr, partner at Kleiner, Perkins, Caufield & Byers
    (Doerr has a mixed background, but while he was with Intel, he appeared to strongly support the jobs offshoring program — Intel lost over $1 billion in the chip project in India, which they belatedly relocated back to America. Doerr also appears to support the privatizing of American education.)

    Monica C. Lozano, Director of Bank of America
    (BofA director, what more need be said? That she was also on the BoD of Walt Disney Corporation, and the Tenet Healthcare Corporation [from a wiki entry: In the early 1990s as National Medical Enterprises, the company was accused of committing fraud by admitting thousands of psychiatric patients who did not need hospitalization and then charging these patients inflated prices. In 1991, the federal government investigated the company for fraud and conspiracy. In 1993, offices of the company were raided by law enforcement in an attempt to show that the company was defrauding patients and insurance companies. In 1994, the company paid $2.5 million to settle lawsuits from 23 patients at its psychiatric hospitals. Again in 1994, National Medical Enterprises settled fraud charges with the United States and 28 states involving payments of a record $380 million USD at the time and federal guilty pleas on eight criminal counts by two of its units. The company also agreed to a 5-year corporate integrity agreement with the U.S. Department of Health and Human Services.] Also on BoD of a Mitsubishi financial subsidiary.)

    Charles E. Phillips, Jr., president of Infor.
    (former managing director with Morgan Stanley)

    Richard L. Trumka, president of the AFL-CIO

    Austan Goolsbee, chairman of Council of Economic Advisers
    (Told the Canadian press, during Obama’s first presidential campaign, that all the talk against NAFTA was purely political, and not to be concerned. Goolsbee’s wife is a former management consultant at McKinsey & Company, historically the major PR/mouthpiece for the global banking cartel. Also Yale Skull & Bones)

    Christina Romer, former chairperson of Council of Economic Advisers
    (Submediocre economist, questionable papers on causes for the Great Depression, not that far removed from Bernanke’s submediocre papers on the Great Depression.)

    William H. Donaldson, former Securities and Exchange Commission chairman
    (Nixon and Geo. W. Bush administrations, Skull & Bones – also, I believe Donaldson is a member of THE Donaldson family, which married into and became part of the ultra-rich DuPont family.)

    Laura D’Andrea Tyson, former Chair of the Council of Economic Advisers during the Clinton Administration
    (Long-time position on Board of Directors of Morgan Stanley)

    Martin Feldstein, former chief economic advisor to President Ronald Reagan,
    (Feldstein was a director at HCA when they paid the largest out-of-court settlement for Medicare/Medicaid fraud, Feldstein was a director at Eli Lilly when they had to pay the largest criminal penalty in history for falsely marketing a drug which killed a number of people (over $1 billion penalty), and Feldstein was a director at AIG’s Financial Products group when they were involved in the largest insurance swindle in US history (selling $460 billion worth of credit default swaps without keeping the necessary capital on hand — received over $333 billion in government bailouts, and still counting, had billions also written off from their losses by the US gov’t – you may have heard of them???)

    Roger W. Ferguson, Jr., President and Chief Executive Officer of the Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF)
    (Former partner with McKinsey & Company, member of the Group of Thirty, the international group of financiers, created by the Rockefeller Foundation in 1978, which pushed for the removal of “legal risk” in the widespread adoption of credit derivatives, i.e., the primary cause and platform for debt leveraging resulting in asset-price inflation, in other words, massive wealth transfer to the plutocracy. Majority of Group of Thirty members also belong to Peter G. Peterson’s Peterson Institute, also referred to as the International Institute for Economics.)

    David F. Swensen, CIO at Yale University
    (Former SVP at Lehman Brothers, specializing in swaps.)

    ***SECRET HISTORY OF G.E.

    During the economic meltdown of 1892, JP Morgan, that plutocratic parasite, engineered the takoever of Edison Electric, the company of America’s most prolific inventor, Thomas Edison, along with Edison’s electrical patents.

    JP Morgan also scammed the brilliant inventor and father of our electrical grid, Nicholai Tesla, out of the majority ownership of Tesla’s patents!

    Morgan effectively ended the inventing careers of both Edison and Tesla!

    In 1985, Jack Welch began a program of massive offshoring of GE’s tech jobs: engineers, programmers, R&D scientists, etc., and over the next decade restructured GE into a private equity firm and hedge fund of hedge funds.

    Today, GE only exists because they were given TARP bailout funds.

    I guess that’s why GE’s CEO, Jeffrey Immelt, is President Obama’s advisor?
    (special thanks to SD for this!)

    1. Goin' South

      JFK:

      “My dad always told me that (all?) businessmen are sons of bitches.”

      Applied to US Steel when they reneged on a deal that Kennedy had brokered between them and the the United Steelworkers.

      And it was more than just words. Kennedy and his brother/AG went after US Steel and its management with all the tools of the federal government until US Steel caved.

    2. Walter Wit Man

      Wow. Great summary of the stooges in Obama’s administration.

      Imagine what would have happened if you wrote this blog post 4 years ago predicting this–you would have been shouted out of polite society.

  5. Hugh

    “These people aren’t stupid, they aren’t without principles, and they aren’t electorally driven. They are ideologues.”

    As I have been trying to get across here recently, believing in something does not mean you are acting in good faith. If someone believes something when they should know better, they have the resources to know better, and they are being paid to know better, yet they persist in patterns of gross wrongness which just happens to enrich them and theirs, then the good faith, or good principles, defense is off the table.

    And Obama is electorally driven.

    As Bill Black has been saying for an age, control fraud is pervasive. And it is inherently a violation of Sarbanes-Oxley. There isn’t a banking CEO on Wall Street who hasn’t trashed SarbOx.

    “President Obama and his administration believe passivity towards business interests is the appropriate role of government”

    Again they are acting in bad faith. What they are actually doing is actively facilitating the looting of the country and the 99%.

    Finally, Schneiderman is a Democratic officeholder. He signed on to this committee to help himself, the Democratic party, and Obama. He did not do it to help us.

    1. Aquifer

      i agree completely – why does one insist on plastering the “value neutral” badge of “ideology” on Obama? His motives, IMO, lie an a considerably lower plain than “ideology” unless that considers that being elected at whatever cost is an “ideology”. The guy sought power and position, played the game, got what he wanted and has continually acted in ways he calculates are most likely to help him preserve it.

      One cannot serve 2 masters, as they say – he has chosen mammon; if that is an “ideology” for Mr. Stoller

      For a great example, check out Moyer’s interview of John Reed (Reid?), former CEO of Citigroup, the latest in Moyer’s series – where the euphemism for greed is “exuberance” …. Perhaps Mr. Stoller would call that an “ideology” as well?

      I think that program is well worth watching, as well as the f/u with Byron Dorgan, the contrast is stark and revealing …..

  6. Paul Tioxon

    Here is an acid test of what may come about. The Great Mortgage Fraud Settlement may be upon us. But so is the newish investigations. You don’t announce a settlement and reinvigorate a unit to look into criminality at the same time. It does not make any sense. Unless, the settlement is a narrow sliver of only one crime, the robo signing and the rest of the possibilities for liability other than lying to local courts about foreclosure is left wide open. Hence, this timely report from Huff Post.

    http://www.huffingtonpost.com/2012/01/27/obama-administration-mortgage-fraud-settlement_n_1236708.html

    “According to someone intimate with the negotiations, there will be no legal release of the banks with respect to:

    Criminal liability.
    Tax liability
    Fair lending, fair housing, or any other civil rights claim.
    Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
    CFPB claims for the period after they came into existence in July 2011
    SEC claims
    National Credit Union Association Claims
    FDIC claims
    Federal Reserve Board claims
    MERS claims

    In addition, the source said, there will be preservation of the vast majority of securitization claims including all claims regarding state pension funds as well as the vast majority of the origination fraud claims from HUD, the VA and the USDA. ”

    Now try not to invoke Hitler or fascism, tools of Axlelrod etc. and see, if what is being leaked, bears any reality to what will actually come about. It seems if Schneiderman does not just want to idly pass his time in office, this settlement gets done on local corruption of lying to recorders of deeds and the larger issues are left on the table for someone like him with a joint Fed/state task force to sink their teeth into. That would make sense out of the dual nature of having a settlement and a newish investigation. How effective the New Unit will be we will have to wait and see.

    1. Walter Wit Man

      But the only thing on that list that concerns the State AGs is #1 and #10: criminal liability and MERS. The other stuff is primarily the federal government’s concern.

      So the State AGs don’t have anything to give away! What is there to negotiate? The state AG can’t release the banks from liability if the Federal Reserve, or SEC wants to prosecute under federal law.

      So that list of other stuff is simply added to the state AG settlement discussion to confuse liberals and make them think Obama and the gang are doing something about financial crime in general.

      Again–these are not connected.

      There is no legitimate reason for the banks to seek releases from the state AGs on 8 of the claims on that list of 10.

      This is a con job on so many levels.

      1. Paul Tioxon

        Your make an irrelevant argument on 2 grounds:

        1. State AGs can and sometimes do exercise Federal authority. W Virginia AG went up against Capital One in Federal Court to overcome Federal preemptive obstacles to holding that credit card company accountable. The Consumer Products Safety regulations authorizes state level enforcement. It is not entirely out of their jurisdiction if that is what you are getting at. But then, that is why there is a teaming with the Feds.

        2. In the areas of state jurisdiction where the Federal Attorneys do not bother with the fraud of lying to deed recorders at the county level and the lying to local judges about foreclosures, just because the Feds don’t bother with this does not mean they can’t wave their corrupt fascist magic deny the rule of law wand and release and waive and indemnify and generally hold harmless the banks in all of the other 9 area which, if the report is true, the Feds are not closing the door on. It WOULD have been a nice trick to cop to locals and pay a pittance and also, get the DoJ to sign off on any further criminal prosecution, but that old deal, the one that stand to high heavens, if the report is true, is no longer the case. So, it is still a mine field for the banks, and they are paying for robo signing but not being absolved from every other crime in the books, because they settled for this little slap on the wrist. They could not get away with that big of a gift. No matter what you think, or say. The old deal has changed and their criminal liability is still open to prosecution. Whether anyone, now that Schneiderman is there, will do anything about, it is not because they got a plea bargain not to be further prosecuted. And that is a change in the deal.

        1. Walter Wit Man

          You have a point on number 2. I agree the state AGs can waive criminal liability (but wouldn’t they have had to name individual people?), but I guess I was saying I would be shocked if the AGs would agree to release criminal liability without even doing an investigation. I mean it’s shocking enough they are agreeing to a civil settlement before an investigation but I never figured they would be brazen enough to actually try to shoehorn it in there.

          So, unfortunately, maybe all the Attorneys General in this country are that corrupt. Like I keep saying, I’m not cynical enough.

          As to point 1 . . . c’mon. Sure, there is some overlapping jurisdiction but this amounts to what, about 1% of all criminal and civil liability the banks face both under federal and state law? [just to throw a number out there] If that?

          And again, what legitimate reason do they have to negotiate a global settlement and a release of this scope? How did they go from negotiating robo-signing claims to get-out-of-jail-free cards for everyone? I wonder how much time they wasted on that useless exercise–that seems only intended to fool liberals and delay justice.

    2. Walter Wit Man

      The real bombshell of this leak is the fact that the state Attorneys General evidently were considering RELEASES FROM CRIMINAL LIABILITY.

      I want to know which Attorneys General were going to be bought off in this way? Why was this even considered?

      Can corporations literally BUY GET-OUT-OF-JAIL-FREE cards now? They get to simply pay money not to go to jail for crimes?

      Can average people purchase get of jail free cards?

      Wow, instead of an exculpatory leak this seems like an admission that our state Attorneys General are actually working hand in hand with the criminals.

      No investigation and state AGs were negotiating this? Crazy. There should be firings and prosecutions based on this fact alone. It’s a deriliction of duty and a borderlien criminal action.

      Seriously.

    3. Walter Wit Man

      Jeez, an attorney that recommended his client settle a civil case before there had even been an investigation may be acting unethically.

      But I would be interested in seeing the ethical opinions on prosecutors giving huge numbers of criminal defendants get out of jail free cards before even conducting an investigation. Especially since the potential criminals are the friends and benefactors of the prosecutors and politicians. How is this ethical?

      What was considered during the negotiations? What, would individual witnesses provide token “testimoney” in exchange for get-out-of-jail-free cards?

    4. LeonovaBalletRusse

      Paul, wouldn’t a real prosecution bring Financial Revolution?

      BILL BLACK/YVES SMITH 2012: Justice for the People Now

      Occupy Charlotte 2012

  7. Mogden

    This is really just an exercise in running out the clock on the statute of limitations. I gave up any hope of effective implementation and prosecution of the law a long time ago. The elites are too corrupt, and they will remain that way until some number of them are dangling from lightposts.

  8. steelhead23

    Is it possible that Obama is promoting a harder stance as regards the banks? I note that the Fed, under the tutelage of a chairman Obama expended a bit of political capital to get re-confirmed has provided extended ZIRP, opened its lending windows to dreck, with extended repo dates, bought tons of MBS, to prevent a global financial implosion and inject liquidity, all at considerable risk to the dollar. Yet, loans are hard to get and startups, are quite slowed, dampening recovery. And the banks gamed the HAMP to death. I suppose one might say that once a hopium addict, always a hopium addict, but I simply have to hope.

  9. Middle Seaman

    Thus, we have to listen an abomination such as for Obama Pro-business Populism is no Oxymoron. There is absolutely nothing about Obama that is populist. He is a member of the elite by choice and is fully aware and delighted about it.

    Almost everything in the first two paragraphs of this post is either dead wrong or insifnificant. Obama supports the banks because they are his people, they elected him. Of course, they did nothing wrong after all they his friends.

  10. Francois T

    “These people aren’t stupid”

    Puhleeeze!!

    An obtuse and persistent refusal to look at the facts on the ground characterize stupidity.

    An agile brain is totally useless without a minimal disposition to see the world as it is.

  11. Jackrabbit

    These people aren’t stupid, they aren’t without principles, and they aren’t electorally driven. They are ideologues.

    As others have said earlier, this seems way too kind. Couldn’t something similar be been said about the catholic hierarchy that covered up child abuse?

    —————————————————-

    Paul Tioxin’s description of the crimes that would not be covered by a State AG settlement is very interesting. Maybe the Obama administration is trying to get the State AG settlement over the goal line with promises of future action on larger issues? This would be an angle that would pull someone like Schniederman in: national attention.

    The question we are trying to answer here, I think, is this: has Obama turned from cronyism to power politics? This new commmission could scare up Wall Street support (campaign $ – hoping for better treatment) even as Obama engages in populist rhetoric.

    Obama is facing at a difficult campaign. He HAS to go more populist and Wall Street has been turning more toward the Republicans. Every dollar that Obama “scares up” is a dollar denied to the GOP.

    Note: Whatever the 11-dimensional chess may be, a healthy dose of skepticism toward any promises, excuses, rationalizations from the Obama Administration is still in order.

  12. Blurtman

    Can the Schneiderman-Infused Financial Fraud Unit Prosecute Hank Paulson?

    Can the Schneiderman-Infused Financial Fraud Unit Prosecute Jamie Dimon?

  13. The Bulb

    Look no further than the SOTU address. Obama says “no bailouts” and 5 minutes later proposes a massive refi scheme that would be a huge bailout of the banks by transferring default risk from banks to the taxpayers. The idea is going nowhere, but it still highlights the fact that he is playing hardball with banks in words only.

  14. James

    More election year smoke and mirrors, no more, no less. If we’ve learned nothing else from NoBama in his first three years, it’s that the only “change we can believe in” is the one transforming the US into a imperialist, fascist, crony-capitalist puppet state hell bent on world domination and the enrichment of the few at the expense of the many. All enabled by a signature winning smile and grand rhetorical style that lets everyone know for certain that he knows that we know what he’s up to and could give a f*** less. Arrogance can’t even begin to describe the hubris coming off of this guy. Being a bought and paid for puppet leader of an all powerful corporate state will do that to you I hear.

  15. Mr. Coughsalot

    A cynical person might think the fraud unit is a signal for the banks to “pay” or be “played.”

    When a bank gets $100s of billions, one wonders what small percentage needs to get funneled back to government servants to maintain the fed reserve printing presses and keep lady justice blind.

  16. Lakecabs

    I have been trying to find out about Schneiderman. The info I have seen seems to be lacking. I have tried the normal ways to look up stuff about him. Does anyone have a good link?

    1. Walter Wit Man

      I would be interested in a better sketch of the man as well.

      I’m more cynical than most so when I see news from last August (!) that Schneiderman was kicked off the executive committee of the State AG negotiation team my spidey senses begin to tingle because I see how Schneiderman is being set up by the Democrats to be a progressive hero:

      For instance, notice the response the Democrats got:

      “Please everyone, we must support this man. He is our last hope on a national level.”

      http://4closurefraud.org/2011/08/25/dismissal-of-ny-attorney-general-schneiderman-shows-obama-administration-and-iowa-ag-miller-poised-to-let-big-banks-off-the-hook-for-mortgage-fraud/

      I’d be interested in more details of his personal story too but I’ve already made up my mind. If he were serious he would be ACTING in a much different way.

      This is all a contrived drama so that Schneiderman, Harris, and Beau can look like progressive heroes.

      They aren’t. They are neoliberal scumbags participating in the cover up.

    2. LillithMc

      Schneiderman was on Rachel Maddow last night. He said his state had a few good laws that could help him. He is working closely with Beau Biden on the MERS lawsuit. The meeting of the new committee with the Justice Department was exciting because of the additional help and funding that was provided. He also said there were tax implications that could be helped at the federal level. He seemed very upbeat.

      1. Nathanael

        I suspect Schneiderman intends to simply take the results of the federal investigations and use them / send them to the IRS.

        He’d better watch out though; I think that he’s too naive. He will be given dishonest investigators who will stonewall him and feed him false documents, and even if he distrusts the fellow panel members, he won’t expect to have his staff sabotaging him. And they will.

  17. MichaelC

    Weil’s right about SOX. To put that train in motion the SEC needs to make the charge and refer it to Justice.

    So the initial pressure has to be directed at Kuzami and Shapiro. Perhaps Schneiderman will pressure them to do their jobs.

    1. Walter Wit Man

      Let me guess how this plays out.

      Schneiderman, the progressive hero who really, really, really, sincerely, wants to go after the banks, will come up just a biiiiiiiiiiiit short, and will be outvoted 2 to 1 when it comes time to recommend that Justice prosecute anyone. Shoot.

      Oh well, since Schneiderman is truly a progressive at heart (for reals!), he won’t rest and Obama will finally see how wise it is to start going after the banks and he will probably then appoint Schneiderman as AG so he can go after the crimes he recommended justice pursue (but was thwarted from doing so by the meany conservatives). This should buy the criminals another year or so as fugitives from justice. But don’t worry your pretty heads liberals, whatyagonnado? Vote Republican?

      And if for some reason Schneiderman doesn’t fool liberals there will be Beau or Harris there as backup stooges.

      I’m starting to get embarrassed for liberals–they keep falling for this scam over and over.

      1. Walter Wit Man

        And for shits and giggle I bet Obama and Schneiderman stage a fake disagreement where Schneiderman threatens to walk away (“When I took this job I said I would walk away if it wasn’t on the up and up . . . the GOP and banks prevented reform and I was about to walk away . . . but the president asked me to serve in Justice and I couldn’t refuse.”)

      2. Nathanael

        I actually think both Beau Biden and Schneiderman will decline to participate in whitewashes or coverups, and will actually do what they can.

        Why? Because they’re younger. They’re from a generation which, mostly, recognizes that covering up for big business is, sooner or later, reputational suicide. I don’t think the older generation recognizes that.

  18. Sluggeaux

    The only thing that we need to know — somehow ignored by Stoller and all the terrific comments above — is that Robert Khuzami is Schneiderman’s co-chair. Schneiderman has clearly sold-out to Obama’s corporatist graft factory.

    For anyone who has lived in a cave for the past decade, Khuzami was a keynote speaker at the 2004 GOP convention (on behalf of the Patriot Act) who left his job as a Manhattan AUSA that same year to become General Counsel for the Americas at Deutsche Bank, where he oversaw “The Big Short” that encouraged lenders to manufacture dreck to bet against. This is the man who Obama chose in 2009 to head the “enforcement” division of the SEC, where he spearheaded the “no admission of guilt” fraud settlements, one of which was recently throw out by U.S. District Judge Jed Rakoff for being against the public interest. Khuzami’s response has been to breach Justice Department ethical rules to comment publicly on pending litigation, bad-mouthing Judge Rakoff (who ironically before being appointed to the Federal bench led the Justice Department’s prosecution of Junk Bond King Michael Milkin — who now skims our tax dollars and puts teachers on the street selling $140.6M annually “online schooling” through K12 Inc).

    Only time will tell how many pieces of silver it took to buy-off Schneiderman…

  19. Aquifer

    I do believe it has been pointed out here and/or elsewhere that Schneiderman has a considerable arsenal and the independence, as NY’s AG, he needs to pursue the crooks from his own office – what could be gained from the Fed?

    A couple of things come to mind, which have been pointed out elsewhere

    1) They have something on him and threaten to “Spitzer” him. Spitzer couldn’t be bought off so he was skewered. I suspect this lesson has not been lost on Schneiderman ..
    2) He has his own political ambitions, with which he can be leveraged, and they are being fed a) from the Fed
    b) from Cuomo, with his own ambitions who is getting pressured from the Party to put a squeeze on his AG, c) a combination of a and b

    (The NY AG office has been a traditional stepping stone to the NY governor ship …)

    Methinks he will do what Warren did in return for her admin “appointment” – work the best he can, then swallow hard and put a smiley face on when the admin he is now a part of sabotages the whole effort … He has been, as she was, co-opted, IMO – sad how easy it is to do …

    1. Lakecabs

      I love Matt Taibbi but he is one of those I will vote for least worse type of guys. It just compounds the problem.

      1. John Regan

        Well put, maybe a little too harsh. Sometimes Taibbi just fillets people like Boehner so well it’s like a work of art in print. Coined the term “vampire squid” for Goldman Sachs in a brilliant column.

        Where he’s running aground here is quite understandable. He’s looking to Schneiderman for some results, but the fact is that no one in a position like that can do much of anything. Obama couldn’t do much even if he wanted to, and if he changed his stripes and actually tried he would probably be murdered.

        The Occupy thing is on to something, I think. Don’t focus on any one person that can be destroyed; stay decentralized and diffuse and hard to target.

        It’s like you have to think about these things not so much in political terms as military ones.

        1. Lakecabs

          . Obama couldn’t do much even if he wanted to, and if he changed his stripes and actually tried he would probably be murdered.

          It is a real shame that I have to agree with you.

          1. beowulf

            If you haven’t already, read Jim Douglass’s JFK and the Unspeakable.

            In 1962, as Douglass records in his preface, [Thomas] Merton wrote a friend the following eerily prescient analysis:
            “I have little confidence in Kennedy. I think he cannot fully measure up to the magnitude of his task, and lacks creative imagination and the deeper kind of sensitivity that is needed. Too much the Time and Life mentality ….

            “What is needed is really not shrewdness or craft, but what the politicians don’t have: depth, humanity and a certain totality of self-forgetfulness and compassion, not just for individuals but for man as a whole: a deeper kind of dedication. Maybe Kennedy will break through into that someday by miracle. But such people are before long marked out for assassination.”
            http://www.lewrockwell.com/spl/can-obama-face-unspeakable.html

          2. Nathanael

            If Obama were murdered, that would be a major win for progressive causes due to the martyr factor — Kennedy’s murder is what got us the 1964 Civil Rights Act.

            But he’s not willing to take the risk, meaning he’s not a true patriot.

          3. Nathanael

            Or perhaps he is willing to take the risk (he has enough assassination threats), and he simply has bought in, lock stock and barrel, to the right-wing neoliberal antidemocratic economic bullshit.

            That seems sadly likely.

  20. Susan the other

    Hush. Please. Do not tell the people that the private banks are totally superfluous and unnecessary. We do not need them to dispense the money of the nation at all. The money of the nation is the peoples’ money. It represents the industry of all the people. And of each person. In no way does it represent the industry of the private banks. Interest caused by debt load, in turn causing environmental destruction for the privileged to profit from its demanded interest on the debt load is a model that is long dead. And the monkeys of the private banks are the walking dead. If private finance can find its own niche, fine. If not, too bad. Where is the argument for private banking? Where is Larry Summers? I’d like to hear him stutter.

    1. F. Beard

      Where is the argument for private banking? Where is Larry Summers? I’d like to hear him stutter. Susan the other

      LOL! Excellent question!

      1. F. Beard

        Oh. Never mind, perhaps.

        You think what we have now is private banking? It isn’t. It is fascist banking. It is debatable if truly private banking could even exist.

    2. Skippy

      “If private finance can find its own niche,” – Susan the other

      I wonder if they have the acumen for street corner – back ally negotiations.

      Skippy… that niche is already filled… methinks.

    3. Nathanael

      The argument for privately owned, privately managed, privately profiteering, banks with government charters and government backing issuing government money…

      …is that it makes a few people very wealthy, and that it’s the status quo (even though it got there through evolution, happenstance and accident).

      That’s not much of an argument, is it? But it’s the only argument the Money Trust had against the Greenbackers in the 19th century and early 20th century, and that fight ended with a draw or stalemate. Perhaps it is time to refight that fight and break the Money Trust for good.

Comments are closed.