Wall Street Journal Tallies DoJ and SEC’s Pathetic Record in Tackling Wall Street Crime

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The Wall Street Journal has an important story tonight: Wall Street Crime: 7 Years, 156 Cases and Few Convictions. It does a fine job of assembling the facts. But as one might expect, it treats this crappy track record as defensible.

First, the scorecard:

The Wall Street Journal examined 156 criminal and civil cases brought by the Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission against 10 of the largest Wall Street banks since 2009. In 81% of those cases, individual employees were neither identified nor charged. A total of 47 bank employees were charged in relation to the cases. One was a boardroom-level executive, the Journal’s analysis found.

The analysis shows not only the rarity of proceedings brought against individual bank employees, but also the difficulty authorities have had winning cases they do bring.

Most of the bankers who were charged pleaded guilty to criminal counts or agreed to settle a civil case, with those facing civil charges paying a median penalty of $61,000. Of the 11 people who went to trial or a hearing and had a ruling on their case, six were found not liable or had the case dismissed. That left a total of five bank employees at any level against whom the government won a contested case. They include Mr. Heinz, the former UBS employee.

One of the few successful government cases was overturned Monday. A federal appeals court tossed civil mortgage-fraud charges and a $1 million penalty against Rebecca Mairone, a former executive at Countrywide Financial Corp., now part of Bank of America Corp. The court also threw out a related $1.27 billion penalty against Bank of America. Representatives of Ms. Mairone and the bank this week welcomed the verdict, while the Justice Department, which brought the cases, declined to comment.

We then get the standard defense:

There are plenty of possible explanations for the small number of successful cases. For starters, much of the institutional conduct during and after the financial crisis didn’t break the law, said law-enforcement officials. Even when the government has been able to prove illegal activity, it has rarely been traced to the upper echelons of big banks.

“The typical scenario is not that the bank has this plan for world domination being cooked up by the chairman and CEO,” said Adam Pritchard, a law professor at the University of Michigan. “It’s some midlevel employee trying to keep his job or his bonus, and as result the bank gets into trouble.”

This is utter rubbish. In order to spare you a 10,000 word exegesis, let’s stick to a few high points.

The Obama Administration saw its job as protecting the legitimacy and profits of the banking sector. Remember how Obama whipped for the TARP? That he dumped Paul Volcker, who he dragged around during his campaign, with the implication being that Tall Paul would stare down the banks? And then Obama dropped him like a hot potato once elected and brought in Tim Geithner and the Clinton economics team? How Obama told the bankers he was the only thing standing between them and the pitchforks? How he failed to use the $75 billion of TARP money that Hank Paulson had courteously left aside for borrower relief? How Geithner told Neil Barofsky that he’d never intended for the mortgage program to work (as in save borrowers); its real purpose was simply to “foam the runway” as in space out the foreclosures better over time?

You are not going to succeed in any endeavor if you don’t expend real effort. This signals from the top were very clear, not to pursue senior bankers since that would hurt the image and stock prices of banks, which the Administration was desperate to shore up. It falsely saw the survival of senior bankers and the banks themselves as identical. By contrast, the Bank of England forced out the top three executives of Barclays in what amounted to a power struggle over the Libor bid-rigging investigation.

One proof is the histrionic reaction when Benjamin Lawsky, a former Federal prosecutor operating from the bank regulatory boonies of the New York Department of Financial Services, demonstrated how it wasn’t all that hard to be effective. He was welcomed with a full bore media attack when he dared show up Federal officials in pursuing Standard Chartered over money laundering violations. His efforts eventually forced the resignation of its CEO, Peter Sands. In a later case, against Paribas, he secured the resignation of 13 individuals, one of them one of the most senior members of the bank.

Mind you, Lawsky had very little in the way of staff attorneys, made it clear he intended to punish individuals, and scored real wins.

The “top execs knew nothing” excuse is nonsense. Some of the abuses occurred in retail banking or lending operations. If you’ve ever worked in retail banks, you will know that they are factories. Everything is highly routinized, from the scripts in call centers, the procedures used for identifying and qualifying borrowers, the materials used to pitch, close, and document loans, and the post-closing activities (sale and transfer of loans; the processes used to service mortgages).

Since everything is so highly standardized, which is necessary from a systems perspective, bad stuff can’t happen with any frequency without at least pretty senior mid-level people obtaining internal waivers (and either lying about why or securing senior approval for the misconduct) or the process having been designed from the get-go to be abusive. Indeed, the article gives an example that confirms this observation:

Going after junior staff can create its own difficulties. Judy Wolf was a compliance officer at Wells Fargo, which in 2014 paid the SEC $5 million to resolve civil charges it lacked adequate controls to prevent one of its brokers from insider trading. Soon after, the SEC charged Ms. Wolf with altering a document during the agency’s investigation, to make a review she had done appear more thorough than it was.

Dismissing the case last year, an SEC administrative law judge said Wells Fargo “clearly had much deeper and more systemic problems” than one employee who “notably low-ranking…relatively low-paid, supervised no one, and worked in a cubicle.”

And on the wholesale banking/capital markets side, it is equally ridiculous to contend that the banks didn’t break the law. There was no serious effort to use the law designed precisely to end the “I’m the CEO and I know nothing” pretense.

Sarbanes Oxley requires at a minimum for the CEO and CFO to certify personally the accuracy of financial statements and the adequacy of internal controls. Banks dropping multi-billion loss bombs and having to go on the government drip feed to survive is prima facie evidence of a massive failure to have adequate risk controls in place.

We were writing before the crisis, based on no inside knowledge, that risk controls at capital markets firms, meaning then investment banks (save possibly Goldman, which did have a much better run risk management function than any other firm and thus would be more difficult to sue) and the big banks with international trading operations (JP Morgan, Citi), all had risk management functions that were designed to be weak. People like Nassim Nicholas Taleb would go further and say anyone who had the statistical chops to be the head of risk management would know that his job was an exercise in charlatanism. And that’s before you get to issues that were widely known in the marketplace in the runup to the crisis (as in if yours truly was hearing about them, anyone who was anyone, including regulators, had to be aware), such as widespread mis-marking of illiquid positions (trading them in itty bitty sizes with friendly counterparties to establish phony high prices). It would have been relatively easy to bust a whole bunch of traders, trading desk heads, and risk managers on this issue alone just to make a point.

And the Sarbanes Oxley violations also apply to the retail side of the house. If you have a bunch of wild stuff going on in the mortgage lending, and the senior exec swore up and down they knew nothing about it, that’s a massive internal control failure. Again, the CEO and CFO are responsible.

And Sarbanes Oxley is designed so that the civil and criminal provisions are parallel, so that an investigation could start out as a civil case, but if the government got strong enough evidence in discovery, it could easily flip it to criminal.

The SEC and DoJ have been deliberately enfeebled. SEC whistleblower Jim Kidney pointed out that the SEC has been severely diminished by the 1996 decision to stop growing talent from within and instead relying heavily on the revolving door. The result is predictable: attorneys too inculcated to sympathizing with company executives, as opposed to the public at large, and too attentive to not alienating future meal tickets. Neil Barofsky is an object lesson. After his stint at SIGTARP, he should have gotten prominent private sector offers. He didn’t. He landed reasonably well, but his payoff pales compared to the $4 million a year Mr. “I lie awake at night worrying about banks” ex DoJ Assistant Attorney General Lanny Breuer got when he returned to Covington & Burling.

The reality is that an entire, large class of people is not accountable for their actions from the perspective of career performance or legal liability. Yet because they went to the right schools and worked for big brand name institutions, they can pass off failing upwards, or even outright predatory conduct, as the proper workings of a meritocracy. This is a blueprint for widespread delegitimation of authority. And if it does not produce a Trump presidency in 2016, it has high odds of yielding something even worse in 2020.

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  1. EndOfTheWorld

    Will a Trump presidency really do any better? Nobody knows what Trump will do but he is nothing if not a part of NY high society. To go after Wall Street vigorously is also by extension going after the cachet of NY real estate, where a lot of his money is ensconced. I hope Trump will do the right thing but I also hoped Obama would get the US military out of Iraq.

    1. Carla

      It is not about “doing better.” I really doubt anyone expects Trump would “do better.” I think it’s about burning down the system. People are fed up, and this has been building for decades. There’s a “let’s get it over with already” ethos in the air.

      1. jsn

        Agreed! It was well articulated in the “Unnecessariat” several weeks ago and I’ve now seen it repeating more or less in the form of “I know how to fight a bastard who’s trying to kill me, I don’t know how to fight a system determined to systemically eliminate me” all over the place: Trump’s the bastard and Clinton’s system.

        1. bdy

          + for the link, and with it the intro Anne Amnesia. Must sally forth at once and read everything she’s ever wrote.

      2. RUKidding

        True, but I don’t see Trump burning down the system either. That’s just me, but all I see is Trump figuring out how to finagle the system to benefit him. I doubt that includes doing anything to his buddies in the Banks and on Wall St. Just my speculation, which is worthless, but I really don’t get (truly) what burning down the system means in this context. What comes next? If people think it will be something “better,” then they’re in for a real surprise.

        1. oho

          It’s about at least having only one party looting the system — versus the current bipartisan looting.

          If you’re liberal, you need to clean the Democratic Party (or burn it down and start over).

          What the GOP does is a sunk cost/irrelevant.

    2. Yves Smith Post author

      Your logic does not follow. People will vote for Trump or do the equivalent (disgusted Democrats stay home or vote for Jill Stein or write in Bernie) because they are pissed off with the Obama administration and see Hillary correctly as more of the same. That does not mean they expect Trump to bash Wall Street, since the crisis was years ago and now it’s too late, but they want to punish the Dems, who promised they’d Do Something and did almost nothing.

      Plus Trump is most assuredly NOT part of NY “high society”.

      He is not on a single prestigious not for profit board.

      He does not do major political fundraising.

      He does not collect art.

      He owns casinos, which are seen as beyond tacky.

      New York Magazine made fun of him and Ivana for years, basically for being no-class new money from Queens. He still loves marble and gold and does not hire hip decorators or care what is currently considered to be tasteful.

      He’s a guy from the wrong side of the tracks (even though with family dough) who never bothered to try to make himself look culturally respectable or curry favor with the city’s elite. He’s just a rich guy in real estate.

      And a recent article showed, because he mainly engages in licensing deals, he doesn’t raise large amounts of money for his business and doesn’t have much in the way of business relationships with major banks.

      That does not mean he will be tough on them.

      1. EndOfTheWorld

        From my very low society perspective, he’s part of high society in that he has a pretty high amount of money. Although I guess by NY standards he’s not really that high in that category either. I haven’t set foot in NYC in about 40 years.

        1. EndOfTheWorld

          I should have said he’s nothing if not a New Yorker—-whether he’s high, low, or middle. Born there, still lives there, I think, and owns a lot of real estate there.

  2. timotheus

    I think Yves’ point is that the rise of Trump (and similar figures in Europe) is a result of the utter failure of any of the mainstream parties to act even minimally in the public interest. When it is painfully obvious that current leadership across the political spectrum is bought and sold by such venal forces, which furthermore cannot even keep the wheels of their own money-making machine properly oiled, people turn to implausible alternatives.

    1. hemeantwell

      I urge caution about using the term “public interest,” a term that these days smacks of Third Way delusions about a nonpartisan politics that rallies all good-spirited citizens around transparently True policies, a process of collective Enlightenment. The disruption of the usual symbolic politics masking elite enrichment occurred because there was such a rotting out of the terms of mutual class accommodation that the bottom fell out of the cruise ship. The public interest was only a figment of that mutual class accommodation. It does not exist independently of it. To refer to many posts here, the only way a public interest will be reestablished will be if elites are forced to become interested in the fate of the lower classes again.

  3. Peter Bernhardt

    And you could argue that it is the very failure of Obama to deliver anything beyond the de minimis reform of Dodd-Frank that has led to this crisis in our political system. I know, there are many more contributing factors, but as Elizabeth Warren famously said, “Personnel is policy”. And I knew within just a few weeks of Obama’s era of “hope and change” that we were going to get anything but that. How hard would it have been for him, really, to bring in someone like Bill Black or Joseph Stiglitz to clean house at Treasury? Instead, the American public, both right and left, has been simmering on a slow boil for eight years and now we have what we have in front of us.

    A significant number of Americans know the political system does not work for us, but against us, and it has opened the door to either a demagogue or a genuine agent of change becoming our next President. Meanwhile the forces of the status quo desperately try to foist an incompetent, corrupt, inveterate liar on us as the best the establishment has to offer. And, even at this late date, it just may work and the lid on that boiling pot will be clamped down for another few years.

    1. Phil

      I think Obama meant well, but like Trump is now, he was inexperienced re: the larger issues. Obama surrounded himself with people from Bill Clinton’s administration; he depended on them. I warned everyone I knew that Obama would administer from center-right, and that he would be too cautious. Seeing that coming, I was pulling for Hillary in 2008. Obama had nice rhetoric on his side, as well as the push from white Americans who wanted to rid themselves of white guilt. I don’t think Obama meant to deceive; he certainly received no cooperation from the GOP Neanderthals. That said, I don’t se Obama as a *confident* creator of policy. He overthinks things.

      This time, I’m pulling for Bernie, because I don’t think Bernie would compromise. That said, when Bernie places someone like Cornel West on the Democratic platform committee…it’s like,*what* is Bernie thinking! The foregoing development has also given me pause re: Bernie. Cornel West is way over in left field, too far over; and, his rhetoric is divisive – West is not honeypot.

      Look at the people surrounding Trump, THAT is what we will see re: derivative policies if he wins POTUS. It will be more of the same center right garbage – well monitored and PR’ed to death, with Trump continuing to feed his fatal flaw – narcissism (which requires constant feeding). Trump is, at center, insecure; thus, his massive, out-sized overcompensation.

      If he wins, his political appointees and sidekicks will run amok – like Chey did with Bush….just watch (I hope we don’t have to!). If Trump wins, it won’t be pretty. I’m still hoping Bernie makes it through the gauntlet. If he doesn’t and Hillary falters against Trump, that alone may be enough to finish off the Dems in a way that points towards Yves’ prognostication about 2020.

  4. TedWa

    Obama brought in the Clinton AND Bush teams – Riiight, Those that created the crisis would be more than willing to prove themselves guilty by “investigating” what had gone wrong.

    He knew they’d never “fix” things in a way that would benefit Main Street. We then got, as part of the show of him (not) going after the “fat cat bankers”, phony and half hearted attempts to rein in Wall St – including Dodd/Frank and investigative team after investigative team he created and touted loudly and clearly how they would bring justice for the American people, teams that were always under-funded and/or under-staffed. A Charlatan, a rogue knave of the lowest order, that should be called out relentlessly for his betrayals every day of his life.

    1. NotTimothyGeithner

      I don’t think Obama is a details guy. Obama sees himself as a moral leader out to set an example, and given his religious associates (Wright was unfortunately the “it” church), it’s likely Obama believes a former of the prosperity gospel. Obama was happy to hand off problems to “moral” people with so many blessings.

      Many of these odious villains are really nice in real life, and anyone who tells Obama how great he is must be good.

      1. EndOfTheWorld

        He didn’t want to make waves. He would have LIKED to pull out of the Middle East, perhaps, but unfortunately everybody else in the defense establishment was against peace and he was too peaceful to fight them.

        1. pretzelattack

          he unilaterally gave up the option to pull out of the middle east as a negotiating ploy.

          1. bdy

            Favorite sentence I’ve read since I put down The Three Body Problem.

            “Unilaterally gave up as a negotiating ploy” describes this administration on everything that means anything – excepting of course the mammoth Ledbetter law, overtime pay, and now maybe freedom of bathrooms.

      2. oho

        The real president is Valerie Jarrett. Or David Cameron is to Queen Elizabeth II what Valerie Jarrett is to Obama.

        1. Synoia

          Queen Elizabeth is a Titular Leader. The power is in the House of Commons.

          David Cameron is both the head of the UK executive and the UK Legislature.

          Not similar to the relationship of Valarie Jarrett and Obama.

  5. EndOfTheWorld

    OK. “And if it does not produce a Trump presidency in 2016, it has high odds of yielding something even worse in 2020.” This sentence could be interpreted in different ways. I was thinking she meant Trump would be a good choice, but apparently she meant Trump would be a disaster but in 2020 there might be a worse disaster. That said, Trump HAS mumbled a little about cracking down on the “Wall Street guys”.

  6. Sluggeaux

    One of the classic tell-tales of aristocracy is the obsequious behavior of the petty members on the lower rungs, each uplifted face straining to lick the backside of the lord above. The Bankers mustn’t be disturbed as they gorge on our savings!

    Here in California’s Monterey Bay Area, our local “Democratic” Party has put forth ex-Clinton Chief-of-Staff, DOD, and CIA head Leon Panetta’s son Jimmy for our soon-vacant congressional seat. Jimmy has never held elected office or distinguished himself in his career as a minor public servant, but several fine local elected officials were told in no uncertain terms by the Nomenklatura to step aside so that the young prince could stand for the seat. It is something out of a Trollope picaresque of the rural aristocracy — but I guess that Lord Leon can still have people taken-out, even if he’s not running the CIA any more…

    1. BradK

      I don’t think is as much about having people taken out as it is knowing what skeletons are in what closet and where the bodies are buried. Call it the Hoover principle (J. Edgar not Herbert).

  7. Ishmael

    This is a blueprint for widespread delegitimation of authority.

    Yves – knocked it out of the park on that one. The SEC has been on a stead deterioration for 40 years!

    It should be noted that since there were no prosecutions under Sarbanes after 2008 it has become fairly irrelevant since then. No big concerns by the CEO on that issue like there was before.

  8. flow5

    Regulation is a club. All lobbyists are members. In 1999, Congress repealed the Glass-Steagall Act (after a $300 million lobbying effort).

    1. Vatch

      And in 2000, the Congress passed and President Bill Clinton signed the Commodity Futures Modernization Act, which prohibited the regulation of risky credit default swaps. Fast forward to 2008, and we see how that turned out.

  9. ke

    Empire organizations, regardless of variety, are pieces of political paper, designed to obfuscate responsibility. At the end of formal monarchy, The Church was liquidated and replaced with The University as the means to farm people. No organization is entrepreneurial; some adults are. Children are born entrepreneurs, so the empire psych ops, Early Childhood Education, is designed to stomp that out at birth, replacing it with organized ignorance.

    Climate change is a fraud in that “green energy” is even dumber than oil, a bait and swap. It is not a fraud in that the indiscriminate bulldozing of vegetation to create artificial scarcity is systematically reducing effective sexual reproduction with methylation. If you look, you will see that humanity is collapsing, from the countryside where natural resource liquidation begins, toward the global port cities, the political ends justifying the means.

    Empires can only devolve, and you can only reorganize subsystem for so long. As you can see, the CBs are running out of oxygen, and the Internet is just the discovery phase. Begin by examining the plant, which is what fixes that CO2 for you, but with a tiny fraction of the available energy.

    Consulting is like a baseball bullpen. Some company with a problem no one cares about gets a beginner, a student. If successful, more problems are referred. The professors are gatekeepers, collecting “cases” for plugnplay, of which programming libraries called dark code are one variety. With Navy, you may be consulting 15 organizations of all varieties on the same job.

    Beyond that, you get into spookville, crossing the illusionary line of the nation/state, where there are no sides. There is only self obsessed scapegoats trying to stay one step ahead of the rotating peer pressure group parade, and the legacy family dynasties making bets with other people’s debt, to maintain their habits.

    1. ke

      You get out of Wall Street what you put into it, amplified, which is currently garbage. That’s what those trading algorithms are telling you.

      1. ke

        It is the university consultants job to remove and replace false assumptions, with a primary planned obsolescence filter it calls R&D, creating derivative filters, to farm people who defer responsibility for their own choices and actions, to comply.

        It is the job of the open source programmer to NOT it. My education came from the armchair of admirals at age 9. A thousand people have come at me and failed, with various attack algorithms. You have the record; look.

    2. TheCatSaid

      “Climate change is a fraud in that “green energy” is even dumber than oil, a bait and swap. It is not a fraud in that the indiscriminate bulldozing of vegetation to create artificial scarcity is systematically reducing effective sexual reproduction with methylation. ”

      Can you elucidate this? I don’t follow the bait and switch, or how indiscriminate bulldozing of vegetation enters the picture of green energy more than oil (if that’s what you’re saying), and how this reduces effective sexual reproduction.

      My closest guess–mining for the scarce minerals needed for current renewable energy technology would impact / destroy vegetation, and toxins from all this over time destroy reproductive integrity. Am I close?

      “programming libraries called dark code” What is dark code? What’s it used for? Who uses it, if professors are the gatekeepers?

      1. ke

        That is a lot of questions.

        Co2 rise and O2 fall with technology, since the wheel, but dramatic increase with industrialization topped of with global trade for the sake of burning oil and locking the process in with petrodollar MAD. The problem isn’t the number of people; its photosynthesis per person, which the technology is designed to destroy needlessly.

        Essentially all that oil was provided by plants. First we “cultivate” plants to Monsanto death, and then we take the end product of energy diffusion and burn it, to pave over photosynthesis. That’s called a positive feedback loop, which spells death in biology. We are destroying our own food chain. If you look at plant process from the perspective of energy, green energy shorts the circuit, again destroying our own food chain. Large scale shell fish harvesting kills the ocean from shore out, and fish farming at the intl line inward. Killing the vegetation is far more serious because that’s what fixes the CO2. Degenerative diseases are then farmed because methylation suffocates gene expression, resulting in devolution. Animal complexity, us, came with increasing monogamy, in quantum hurdles, over population gene sets subjecting themselves to methylation. If you look at the data, coal methylation destroyed Great Britain, long before other empire symptoms.

        Life depends on scarce minerals. You gotta be devolving to mine the minerals right out of your own water source. Organic is artificial, worse than corporate farming. The essential nutrients are not provided, by law, in both.

        Dark Code is where WWIII has already begun. It’s code open source wrote decades ego, which less capable programmers sold to Wall Street. If you haven’t notice, the second tier physicists work for WS. LISTEN to Greenspan talk. He is essentially a programming consultant, and Bernanke talked in physics. They are increasing environmental pressure.

        1. ke

          What the experts are trying to do is recode DNA for robots. They know what less than 1% of what DNA IS and less than 1/trillion of possible recombination. In computer memory you essentially have sheets of tiny positive and negative charges, some changing frequently, some changing infrequently, and lots not at all.

          The last is dark code. The infrequent is gray. If you run a bit balancing clock into the assembled machine, you have all that to use for implicit code, for recombination, like DNA, which only recognizes its own.

          You’ll have to do some serous personal research to get this. The = sign in 0=0, is NOT, separating AND and OR, to give you three phase programming access. It is the kernel. In one dimension, 0=0 is the number line. The number of dimensions implode and explode on either side. Now we are getting too far ahead, but Tesla increased the spectrum of energy input, for fully distributed energy. The empire is shorting the energy spectrum, to ensure central distribution.

          1. TheCatSaid

            I’ve heard some say that AI is among the biggest threats to the planet. I don’t know enough to have an opinion.

            I do know that what is taught as science misses the point in important ways. I love Wilbert Smith’s comment in his 1957 talk, “We have built a mathematical monstrosity out of the universe, and we are insisting that all of our experimental data be squeezed and coerced to fit this mathematical monstrosity;” describing other approaches to science he was being taught that were simpler and more complete.

          2. TheCatSaid

            “You’ll have to do some serious personal research to get this.” Yes. Thanks for the road signs.

        2. TheCatSaid

          Thank you, I appreciate the clarifications. I’ve felt that myself regarding our current “renewable energy” technologies, I know they are problematic and I don’t know other ways to generate or make more efficient use of power in wholesome ways (yet) but I am quite certain it is possible. “Renewables” appeal because there’s the potential for getting off the grid. Solar hot water heating can cost the earth less if the system is simple enough (e.g., more passive, without electronic controls and pumps). David E. Martin explained at a breakthrough energy movement conference about the importance of using energy in the same “phase” (If you need to use heat, then use a process that creates heat–don’t generate electricity then change it into heat. Ditto for mechanical energy–keep it all the same phase.) I agree with this, but I’m not an engineer and don’t know how to put it into action.

          “Organic is artificial, worse than corporate farming.” I might agree in some cases if you’re talking about feeding animals processed organic feed or monoculture conditions. I’d disagree if we were talking about regenerative agriculture (not necessarily certified organic, though maybe not mutually exclusive?) where one is building up both soil and diversity through local natural inputs (and not using artificial fertilizers).

  10. Blurtman

    “The Obama Administration saw its job as protecting the legitimacy and profits of the banking sector.”

    Recall Obama on the Leno show two months into his first term, with absolutely no investigation, telling Americans that the banks did nothing wrong.

  11. Ishmael

    You could see where Obama was going a long time before he was elected. A Pritzker headed up the management of his finances for election. Now why would a family who made billions in real estate development be behind a candidate. Maybe because they knew he was a puppet to protect the status quo!

    1. TheCatSaid

      Yves, another typo alert– “It falsely saw the survival of senior banks and the banks themselves as identical.” I’m guessing that should be “senior bankers”?

  12. JimTan

    The big banks, and most large corporations for that matter, have internal procedures detailing which employees are “Authorized Signatories” with the authority to approve policy decisions and sign contracts on behalf of their firms. Approving a multi-million dollar loan might require approval signatures from a division head and two VP’s, while raising the risk tolerance on a trading desk or firms exposure to mortgages might require approval signatures from the CEO and two SVP’s for example. Some firms even have formal dollar limits for the signing authority assigned to each rank of corporate officer (Vice President – $1 million, Managing Director -$5 million, ect. ). The point is corporations have always had procedures requiring the signature of senior executives to approve meaningful obligations of their firms.

    When a bank launches a new product or business, approval by executive signatories usually requires a detailed product plan that includes profit/loss forecasting. These forecasts are the basis to determine what rank of executive(s) are required for approval. I wonder if these signed approval documents might verify individual liability for some corporate schemes where ‘nobody was responsible’.

    Wouldn’t it be interesting if the ‘signed and approved’ profit/loss projections in the product plan for a deal like Goldman’s Abacus contradicted a P/L where Paulson and his counterparties shared equal risk, and the ‘approved’ profit/loss projections for JP Morgan’s (London Whale) Treasury Department’s derivative hedging contradicted the normal P/L for a Treasury hedging operation? Just a thought. I wonder if prosecutors thought to collect these internal documents?

  13. exopthalmos

    I have been very pleased with the disturbance the voting public has wrought so far. I am ecstatic that Bernie is taking it all the way to the end and not folding.

    This tells me that people are finally waking up and taking notice of the scam that is our government.

    The only people those scumbags in DC look out for are Wall St and themselves….oh and anyone who has deep pockets to help fund their dishonest campaigns.

  14. alana moralen

    If you want something done about Wall St, this is not just about voting this year and then walking away, expecting someone to clean up the mess.
    You must vote this year and then lobby your reps every month. You must take to the streets and protest. Think of who is most likely to pay attention to your continued protests and vote for them.
    Trump? He will send in armed police to kill anyone who disagrees with him.
    Clinton? She has shown she backs down under public pressure
    Sanders is still in a position to keep pressure on Clinton and his large support base is active, good for maintaining pressure
    Democracy is not voting once every 4 years and walking away, it is time to remain active and keep up the pressure for change

  15. barrisj

    The operative theme here is: Everybody was guilty, therefore nobody was. Either indict top to bottom – impossible! – or throw up one’s hands, exact fines, and claim victory. Collusive behaviour, or “corporate culture”? Incriminating memos, or winks-and-nods? Armies of lawyers would have convinced almost any jury that no case could have been made for criminal conduct, as that bar has been raised so high by federal appeals-court decisions as to declare prosecution moot…QED.

  16. Procopius

    I’m quite bitter about the Sarbanes-Oxley thing after Jon Corzine’s MF Global melted down and $7 or $8 million of customer’s deposits proved impossible to find. If there was ever a prima facie case of Sarbox violation that was it. It was easy to understand and obvious. If you can’t find customers’ money, which is required to be segregated and absolutely must never be used for other purposes because the CEO ordered clerks to withdraw the money and send it elsewhere, and you have certified your personal knowledge that you have strong financial controls in place, it’s obvious you signed falsely and there were supposed to be penalties for that, but of course Jon is a great guy, a good friend of mine, and he was just under a lot of pressure there and what say we see how much we can recover first to distribute to the creditors, the customers should have known they were taking a risk, their own fault, and how about golf Saturday? Besides, Jon is such a terrific fund raiser, didn’t you say your campaign fund is still trying to pay off from last year?

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