Saturday, August 04, 2012

Are we sure the jails are big enough.....

Like anyone is going to prosecute, right? (Don't tell him the law has been bought, ok?)

Corrupt Government Officials Should Be In Jail … Alongside Corrupt Banksters | ZeroHedge

Wall Street fraud caused the Great Depression and the current financial crisis. Top economists and financial experts agree that our economy will never recover unless Wall Street fraud is prosecuted. Yet the government has more or less made it official policy not to prosecute fraud, and instead to do everything necessary to cover up for Wall Street.  For example, the Obama administration is prosecuting fewer financial crimes  than under Reagan or either Bush. For example, we pointed out in 2010: The government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are.   But it is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud.   Here are just a few of many potential examples: The government-sponsored rating agencies committed massive fraud (and see this) The Treasury department allowed banks to “cook their books” Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks Tim Geithner was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth” The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted Freddie and Fannie helped to create the epidemic of mortgage fraud The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not Arguably, both the Bush and Obama administrations broke the law by refusing to close insolvent banks Congress may have covered up illegal tax breaks for the big banks Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith’s, definitive study of the Great Depression, The Great Crash, 1929: The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy. In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced.

No comments: