THE
BANKSTER-OWNED PRESIDENT PROMISED HIS CRIMINAL BANKSTER DONORS NO real
REGULATION, NO PRISON TIME, AND UNLIMITED PILLAGING OF THE NATION’S ECONOMY!
DESPITE
THE DEVASTATION THESE BANKSTERS HAVE CAUSED AMERICANS, THEIR
PROFITS
SOARED GREATER DURING OBAMA’S FIRST TWO YEARS, THAN ALL EIGHT UNDER BUSH. SO
HAVE FORECLOSURES!
Records show that four out of Obama's
top five contributors are employees of financial industry giants - Goldman Sachs ($571,330), UBS AG ($364,806),
JPMorgan Chase ($362,207) and Citigroup ($358,054).
*
“Barack Obama's favorite
banker faces losses of $2 billion and
possibly more -- all because of the complex, now-you-see-it-now-you-don't
trading in exotic financial instruments that he has so ardently lobbied Congress
not to regulate.”
Is JPMorgan's Loss a Canary in a Coal Mine?
Posted: 05/16/2012 4:49 pm
That sound of
shattered glass you've been hearing is the iconic portrait of Jamie Dimon
splintering as it hits the floor of JPMorgan Chase. As the Good Book says,
"Pride goeth before a fall," and the sleek, silver-haired,
too-smart-for-his-own-good CEO of America's largest bank has been turning every
television show within reach into a confessional booth. Barack Obama's favorite
banker faces losses of $2 billion and
possibly more -- all because of the complex, now-you-see-it-now-you-don't
trading in exotic financial instruments that he has so ardently lobbied
Congress not to regulate.
*
A
law unto themselves
15
August 2012
On August 9, the US
Justice Department announced it was ending a criminal investigation into
allegations that Goldman Sachs committed securities fraud in its underwriting
and marketing of mortgage-backed securities in the months leading up to the
Wall Street crash of September 2008. The department said it would not file
charges against the bank or any of its employees.
As a special favor to
Goldman, the Obama administration’s Justice Department took the unusual step of
making a public announcement that it had cleared the bank of wrongdoing.
The allegations
stemmed from a detailed, 640-page report on the financial crisis issued in
April of 2011 by the Senate Permanent Subcommittee on Investigations. The
report, based on a two-year investigation and 56 million pages of evidence,
documented rampant fraud and criminality by major banks and the complicity of
credit rating firms and federal bank regulators. In releasing the report, the
chairman of the committee, Senator Carl Levin, said the panel’s two-year probe
had uncovered “a snake pit rife with greed, conflicts of interest and
wrongdoing.”
The largest section
of the report by far, comprising 240 pages, was devoted to a scrupulously
documented account—citing internal emails, memoranda, prospectuses and
interviews—of how Goldman Sachs, beginning in December 2006, offloaded billions
in toxic sub-prime mortgage holdings to investors by packaging them into
complex mortgage-backed securities and collateralized debt obligations (CDOs).
Goldman sold the investments while concealing the source of the mortgages, the
fact that they were losing value, and Goldman’s belief that they would decline
further.
As the report
substantiated, Goldman further defrauded its clients by betting for its own
profit that the securities it was recommending would collapse, without telling
its customers that it was doing so.
The committee
referred its findings to the Justice Department, making clear it believed
criminal prosecutions were warranted. It also suggested that Goldman CEO Lloyd
Blankfein, who testified before the panel in April 2010 and flatly denied
taking a net “short” position on mortgage-backed securities or amassing profits
by defrauding clients, be prosecuted for perjury.
Last Thursday, the
same day that the Justice Department gave Goldman a free pass, the bank
reported that the Securities and Exchange Commission (SEC) had concluded its
own civil investigation into a $1.3 billion sub-prime mortgage deal dating from
2006 and decided to take no action.
These actions
exemplify the operation of the aristocratic principle in what passes for
American “justice”. Bankers can lie, steal, cheat and defraud the public
without limit, causing human suffering and social ruin on a global scale, with
no fear of being held accountable. They are not subject to the laws that apply
to mere mortals. They operate with impunity, a law unto themselves.
Of course, to secure
this status, the financial lords must devote a portion of their fortunes to
bribing politicians, parties, regulators and courts, from the president on
down. But this hardly has to be concealed any longer since it has been
essentially sanctioned by the Supreme Court’s ruling on corporate campaign
donations.
The current crisis
has revealed how completely the bankers rule behind the trappings of democracy.
Instead of being led away in chains and having their ill-gotten wealth seized
for treating the world economy as their personal gambling casino—a crooked one
at that—the financial oligarchs were rewarded with trillions stolen from the
public purse. Now the state, bankrupted by the bailout of Wall Street, is
clawing back a portion of the cost by destroying social programs and public
services and impoverishing the working class.
In its August 9
statement on Goldman Sachs, the Justice Department said it had conducted “an
exhaustive review of the [Senate] report,” but concluded that “based on the law
and evidence as they exist at this time, there is not a viable basis to bring
criminal prosecution…”
This is a
contemptible lie, as a reading of the Senate Permanent Subcommittee on
Investigations report makes clear.
On page 329, for
example, the report states: “The Goldman Sachs case history shows how
one investment bank was able to profit from the collapse of the mortgage
market, and ignored substantial conflicts of interest to profit at the expense
of its clients in the sale of RMBS [residential mortgage-backed securities] and
CDO securities.”
On page 376, we find:
“… Goldman engaged in securitization practices that magnified risk in the
market by selling high-risk, poor quality mortgage products to investors around
the world.”
On page 602, under
the heading “Analysis of Goldman’s Conflicts of Interest” the following
subheadings are listed:
Shorting Its Own
Securities.
Failing to Disclose Key Information to Investors.
Misrepresenting Source of Assets.
Failing to Disclose Client Involvement.
Minimizing Premiums.
Selling Securities Designed to Fail.
Delaying Liquidation.
Misrepresenting Assets.
Taking Immediate Post-Sale Markdowns.
Evading Put Obligation.
Using Poor Quality Loans in Securitizations.
Concealing Its Net Short Position.
Failing to Disclose Key Information to Investors.
Misrepresenting Source of Assets.
Failing to Disclose Client Involvement.
Minimizing Premiums.
Selling Securities Designed to Fail.
Delaying Liquidation.
Misrepresenting Assets.
Taking Immediate Post-Sale Markdowns.
Evading Put Obligation.
Using Poor Quality Loans in Securitizations.
Concealing Its Net Short Position.
The report concludes
with a survey of federal securities laws that apply to Goldman’s activities. On
page 606, for example, the following appears: “With respect to a broker-dealer,
the SEC has held: ‘When a securities dealer recommends a stock to a customer,
it is not only obligated to avoid affirmative misstatements, but also must
disclose material adverse facts to which it is aware. That includes disclosure
of “adverse interests” such as “economic self interest” that could have
influenced its recommendation.’”
No one with a
straight face can claim that Goldman did not violate federal laws in its
money-mad drive to profit from the collapse of the housing market. The Senate
report is a devastating indictment of criminal practices that pervade not only
the actions of Goldman Sachs, but all of the major banks, hedge funds and
financial institutions.
The role of the
government in shielding the financial mafia—not a single leading US banker has
been prosecuted since the crash of 2008—shatters all claims that the financial
system can be reformed. The grip of the financial aristocracy over society can
be broken only through the independent, revolutionary mobilization of the
working class on the basis of a socialist program. At the center of that
program is the expropriation of the major banks and their transformation into
public utilities under the democratic control of the working people.
Barry Grey
The author also
recommends:
US drops investigations of Goldman
Sachs
[11 August 2012]
[11 August 2012]
Senate report on Wall Street crash: The
criminalization of the American ruling class
[18 April 2011]
[18 April 2011]
*
Senate report on Wall Street crash: The criminalization of the American ruling class
18 April 2011
The US Senate Permanent Subcommittee on Investigations released a voluminous report last Wednesday on the Wall Street crash of 2008 that documents the fraud and criminality that pervade the entire financial system and its relations with the government.
The 650-page report is the outcome of a two-year investigation that involved over 150 interviews and depositions as well as the examination of subpoenaed emails and internal documents of major banks, government regulatory agencies and credit rating firms. The report, entitled “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” establishes that the financial crash and ensuing recession were the result of systemic fraud and deception on the part of the mortgage lenders and banks, carried out with the collusion of the credit rating corporations and the complicity of the government and its bank regulatory agencies.
The World Socialist Web Site will analyze the contents of this important document in detail in the coming days. However, its basic thrust is clear. As the executive summary states: “The investigation found that the crisis was not a natural disaster, but the result of high-risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”
At a press conference Wednesday and in subsequent interviews, Senator Carl Levin (Democrat from Michigan), the chairman of the subcommittee, was even more explicit. “Using emails, memos and other internal documents,” he said, “this report tells the inside story of an economic assault that cost millions of Americans their jobs and homes, while wiping out investors, good businesses and markets. High-risk lending, regulatory failures, inflated credit ratings and Wall Street firms engaging in massive conflicts of interest contaminated the US financial system with toxic mortgages and undermined public trust in US markets.
“Using their own words in documents subpoenaed by the subcommittee, the report discloses how financial firms deliberately took advantage of their clients and investors, how credit rating agencies assigned AAA ratings to high-risk securities, and how regulators sat on their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of interest are the threads that run through every chapter of this sordid story.”
Levin went on to say that the investigation had found “a financial snake pit rife with greed, conflicts of interest, and wrongdoing.” He told the New York Times: “The overwhelming evidence is that those institutions deceived their clients and deceived the public, and they were aided and abetted by deferential regulators and credit ratings agencies who had conflicts of interest.”
The report is divided into four sections, each focusing on a different contributor to the network of fraud and abuse: the mortgage lenders, the regulators, the credit rating firms and the Wall Street investment banks. The first section takes Washington Mutual (WaMu) as its case history, detailing the predatory and deceptive lending practices and accounting and reporting subterfuges that led, following the implosion of the subprime mortgage market, to the bank’s collapse and takeover by JPMorgan Chase in September of 2008.
The second examines the corrupt role of the federal Office of Thrift Supervision (OTS), which oversaw three of the biggest financial failures in US history—Washington Mutual, IndyMac and Countrywide Financial. “Over a five-year period from 2004 to 2008,” the report states, “OTS identified over 500 serious deficiencies at WaMu, yet failed to take action to force the bank to improve its lending operations and even impeded oversight by the bank’s backup regulator, the FDIC.”
The third section documents the systematic manner in which the rating firms Moody’s and Standard & Poor’s gave top credit ratings to collateralized debt obligations (CDOs) and other complex securities backed by subprime and other toxic mortgages, enabling the banks to make billions of dollars by palming off these junk securities as top-grade investments. In return, the rating companies raked in huge profits for their services.
As the report states: “Credit rating agencies were paid by Wall Street firms that sought their ratings and profited from the financial products being rated… The ratings agencies weakened their standards as each competed to provide the most favorable rating to win business and greater market share. The result was a race to the bottom.”
The final section examines the fraud and deception perpetrated by the major investment banks as they profited first from the inflation of the US housing market and then from its implosion. It takes as its examples Goldman Sachs and Deutsche Bank. Goldman began betting heavily in 2007 that the housing market would collapse, packaging and selling subprime mortgage-backed CDOs even as it secretly bet that the same securities would plummet in value.
The report cites emails by Deutsche Bank’s top global CDO trader, Gregg Lippman, calling risky mortgage securities marketed by the bank “crap” and “pigs” and the bank’s operations a “CDO machine,” which he characterized as a “Ponzi scheme.”
The document points to the central role of the big Wall Street banks in promulgating the fraud, stating: “Investment banks were the driving force behind the structured finance products that provided a steady stream of funding for lenders originating high-risk, poor-quality loans and that magnified risk throughout the US financial system. The investment banks that engineered, sold, traded and profited from mortgage-related structured finance products were a major cause of the financial crisis.”
The overall picture is one of criminality on the part of the entire financial establishment that, with all levels of government serving as its co-conspirator, systematically looted the economy in order to further enrich itself. The result is a social tragedy for tens of millions of people in the US and many millions more around the world. And yet, the result of this historic crime is that the bankers and speculators are richer and more powerful than ever.
Not a single senior executive at a major US bank, hedge fund, mortgage firm or insurance company has gone to jail. Not one has even been prosecuted.
There is every indication that none will be criminally indicted in the future. As with the similarly damning report released in January by the US Financial Crisis Inquiry Commission, the Senate report has been largely buried by the mass media. It was reported perfunctorily on the inside pages of some of the major newspapers and barely mentioned by the broadcast and cable networks, and then dropped.
One day after the release of the Senate report, the New York Times published a long article on the failure to prosecute any of the Wall Street criminals. It recounted a private meeting between the then-president of the Federal Reserve Bank of New York (now Obama’s treasury secretary) Timothy Geithner and then-New York Attorney General Andrew Cuomo in October 2008 at which Geithner urged Cuomo to back off on investigations of the banks and rating agencies.
The article contrasted the absence of criminal charges against bankers today with the aftermath of the savings and loan debacle of the late 1980s, when government task forces referred 1,100 cases to prosecutors and more than 800 bank officials went to jail. It noted the precipitous decline in referrals by bank regulators to the FBI, from 1,837 cases in 1995 to 75 in 2006. Over the ensuing four years, at the height of the financial crisis, an average of only 72 a year have been referred for criminal prosecution.
The Office of Thrift Supervision has not referred a single case to the Justice Department since 2000, and the Office of the Comptroller of the Currency, a unit of the Treasury Department, has referred only three in the last decade.
How is this to be explained? Why are Goldman CEO Lloyd Blankfein, JPMorgan CEO Jamie Dimon, the former CEO of Washington Mutual, Kerry Killinger, as well as Treasury Secretary Geithner and his predecessor, Henry Paulson (previously CEO of Goldman), not in prison?
Such financial manipulators are being shielded while workers are being stripped of their jobs, wages, homes and basic social services to pay for the debts resulting from the transfer of trillions in public funds to the banks. Collective resistance to this attack is being criminalized in the form of anti-strike laws, imposing fines and jail terms for workers who fight back.
One reason for the absence of prosecutions is the power of the individuals involved, all of whom wield immense influence over politicians, the media and the legal system. But it goes deeper than the status of individuals, just as the sordid state of affairs as a whole arises not from individual greed, but rather from a profound crisis of the entire system.
The criminalization of the American ruling class is the outcome of more than three decades in which the accumulation of wealth by the corporate-financial elite has become increasingly separated from real production. In its pursuit of profit, the ruling class has dismantled huge sections of industry and turned ever more decisively to financial manipulation and speculation.
The ascendancy of the most parasitic sections of the capitalist class has been accompanied by a sharp decline in the living standards of the working class. The richest and most powerful layers have acquired staggering levels of wealth by plundering society.
The ruling class itself senses that to prosecute any of the leading figures in the defrauding of the American people (and the rest of humankind) would rapidly expose the criminality of the entire system. It would mean putting the capitalist system itself on trial.
No comments:
Post a Comment