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Neil Barofsky: Too Big to Jail – Our Banking System’s Latest Disgrace

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By Neil Barofsky, former Special Inspector General for the Troubled Assets Relief Program, currently a senior fellow at the NYU School of Law and the author of Bailout. Cross posted from The New Republic with author permission

You can be forgiven if you watched the Department of Justice’s announcement yesterday of a $1.92 billion settlement with HSBC with a sense of disappointment–and déjà vu. The event checked all the boxes in a theatrical routine that has become all too familiar.

Descriptions of breathtaking misconduct involving the facilitation of massive drug trafficking and transactions with rogue terror-sponsoring nations? Check.

Broad boasts about the “historic” nature of the settlement that will certainly end the type of criminal misconduct alleged? Check.

Mea culpas from the offending institution with promises that it has really learned its lesson this time and will never ever engage in dastardly conduct again? Yep, that too.

Nothing, however, was quite as it appeared. Sure, HSBC paid a record fine, but there was something vitally important missing from yesterday’s press conference: actual criminal charges for obvious criminal conduct.

Some perspective: HSBC sent more than $800 million in bulk cash from Mexico to the United States, a good chunk of which apparently represented proceeds from some of the most notorious Colombian drug cartels. As someone who tried the first narcotics money laundering case involving extradition from Colombia, let me assure you that this is a lot of money, the discovery of which usually generates vigorous prosecutions and lengthy prison sentences. And it wasn’t HSBC’s only dirty business: There were also hundreds of millions of more dollars of illegally disguised transactions with rogue nations such as Iran and Sudan.

Why no criminal charges? Why instead only some remedial measures and a “historical” fine that can be measured in weeks — not years — of earnings? It certainly wasn’t for lack of evidence. No, instead the government determined that HSBC is not only too big to fail, but also too big to jail. As the New York Times first reported, even though there were strong voices within DOJ pushing for criminal charges, the big banks’ best friends within the government (the Treasury Department, of course, and other unnamed regulators) were too fearful that an indictment could destabilize the global financial system. Yes, it’s 2008 all over again. In the name of systemic stability, a megabank again escapes accountability for its actions, rescued by compliant officials.

In some aspects, DOJ’s surrender is understandable. Notwithstanding regulatory reform efforts in the U.S. and the UK, the largest banks are in many ways even more systemically dangerous today than when we bailed them out in 2008. This indirect acknowledgment that we have failed to fix the too-big-to-fail problem has potentially dire consequences.

One of the reasons why we have a criminal justice system, of course, is to deter criminal behavior. If you know that you will be punished for putting your hand in the cash register at your local supermarket (or illegally stripping out information from a monetary transaction that identifies the source nation as Iran), you are less likely to do so. But if the government offered a blanket waiver from criminal accountability for a certain group — let’s say all left-handed people over six feet tall or a handful of banks deemed so large and so significant that their indictment could destroy the global financial system — we would expect that those exempted would no longer be deterred from committing criminal acts. And although lefty giants may otherwise lack a predisposition for boosting cash, in recent years the largest banks have demonstrated an unbridled zeal for pushing the boundaries of the law as part of their relentless pursuit of profits. DOJ’s actions with regards to HSBC are beyond unfair: They are downright terrifying for weakening the general deterrence for megabanks, both foreign and domestic, which could rationally interpret yesterday’s actions as a license to steal.

The enduring presumption of bailouts in our banking system already drives the largest banks to take on too much risk with too little disclosure and too much leverage, a toxic cocktail that will inevitably lead to another financial crisis. Yesterday’s action now spikes the punch with a new toxin, confirmation that criminal penalties are off the table, leaving a worst-case scenario of a fine totaling far less than even a single quarter’s earnings. Given the potential profits of criminal behavior and the unlikelihood of personal consequences for the executives directing it, the message is clear: Crime pays. This will inevitably lead to more reckless risk-taking that will further undermine systemic stability and lead to an even greater financial meltdown down the road.

There is, of course, a solution for our emerging two-tier system of justice. The largest banks need to be broken up, the only realistic way to truly end both too big to fail and too big to jail. But since our government has demonstrated a reluctance to do so, perhaps the next time a megabank presents HSBC’s argument that it should not be criminally charged because it would destabilize the financial system, instead of capitulating to this threat, DOJ should require at a bare minimum that in return for allowing the bank to survive, it must break itself up, ensuring that it could never hold the justice system hostage again. Otherwise, we can look forward to many more press conferences that are long on drama but short on impact.

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106 comments

    1. Lambert Strether

      Somebody should ask newly-elected Senator Warren if she’s in favor of that. I’m betting she’ll weasel. Human-readable mortgage forms, sure. Arresting criminal executives, not so much.

      1. Dr. Pitchfork

        Good idea. Seriously, why not ask her office? Either she says “yes” (great) or she weasels (yawn). Tell her you’re from Naked Capitalism and your 150K monthly readers would like to know her answer.

        Whadda ya say?

          1. Lambert Strether

            I keep forgetting NC is big. I don’t think that question is precise enough, though. Probably needs to be reformulated to meet the exact terms of DB. Maybe turn into a hypothetical.

            “If a major bank were discovered doing [what DB did] would you favor criminal prosecution of the executives under [the relevant statute]“?

        1. different clue

          Well you know . . . why not ask them both? Why not ask them all?

          It would be good to know how ALL the relevant officeholders and powerwielders feel about these things, in DEEtail.

  1. Jesper

    The bank was charged, fined and paid up and it didn’t cause a collapse of the world economy?

    But now we’re being told that charging certain individuals would collapse the world economy? Who is so important that the world economy would stop if he/she was put into jail? What could possibly happen?

    I know that some sports stars are seen as very important to their franchises but NHL didn’t end when Gretzky stopped playing, NBA didn’t end when Jordan stopped playing. Messi will sooner or later stop playing football and it won’t stop football from being played.

    Seriously, who is so important to the world that if they stopped working and was put in jail the world economy would falter?

    1. Yalt

      What could happen?

      Criminal charges might be an effective deterrent. An effective deterrent might cause banks to cease their money-laundering activities. Cessation of money-laundering activities might damage the financial stability of an important bank, which in turn could threaten the stability of the world financial system.

      1. DANNYBOY

        Of course no knowledgeable Banker believes that “Cessation of money-laundering activities might damage the financial stability of an important bank” AND also no knowledgeable banker believes damaging the stability of an important bank “could threaten the stability of the world financial system.”

        I worked at the one of the top 10, where the Chairman publicly stated that we could fail and the contagion contained.

        So, let’s ask: “Why this enormous lie?”

        1. OpenThePodBayDoorHAL

          Someone might mention that under those Far-Lefties Ronald Reagan and George Bush there were >1000 felony convictions related to the S&L Crisis. Didn’t “collapse the banking system” back then.

          Actually there were two parts to the weaselling on why there were no criminal charges at HSBC. The first was the “collapse the system” BS. The second reason given was “oh well we didn’t file criminal charges against any of the other banks who did this, so we can’t file any now against HSBC…”
          So let’s just stop prosecuting all of the laws on the books, shall we?
          Except of course if you’re a bank teller who takes $100 from the till…

          1. DANNYBOY

            When you pointed out the lame excuse used: “oh well we didn’t file criminal charges against any of the other banks who did this, so we can’t file any now against HSBC…”

            it reminded me that the most frequent response to my pointing out the sketchiness of current activities at The Bank was: “Well, we’re not the worst of ‘em”.

            Finally the government is in complete resonance with the Banks.

  2. Miller-Modiggler

    Money laundering is capital inflow, so nobody wants to touch that. You’re only jailed if you lose money for your bank (ie rogue trading).

    1. mary

      Miller-Modiggler and hermanas.

      John Le Carre’s most recent book “Our Kind of Traitor” deals explicitly with just precisely the reality of ‘dirty money’, the 2007-2008 crash and politics. From The Telegraph:
      “He(Le Carre)asks a simple question: have things been turned upside down so completely that it is necessary for those who once held to the good and straight path (with only the odd and understandably human deviation) to depend on the riches of crime for survival? His own answer is clear; readers who have not gone all the way with him may still give the question some thought.”
      I heartily recommend “Our Kind of Traitor” to all.

      1. mary

        Just as a further example of USA’s supreme hypocrisy or ‘selective law enforcement’ if you prefer, I would also suggest everyone read “The Secret Lives of Marc Rich: The King of Oil” by Daniel Ammann – business editor of Switzerland’s weekly “Die Weltwoche”.

          1. Mark P.

            Correct. Clinton — repeal of Glass-Steagall also took place on his watch — turns out to have been dirtier than either Bush 2 or Obama.

  3. Dan Kervick

    When has it not been the case that holding the powerful accountable to the rule of law could be “destabilizing”. In every plutocracy, the powerful underpin the stability of the social order – that’s why they are powerful. When the powerful totter, the system wobbles.

    However, in this case, I suspect the only real instability Eric Holder is is interested in is the stability of Democratic Party reelection campaign bank accounts.

    Holder has obviously failed, repeatedly, to do his job. He needs to be impeached.

    1. Barmitt O'Bamney

      The problem is Obankster, his boss. Eric Holder is just the footsoldier. Impeach him and another just like him will take his place in the line. Obankster has a million more where that came from.

      1. Dan Kervick

        Sure, the problem is always the boss. But you have to start somewhere. Nothing would stick on Obama because the AG has prosecutorial discretion about what cases are winnable, and Obama can just assert that he relied on that.

        I don’t agree that the impeachment of an AG would have no effect, even if it wasn’t successful in removing Holder. It would be a significant flex of public muscle, attract tremendous media attention, and drag a lot more of the corruption out into public view.

        1. different clue

          But forcing the publicly visible swapout of one for another . . . and another . . . and another . . . and another . . . and so on . . . and so forth . . . might
          force the focused attention of growing multitudes still in denial or despair.

  4. Old Hickory

    Obama is a captured president. I don’t know if he knows he’s captured or if he just listens to everything that Timmy and Eric tell him and think that it’s true. If we lived in a just world, Barofsky would be Sec Tres.

    1. DANNYBOY

      Dear Mssrs. Barofsky, Kervick, and Hickory,

      I need to add that this scenario began long before 2008, Holder, Obama, and Timmy. This is important, to understand the long-standing nature of the government/ banking syndication.

      I worked at one of the largest banks, during, what was then the most notorious Money Laundering Scheme in history. Of couse, now that is quaint history.

      But note, that bank also received soft-glove treatment. Also note, those transactions resulted in killings and kidnappings (in Russia, before Mexico got the spotlight). Also, that bank was just tbtf. Also…

      So please understand that this rot is deeper and longer than you have considered.

      Requires more of a solution than Mr Barofsky’s: “perhaps the next time… DOJ should require at a bare minimum that in return for allowing the bank to survive, it must break itself up.” Or Mr Kervich’s: “Holder has obviously failed, repeatedly, to do his job. He needs to be impeached.” Or Mr Hickory’s: “Barofsky would be Sec Tres.”

      These are drastic times. Accept that the situation is dire.

          1. DANNYBOY

            ohmyheck,

            I believe that you are sincere. Currently I am facing the brunt of government’s weight on me (fraud). I will not give up without fighting to the end.

          2. ohmyheck

            Completely sincere. I love a good story, one that is truly informative and digs into the truth.

            That you are fighting the Gov’t in a legal battle—sets me back on my heels. I wonder if there are any lawyers at NC whom might be interested in some pro bono work for you? If you don’t mind me pandering on your behalf.
            Can you imagine what could happen if one put all the great minds together from here at NC and let them lay it out in a courtroom? The mind reels…

          3. DANNYBOY

            Dear ohmyheck,

            I thought I judged you correctly. I’m pretty good at ferreting out the monstrous, fakes, and fools (I’m a pretty old guy).

            You can rest assured that I HAVE MAJOR LEGAL REPRESENTATION. Did I mention that my closest relative was Managing Partner at a major Wall Street firm? I’m covered, so don’t be concerned with that.

            What is concerning is the inability of this government to address what we put directly to them. Corrupt

        1. DANNYBOY

          Fraser,

          My point, that the Revolution AGAINST US, began years ago and has only gotten stronger and more brutal over time. We need to agree that it is a bit too late to call for small tactics, against such a massive onslaught.

          We need to bring on A MORE MASSIVE ONSLAUGHT.

      1. Dan Kervick

        Agreed. But a dramatic and publicity-grabbing impeachment would be one way to get more people to start digging into the rot, and exposing it to the light of day.

        1. Doug Terpstra

          Not a single card can be pulled from the magnificent edifice and not a single thread from the emperor’s raiment. All will collapse and unravel.

          It is so reassuring, however, that at least Jon Corzine is finally in prison. Wait . . . What?! Not even a fine?

          1. psychohistorian

            Yep, contrary to a lot of folks belief,

            WE ARE STILL DIGGING DOWN.

            Jail is for the little people……

        1. DANNYBOY

          Yes,

          and The Bank of New York Mellon, and The National Securities Clearing Corporation, and Bankers Trust, and…

          1. DANNYBOY

            Mary,

            As long as we’re reminiscing, which is so much fund, I got a few ol’ memories to warm my heart.

            During the years that I worked for the President of NSCC as Chief Auditor, we had regular meetings with the Board of Directors. The meetings were delightful, due mostly to the guiding hand of our beloved Chairman, Mr. Bernie Madoff.

            Now think about the role NSCC plays in the markets, and Mr M’s role.

            Nice, huh?

    2. Jimbo

      I hate reading this first thing in the morning before coffee and feeling discouraged and mildly outraged. What Rule of Law? Only a fool could miss the significance of zero FBI investigations, zero indictments and zero prosecutions back in 2009.

    3. Brooklin Bridge

      Obama is a captured president. I don’t know if he knows he’s captured or if he just listens to everything that Timmy and Eric tell him and think that it’s true.

      Poor Obimini. Kept high high up in a tower and only allowed to come down for royal events like snuff games. What incredible scarring he would suffer if he knew that when he pushes the brightly colored buttons, brown little four year olds are torn to shreds. Or that we now target their eleven year old brothers for snuff puff or torture-tot (that must be how they explain it to him) just for looking suspicious.

      1. OpenThePodBayDoorHAL

        “Snuff games” indeed. I decided early on that Obomba was either ignorant, or else 100% complicit in the crimes. I’ve concluded he’s not ignorant. It’s the biggest betrayal of all, what a blank space that man’s moral conscience has turned out to be, mouthing the lies with not a flicker of ambivalence behind his eyes. The most grotesque of all Manchurian Candidates.

    4. Barmitt O'Bamney

      Being “captured” was the surest swiftest path to power. Gosh, he’s sorry – he’d really like to help you out. But his hands are tied! All the way to the deposit window.

  5. Dan

    This is immensely frustrating. It basically indicates that corruption is endemic. I don’t let my kids take a couple of extra stir sticks when they are with me on a Starbucks stop – I think I should be teaching them to kick old dogs or something.

    1. Nathanael

      Perhaps you should be teaching them guerrilla warfare strategy and tactics. That’s an unsettling conclusion, but looking around the world, that seems to be the future.

    2. OMF

      It’s getting to the point where those of us with scruples, who have personal difficulties with breaking the rules and harming others, should be getting disability payments. We’re not going to be able to function normally in this society.

    3. different clue

      Perhaps you should be teaching them how to spot the other kids who were brought up to not take the extra stir sticks also. Then all y’all ethical-upbringer parents should be teaching your kids how to hide in plain sight while staying in touch with eachother and bide their time, bide their time, bide their time.

  6. monday1929

    An important elemement of Fascism is blatancy- the boot is put on your neck in the Public Square, not in some alley.

    This Declaration of War should be the Story of the Year. We should welcome the clarity it provides. The only divide this Country need resolve now is between those who disagree with this Ratification of No Rule of Law and those who embrace it.

    To make a minor correction to Mr. Barofsky, this is a DIRECT admission that no systemically Dangerous Institution can be shut down, and Geithner DIRECTLY admitted that Treasury had no way to gauge the risk of shutting down this particular SDI (in the context of his weaseling out of any responsibility for the decision to let these particular criminals free).

    It is also an another admission of the utter fragility of the System.

    Much of the profits, if any, I garner from the collapse of said System will be used to offer bounties to those who provide information leading to the indictments of these financial terrorists and the regulators who enable them.

    I would also request that anyone with the proper skills begin a campaign to notify fiduciaries that they will held liable for entrusting client funds to those SDI’s who have repeatedly broken the law. Then make sure this notification is on the Public Record and can be used as the basis for class action suits when the SDI’s collapse. HSBC has admitted to money laundering and aiding terrorists. Notify the pension funds that a conviction is not necessary to disqualify them from doing further business with repeat offenders- their admissions of guilt or refusal to dispute charges creates a presumption of guilt for the purposes of fiduciary liability.

    Finally, I assume that all lapel-flag wearing patriots and anti-drug warriors are gearing up to boycott HSBC, Right???

      1. monday1929

        Do youthinks you can get rid of your Chase credit card?

        The sentence was to point out the Hypocrisy of the Right- Ie. can they even muster a boycott, or a whispered objection against the epitome of all they claim to stand against?

        By the way, a boycott could put them out of business. Have you convinced even one person to close their account at JPM Chase? Do you still use your Citi card?

      2. different clue

        I am no expert, but it sounded like a good idea to me, and a good project for people ready to engage in the grinding tedious boring work of it . . . and keeping at it.
        Over time it could be a stealthy Operation Moneyflow-Dryup/Scorched Earth against the targetted crimebanks. If it is tried for-real in the long run and just doesn’t work, then stronger measures may certainly be tried.

        Also, recruiting some people and then more people into an extermicott against targetted crimebanks would be a good thing to do.

  7. Galan

    So, here we are. Now we are at the point where for the benefit of their own survival, the “significant few” are prepared to discernibly risk laying bare the dichotomy of an inequitable judicial system; one that prosecutes “ordinary” financial criminals as too small to fail and forebears on bank executives as too big to jail – despite the preponderance of evidence.

    The DOJ, the political establishment and the significant few that pull the leavers of affluent influence are counting on the, not unreasonable, presumption that, collectively, the great unwashed are already so mired in their own personal quagmire of free market effluent and detritus they will have neither the inclination or the ability to raises their head and ask “what the fuck?”. And, even if they did, what are they going to do about it, be “outraged”, rebel and rise-up…. vote?

    These significant few will rely upon the general public’s weary, compliant indifference (particularly, of the educated middle class), and trust that they passively equate “commit the crime you do the time” with the moral and legal equivalency of “commit crime you pay the fine”.
    I’m not sure, but I sense it; I sense that in my lifetime the curtain is being pulled back, that what I took to be democracy, free-market capitalism, and egalitarianism – America – is an illusion. It’s a dollar-backed fraud; a marketing and propaganda exercise of generational proportions. I sense for the first time in my life what it means to be ruled by a government in which a relatively small group exercises control for corrupt and selfish purposes. Also, with regards to this oligarchy, I’m beginning to get a sense my own expendable utility as a resource. The question, for me, is how much further do I go along with it?

    1. different clue

      You don’t have to beat yourself up for not being a totalist and a purist. Purity purism is one of the most disgusting and debilitating hangovers of the Puritan Legacy in this country. Purity purism teaches that if you are not John Brown, you are Simon LeGree.

      Actually, you and I and we have a whole range of partial actions we can take without being targeted for Regime Revenge or Removal. There is a huge gradient between All or Nothing At All. One can boycott this and support that. One may move one’s meager savings from the local outlet of a major crimebank to the local outlet of a regional minibank or a microlocal microbank. One can do the things would would add up to making an additive difference if 50 million other people were to do the same things. And if 50 million other people don’t do them, that’s their fault, not your fault. Hopefully everyone would lift a finger. But no one is obligated to lift a second finger to make up for the movenent-freeloader neighbor who will not even lift Finger One.

  8. Maju

    Capitalism is a criminal mafioso ring and every day more shamelessly so. No surprises therefore.

    Surprise is when a former top chief of a Capitalist syndicate (= shadow single party) is jailed even if briefly, as happened to Díaz-Ferrán in Spain on December 5th (he can still pay €30 million bail, not sure if he did already).

  9. Fraser

    There are millions of us with you, doing something about it every day.

    An online “unionizing” across every activity of our humble daily lives is the only solution that I see mobilizing with the velocity and ease ( lack of physical force & presence ) to address the system with resistance from within the exact system that reinforces the tone deaf ( and worse ) elite.

    Without “blind” justice we truly are lost as eventually the system of trust degrades to near anarchy. While we may have a long way to go to that, let’s not allow ourselves to slide into the chasm that those at the top of the wage and wealth graph have designed for us.

    Push them over !

    Organize via the internet and locally, in person, across every human activity and endeavor.

    The only way we are strong is in some form of union, if not entirely united, we certainly share a common need.

    Justice.

    1. Rodeo B

      No chance. The Fed and Treasury will only bail them out on the backs of the “unproductive.”

      The question any American worth a salt should be asking is who are these people? Maybe the crooks sit at your dinner table or live in the apartment next to you. Instead of uncomfortable with greed, people would rather idolize their money and worship their crimes.

      Long rope and vomit.

      1. DANNYBOY

        also interesting to consider that the major banks would be bailed out, at a time where there is enormous overcapacity in banking.

        again, there is only one answer to why these supports are provided by the government to the banks, and it ain’t The Economy.

  10. Norman

    Drastic times, someone says. Indeed, will everyone just continue to sit on their hands and complain with some sort of remedy involved, or just continue too dither? Time is running out, the crooks know it, so they are in a full court press to get as much as the can before the proverbial S.H.T.F. There will be innocents who will pay the ultimate, but that’s the price to be paid when cutting out the cancerous rot that has permeated out Government/business establishment.

    1. bmeisen

      Answer: Continue to dither and be ripped off. Think of France before the Revolution. Most Parisians were paying most of their income for bread. Not for bread and cheese. For bread. Convicts were being drawn and quartered there, but innocent necks weren’t being jackbooted in front of the HOtel de Ville. Henry XVI had not erected a terror regime. He was a creampuff! The Ancien Regime was rotten to the core, and the people were thrown crumbs imported from the American colonies when harvests failed. They were starving and they did virtually nothing, until in 1788 a hailstorm destroyed Paris’s local wheat crop. It was so devastating and resulting increase in bread price so calamatous that the poor rioted.

      The parallel is McDonalds. Only when the cost of a Big Mac equals 70% of the legal American service worker’s daily wages will change occur. Right now they get about $35/day, after tax. Change in the US will occur when McDonalds increases the price of one big mac to $25. Actually not that far to go.

      1. Nathanael

        We really are facing a French Revolution scenario.

        Of course, those of us warning about it are like the people warning of the situation in the 1740s. And the revolution wasn’t until 1789. So it could be… quite a while. There will probably be some triggering event which sets things over the edge, and it will probably be caused by global warming.

        Or, it is just barely possible we will muddle through without an actual revolution — if we manage to get leaders like Earl Grey, backer of the Great Reform Act in the UK.

        1. OpenThePodBayDoorHAL

          Read Simon Schama’s “Citizen”. It explains how the French Revolution finally tipped over, it wasn’t the peasants with pitchforks. It was the upper middle class and even the upper class who realized they were getting screwed by the 1%. Salt is an example. Everyone was required to purchase some or face stiff fines. But salt that was shipped from the sea to the Alps encountered no less than 34 different internal “customs inspectors” who each got their fee, sending prices to the stratosphere. These private tax agents abounded, the salt tax franchise (or wheat or sugar etc) was handed out as a 1% favor (like defense contracts are today).
          Peasants with pitchforks joined the revolution much later, it was the 5% that made the early difference.

          1. Synopticist

            This is very true.
            The rich stealing from the poor is normal, it’s always been like that. What isn’t normal, is the rich stealing from the well off, the upper-middle class, and getting away with it.

            And that is where we’re at now. You only need to look at MF Global to see a true 0.1 percenter scrwewing a bunch of 1-5 percenters and having no problems, with his 0.1% buddies legitimising what he did.

            Thats a truly pre-revolutionary situation.

  11. LeoPold

    As if money laundering drug money wasn’t bad enough, HSBC was also charged, found guilty and ‘fined’ with ‘Trading With the Enemy Act’, according to court document. Trading with the enemy….. for Gawd’s sake!

    If I remember correctly, wasn’t Prescott Bush’s (He was the father of George H. W. Bush and the grandfather of George W. Bush) Union Banking Corporation seized under the Trading with the Enemy Act and the assets held?

    One might think a precedent had already been established for the DOJ to follow suit.

    1. Yalt

      I’m sure the DOJ looked into that precedent, but neither Gulliver nor Flint has a child who was born in the United States so it isn’t possible to sentence their progeny to serve as President.

  12. steelhead23

    I have zero interest in a criminal prosecution of a bank. Institutions do not commit crimes. Individuals commit crimes. What should happen is that those individuals who facilitated these transactions should be charged with crimes. And some should be offered deals to shorten their sentences so they might identify those at the very top of the syndicate. Bill Black rails against criminogenic incentives that virtually entice poor banksters into illegal acts. IMHO there is nothing more criminogenic than these deferred prosecution agreements. Nothing.

    Want the banks to behave more ethically? Toss a few CEOs in the slam and Voila, bankster behavior would magically improve. Try it Eric.

    1. Heretic

      Removing a few CEO’s is not enough… You remove one Capo, another Capo will take his place. Bankrupt only the bank, and all the crooks move to infest and corrupt another organization. (where did the energy traders for Enron move to? Who employs the analyst who hyped internet stocks prior to Y2000). You need to destroy the culture of silence, informal collaboration and complicity that exists in the banks; you will need to jail dozens, possibly hundreds of people involved in this crooked process.

      1. psychohistorian

        And I keep saying, WHY STOP THERE?

        Why can’t we focus on the global inherited rich that hire/fire and direct these puppet sociopaths?

        I want this multi-century BS social system to change structurally so we get REAL change.

        Laugh the global inherited rich out of control of our world and into poverty like the rest of us.

    2. different clue

      If prosecuting a bank led to de-chartering of that bank, so that it were exterminated from existence as a bussiness entity; that would be a real result and a real achievement.
      One could also prosecute the criminal workers on the crimebank bridge and in the crimebank engine room. One could do both. In theory.

  13. Kevin Egan

    Fortunately, now that his case has been successfully resolved, the DOJ will be able to turn to more important matters!

    I expect to hear any day now about vigorous efforts to prosecute those insidious dangers to the Republic, the criminally emboldened pot smokers of Washington and Colorado.

    1. DANNYBOY

      The biggest sin OF our population was allowing the oppression of people of color. It turns out that that oppression was the dress rehearsal.

  14. jsmith

    I hope everyone understands that this situation should only provide more fodder for laughing in the faces of ANYONE who thinks our fascist system is salvageable in any way shape or form.

    When any “progressive” – politician or propagandist – states that we just have to work the ballot box a bit more: LAUGH IN THEIR F*CKING FACE.

    When any “progressive” – politician or propagandist – states that we just have to have better enforcement of our political and economic spheres: LAUGH IN THEIR F*CKING FACE.

    When any “progressive” – politician or propagandist – tries to sell you the idea that justice and equity are still attainable for the common person in this country: LAUGH IN THEIR F*CKING FACE.

    What? The non-prosecution of war-crimes – torture, aggressive war, indefinite detention, etc tec – wasn’t enough?

    We had to wait until the banks get off scot free for it all to sink in that there’s no reason to entertain quaint ideas of restoring this country to some simulacra of what it never was in the first place?

    Our masters abadoned their last vestiges of nostalgia decades ago and in doing so were better able to hone and perfect the propaganda that fills our minds and keeps us docile and stupid.

    It starts with each of us individually.

    You have to train yourself to not give any respect – in your mind and your heart – to any person involved this fascist charade.

    That may sound easy but in our propaganda-sphere, it is more difficult than one might think.

    We are constantly being manipulated and repeatedly drawn back in to give credence to this abortion of a system and if we are going to collectivize and fight against it, it begins with everyone in their own mind.

    Stop listening to the elite’s “reasonable” sounding explanations for this crime or that crime and just make it so that no explanation will ever be good enough for what we are witnessing.

    No one in any position of power in this country is trying to help you.

    That’s what minorities have known for decades and it is what every single citizen of this country needs to get through their skulls.

    But what about the “good ‘uns”, jsmith?

    Well, the “good ‘uns” will just have to keep on proving they’re “good” to a populace that increasingly will view them just as much of a bunch of traitors as their more overtly fascist kin.

    1. Fraser

      Completely with you save:

      “… there’s no reason to entertain quaint ideas of restoring this country to some simulacra of what it never was in the first place? ”

      Unless you agree that we can only achieve what we believe this country ought to be.

      Howard Zinn’s A People’s History of the US and many others make it imminently clear what is true about US History ( and European, S. and C. American, etc … )

      Use this location and every electronic marketplace of ideas, commerce and communication to united what the majority of us share, leave the arguments out as chaff, focus on the common ground:

      Inequality, an unjust economic and legal “playing field”, unresponsive representative government and nearly every level and locale … pool or purchasing power and focus our econommic activities and endeavors towards the few examples of “just” service and product and highlight the very few examples of true representative governing.

      Together with patience, persistence and absolute integrity to maintain the truth of what we share, from the least amongst us to those with the most and be diligent and disciplined.

      Give no quarter ( dime, nickel, dollar or dinero ) to these large institutions. Starve the beast(s) and reward the just.

      It will take a long time and probably some physical resistance.

      I trust we all do and will continue to do so.

      Reward the just, resist the rest, we must.

      1. jsmith

        My thought with that was more along the Baudrillard et al line of simulacra in that through the ubiquitous and ingenious use of propaganda, the medium, etc all that we have now of our own history are really simulacra, misrepresentations of what the US once was which thus – in the present absence of any form of reasonable government – provides us with an almost “tangible” yet false sense of those simulacra actually being our history – a sense that is and can be masterfully manipulated by our betters to the people’s unending detriment.

        I agree with everything else you say especially the part about patience and time.

        What, did the people involved in Occupy think that the banksters were just going to hand out free money, resign or throw themselves out of windows?

        I really think that the frenetic pace of our culture – again, much a product of our betters propaganda – leads much of Western protest down dead-ends as the consumerist need for instant gratification short circuits any long-term/range planning.

        That is why – again, in my personal belief – a persistent and less malleable worldview – e.g., Marxism – needs to take hold among the masses; one that is comfortable with supporters themselves NOT seeing the tangible results in their lifetimes as the individuals better understand themselves to be part of global movement, an inexorable yet peristent march towards the betterment of all of mankind.

        Like to say more but gotta split.

        1. Nathanael

          Marxism proved pretty malleable, in practice. :-(

          I think more people need to read Veblen. A general social hostility to the predatory and rapacious attitudes of the “leisure class” is what is needed to create a functional society. Right now people are still actually praising the “leisure class”, with “greed is good” thinking and all athat.

  15. JEHR

    And so the future of banking is not going to be another big crash and another big bailout, but many, many little crashes and many, many little bailouts over and over and over again. Wow, something to look forward to!

    1. psychohistorian

      I think a big crash is coming.

      The US dollar is being inflated behind the scenes to keep the global inherited rich having more “money” than say China, for example.

      When the global inherited rich think the time is right they will pull the plug on the US dollar and create and manage the “new” money systems to continue their inheritance based and accumulated ownership of property ways.

  16. barrisj

    Ah, the good ol’ Holder DOJ – they are however sending in the dogs to sniff out yet more Lance Armstrong transgressions, as USPS Inspector General amassing records and testimonies
    re: His Lanceness to be forwarded for possible prosecution. See, it’s all a question of priorities: bring the hammer down hard on a discredited doping cyclist (too small to go free?) but slap the wrists of money-laundering bankster mafiosi (too big to jail?). Ah, yes, the famous “rule of law” that is said to govern conduct within the bastion of free enterprise and late capitalism. Where has it gone?

  17. Mcmike

    Begs the question: is there an outer limit to allowable criminality? Child sex slave trade? Human organ harvesting? Selling weapons tech to enemies? Collapsing the global economy?

    1. DANNYBOY

      Mcmike,

      The Banks are well underway in cornering the markets for Activities #3 and #4. So these are protected under the US To Big To Fail Doctrine.

      The first two activities are still up for grabs, with much positioning in the marketplace. More likely a distribution-focused industry will succeed. So, think Walmart as a probable contender. How’s the record for US prosecution there?

      I hope this answers your question.

  18. Susan the other

    Just like to point out the hopeful: today’s post by Yves et al on Occupy the SEC and their amicus brief in favor of the SEC against GAbelli, which has now, ominously, gone to the supremes. The hopeful thing is that the SC will be forced to move into the 21 C. or blatantly cop out because the crux of the argument is the Discovery Rule as it applies to the statute of limitations. Now this 1839 thinking (5 year limitation on “discovered” fraud) is truly obsolete since we have electronic records going back decades and fully recoverable. There’s no way out except to flat-out fail to apply the law. The Supremes can only fail to apply the law a short time before all of society falls apart. Look out below!

  19. Birdie

    So many of the people with whom I work, teach, and meet do not even know what TARP is. I am working hard that the education system in the US will be improved upon , if it is not, I fear these horrors will grow. Unless we have an eduacted pubic, our quality of life on this earth will worsen.

    Thank you Mr. Barofsky for trying to protect justice and the people of our country.

    1. DANNYBOY

      pssst Birdie,

      methinks the “education system in the US”, as you call it, is perfectly suited to it’s purposes.

      Unless, of course, you believe the criminality that is being kept secret is an accident.

      There are no accidents.

  20. Hugh

    Holder is/was a corporate lawyer. Nuff said. Well, unless one would like to add that as a corporate lawyer Holder brokered a deal for Chiquita Banana to pay a $25 million fine after it pleaded guilty to paying millions in protection money to an armed faction in Colombia that had been designated a terrorist group. So covering for corps involved with terrorists and criminals is not exactly new to Holder.

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