Jed S. Rakoff has Stern Words for Wall Street's Watchdogs, for failing to prosecute Wall Street execs who may have played a role in the financial crisis -
Federal judge wonders who stole people’s money
Opinion: No top executives in prison five years after the crisis
by AL LEWIS at marketwatch.com:
You will never hear a federal judge complain that federal prosecutors do not put drug lords behind bars.
You will never see a federal judge lament that federal prosecutors do not go after prostitutes, moonshiners, street thugs, gang-bangers or even peddlers of counterfeit merchandise.
If you turn to the current issue of The New York Review of Books, though, you can read an essay by United States District Court Judge Jed S. Rakoff titled “The Financial Crisis: Why have no high-level executives been prosecuted?”
The judge from Manhattan tallies the victims in his first paragraph: “Millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.”
Millions of victims and no perps. Seeking justice in America is like making a 911 call in Detroit. You phone to report a fire, or a crime in progress, and maybe someone responds … or maybe they don’t.
The Federal Bureau of Investigation was just too busy chasing terrorists following 9/11 to bother with suspicions of systemic white-collar crime, Rakoff wrote.
The Department of Justice was so overwhelmed that it passed the task of mortgage and securities fraud onto prosecutors in its regional offices who likely did not have the experience to handle such complex cases, and did not produce results, he said.
The Securities and Exchange Commission, which was the primary agency that should have been investigating massive securities fraud, was too busy answering questions about why it missed a single crime perpetrated by Bernie Madoff.
The agency then spent the next five years prosecuting far smaller Ponzi schemes than Madoff’s and suing people for insider trading — because those cases are far easier to prove than the big ones, Rackoff said.
The Federal Bureau of Investigation was just too busy chasing terrorists following 9/11 to bother with suspicions of systemic white-collar crime, Rakoff wrote.
The Department of Justice was so overwhelmed that it passed the task of mortgage and securities fraud onto prosecutors in its regional offices who likely did not have the experience to handle such complex cases, and did not produce results, he said.
The Securities and Exchange Commission, which was the primary agency that should have been investigating massive securities fraud, was too busy answering questions about why it missed a single crime perpetrated by Bernie Madoff.
The agency then spent the next five years prosecuting far smaller Ponzi schemes than Madoff’s and suing people for insider trading — because those cases are far easier to prove than the big ones, Rackoff said.
This is pretty much how it works in the Justice Department, according to Rakoff:
“Which do you think an assistant would devote most of her attention to: an insider-trading case that was already nearly ready to go to indictment and that might lead to a high-visibility trial, or a financial crisis case that was just getting started, would take years to complete, and had no guarantee of even leading to an indictment?
“Of course, she would put her energy into the insider-trading case, and if she was lucky, it would go to trial, she would win, and, in some cases, she would then take a job with a large law firm. And in the process, the financial fraud case would get lost in the shuffle.”
I don’t believe Osama bin Laden could have planned a more perfect set of conditions in which to erode capitalism — if that was his goal.
---
Once the U.S. was fixated on an abstract war on terrorism — against no particular nation, or perhaps the wrong nation — banks, corporations and Wall Street players could loot the Treasury before our blinded eyes. It was a crime so large it spawned a growing class of Americans who now wonder if maybe socialism might be less corrupt.
Rakoff is one of the few federal judges to take a stand for justice in the financial crisis. He’s tried to block high-profile settlements with regulators and banks that would like to settle fraud allegations without admitting nor denying guilt.
In November 2011, for instance, he delayed a $285 million settlement between the SEC and Citigroup, which didn’t want to admit guilt in the case. So was there a crime or wasn’t there? Somehow, only one inquiring judicial mind wanted to know . “Doesn’t the SEC have an interest in what the truth is?” Rakoff asked. An appeals court rebuffed his decision.
Rakoff allows in his essay that it is, of course, possible no one committed a crime in the financial crisis. But he also notes that this is not the prevailing view in government. The Financial Crisis Inquiry Commission, for instance, found that “the signs of fraud were everywhere to be seen.”
“The Department of Justice has never taken the position that all the top executives involved in the events leading up to the financial crisis were innocent,” he wrote. “Rather it has offered one or another excuse for not criminally prosecuting them — excuses that, on inspection, appear unconvincing.”
One of the biggest impediments to successful prosecutions may be that the government itself was responsible for the scams, Rakoff said. Repealing key regulations, such as the Glass-Steagall Act, and encouraging risky lending were just a few ways government fueled the fake boon that led to the great bust and the ensuing bailouts.
“It was the government that proposed the shotgun marriages of, among others, Bank of America with Merrill Lynch, and of J.P. Morgan with Bear Stearns,” Rakoff wrote.
“Regulators made almost no effort to hold accountable the financial institutions they were bailing out, to wonder whether the government, having helped create the conditions that led to the seeming widespread fraud in the mortgage-backed securities market, was all too ready to forgive its alleged perpetrators.”
It’s essential reading for anyone who wonders what happened. At the top of the essay is an editorial cartoon from New York Times, from the last century, asking “Who stole the peoples’ money?” It portrays likely suspects all standing in a circle, each pointing to someone else.
When everyone does it, no one can be found guilty.
Lack of Wall St. Prosecutions Spurs Critical Essay
Moderator: Super Moderators
Great post, thanks.
Kinda begs the age-old question embodied in the old Robin Hood tales and songs about the rich in society and, well, everyone else - and how there are a different set of laws in place.
If we look at how our current form of government is set-up - I don't think that our Fouding Fathers had envisioned a professional class of bureaucrats who's very jobs and livelihoods are dependant upon the continuation (or even and expansion) of the status quo. So, don't look at the hand that feeds them to prosecute them. The federal government is the largest single employer in this country. They are also cahrged as the watchdog for this country - and we all know how well they're doing there.
Regarding the revolving carossel that is the federal executive, senate and house membership, these people depend on corporate funding for their campaigns - no challenges there.
And, that leaves us then with the federal judiciary. The supreme court is a lifetime position. Other judgeships are federal appointments and are considered to be plum positions with good pay and perks. Is anyone really going to upset the applecart here? Doubtful.
The "war on terrorism" has been (IMHO) a smokescreen from the start. Whether the attack on the WTC was commited by dedicated terrorists that somehow outsmarted our military while operation from a cave, or was an operation assisted by elements within our government is irrelevant if we consider that - given the scenario, a plan was either evidently in place, or developed quickly and efficiently enough that would alow for not only the looting of the US Treasury, but would also allow for its cover-up.
While our society has been focused through a continuous stream of color-coded alerts, TSA friskings, alleged FEMA detention camps, and publicized maps showing routes that trucks carrying nuclear waste would take enroute to disposal sites ("perfect for making that dirty bomb that terrorists just love!!!) - the "too large to fail" banking houses have been gutting the Treasury.
And no one noticed?
So, what are we to believe? The watchdog is a deaf, dumb and blind poodle? Is the concept of a government watchdog in today's society so out of touch with reality given today's form of government where every position is inextricably linked to corporate largesse and contributions?
And, as in days of old, will there be an uprising among the vast unwashed (as those who are in the position to pillage this much must assuredly view the lower, middle and yes, even the higher classes of American society because, let's face it - our wealth IS being shifted overseas)? And, will the new uprisings mirror the torches and pitchforks of centuries past, or will Americans be capable of wielding new weapons applicable to new times and new playing fields?
Where the medieval Robin Hood used swords and arrows, will the new champion of the downtrodden yield the hacker's program and unleash the internet back onto those who moved vast sums from one continent to another? Will those who are now young rouse themselves from their carefree days of youthful pastimes and in turn devote their computer skills - honed by years of "playing" with technology - to fighting a new cyber war?
Once the young people of America discover just how truly screwed they are how docile will they be? Aging Baby Boomers may be so engaged in holding onto what they have and see as a shrinking retirement, may not have the energies, saavy nor technical skill to hit these people and organizations where they live - and do it remotely. Stealthily. Over the net. As happened to us here at home.
Who knows what the 21st century Robin Hood will look like, or who he - or she - will deliver their form of justice for such large scale pillaging. Or will anyone even care.........???
Kinda begs the age-old question embodied in the old Robin Hood tales and songs about the rich in society and, well, everyone else - and how there are a different set of laws in place.
If we look at how our current form of government is set-up - I don't think that our Fouding Fathers had envisioned a professional class of bureaucrats who's very jobs and livelihoods are dependant upon the continuation (or even and expansion) of the status quo. So, don't look at the hand that feeds them to prosecute them. The federal government is the largest single employer in this country. They are also cahrged as the watchdog for this country - and we all know how well they're doing there.
Regarding the revolving carossel that is the federal executive, senate and house membership, these people depend on corporate funding for their campaigns - no challenges there.
And, that leaves us then with the federal judiciary. The supreme court is a lifetime position. Other judgeships are federal appointments and are considered to be plum positions with good pay and perks. Is anyone really going to upset the applecart here? Doubtful.
The "war on terrorism" has been (IMHO) a smokescreen from the start. Whether the attack on the WTC was commited by dedicated terrorists that somehow outsmarted our military while operation from a cave, or was an operation assisted by elements within our government is irrelevant if we consider that - given the scenario, a plan was either evidently in place, or developed quickly and efficiently enough that would alow for not only the looting of the US Treasury, but would also allow for its cover-up.
While our society has been focused through a continuous stream of color-coded alerts, TSA friskings, alleged FEMA detention camps, and publicized maps showing routes that trucks carrying nuclear waste would take enroute to disposal sites ("perfect for making that dirty bomb that terrorists just love!!!) - the "too large to fail" banking houses have been gutting the Treasury.
And no one noticed?
So, what are we to believe? The watchdog is a deaf, dumb and blind poodle? Is the concept of a government watchdog in today's society so out of touch with reality given today's form of government where every position is inextricably linked to corporate largesse and contributions?
And, as in days of old, will there be an uprising among the vast unwashed (as those who are in the position to pillage this much must assuredly view the lower, middle and yes, even the higher classes of American society because, let's face it - our wealth IS being shifted overseas)? And, will the new uprisings mirror the torches and pitchforks of centuries past, or will Americans be capable of wielding new weapons applicable to new times and new playing fields?
Where the medieval Robin Hood used swords and arrows, will the new champion of the downtrodden yield the hacker's program and unleash the internet back onto those who moved vast sums from one continent to another? Will those who are now young rouse themselves from their carefree days of youthful pastimes and in turn devote their computer skills - honed by years of "playing" with technology - to fighting a new cyber war?
Once the young people of America discover just how truly screwed they are how docile will they be? Aging Baby Boomers may be so engaged in holding onto what they have and see as a shrinking retirement, may not have the energies, saavy nor technical skill to hit these people and organizations where they live - and do it remotely. Stealthily. Over the net. As happened to us here at home.
Who knows what the 21st century Robin Hood will look like, or who he - or she - will deliver their form of justice for such large scale pillaging. Or will anyone even care.........???
Rakoff defends scathing remarks on financial crisis
Wants Someone To Pay, Before Statute of Limitations Runs Out
From hereisthecity.com:
A federal judge in New York who wrote a scathing opinion article questioning the lack of high-level financial crisis prosecutions says he was offering his views "not as a judge but as a citizen."
Still, U.S. District Judge Jed S. Rakoff is making no apologies.
"Judges have to be neutral, but they don't have to be eunuchs," Rakoff said.
Rakoff spoke exclusively with CNBC in some of his first public comments following the controversial essay in the January 9 edition of the New York Review of Books headlined "The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?" In the article, Rakoff writes that if the financial crisis is a result of intentional fraud, "the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years."
In the interview, conducted by phone while the judge was in his chambers in New York, Rakoff said he wrote the article because he was puzzled by what he called "seeming inconsistencies;" some parts of the government - like the independent Financial Crisis Inquiry Commission - concluding there was fraud, while the Justice Department has so far declined to prosecute top Wall Street executives.
Rakoff said the explanation by some prosecutors for the lack of high-level cases is "implausible," and called the suggestion by some top officials including Attorney General Eric Holder that some prosecutions would damage the economy - the so-called "too big to jail" argument - "a doubtful proposition."
It is rare for sitting judges to offer opinions about issues that could come before them, rarer still to grant interviews to journalists. But Rakoff says he has been careful not to cross any ethical boundaries, repeatedly pointing out, for example, that he has no opinion as to whether fraud actually occurred.
"I did my very, very best to couch my article in terms that were fully within the bounds permitted by judicial ethics," Rakoff said. As a result, he said, he is unconcerned that his comments might complicate a future case in his court.
Rakoff said his restraint did leave him open to what he called "a cheap shot" by Justice Department spokesman Brian Fallon, who complained in a statement following the article that "the judge does not identify a single case where a financial executive should have been charged, but wasn't."
"That would be inappropriate for a federal judge, even when giving his opinions as a citizen, to say I think X should have been prosecuted or Y should have been prosecuted, and I think the Justice Department well knew that I couldn't do that," Rakoff said.
Fallon also noted that the department has prosecuted thousands of defendants following the financial crisis, and pointed to the record $13 billion settlement last month with JPMorgan Chase as an example of authorities being tough on big institutions for their role in the meltdown.
But Rakoff is critical of a growing emphasis by the Justice Department on prosecuting corporations as opposed to individuals.
Manhattan United States Attorney Preet Bharara, whose office handles most securities fraud cases, declined to comment on Rakoff's article. Bharara has argued in the past that charging or threatening to charge a corporation can have a longer lasting impact, forcing a company to change its culture. Rakoff disagrees.
"I have huge respect for Preet Bharara, a great U.S. Attorney by any measure. But even great men can make mistakes," Rakoff said.
"If you prosecute a CEO or other senior executive and send him or her to jail for committing a crime, the deterrent effect in my view vastly outweighs even the best compliance program you can put in place."
Bharara has argued for prosecuting both individuals and corporations. But Rakoff, himself a former white-collar prosecutor, says that is often impractical, because prosecuting high-level executives often requires the use of confidential informants and undercover investigations. If the company itself is a target, Rakoff says, that cover is blown.
"When you get a report from the outside counsel as to what's wrong in the company, at that point it's too late for anyone to wear a wire," he said. "No one who is involved in a higher level isn't already on notice that the government is looking into this."
The 70-year-old judge, a Clinton appointee who has been on the federal bench since 1995, has never shied away from upsetting the apple cart.
In 2009, he initially refused to approve a settlement between the Securities and Exchange Commission and Bank of America over executive bonuses at Merrill Lynch, which the bank acquired during the depths of the crisis. Rakoff called the proposed deal "a contrivance designed to provide the SEC with the façade of enforcement," and sent the parties back to the drawing board.
And in 2011 he blocked a proposed $285 million settlement between the SEC and Citigroup because it allowed the bank to resolve the charges without admitting or denying guilt. The SEC has appealed the ruling but has since revised its policy allowing companies to "neither admit nor deny" wrongdoing.
He said the time is right to speak out about the financial crisis because the five-year statute of limitations for many potential cases is running out.
"I think it's common sense to say that the longer away from a crime it gets prosecuted, the less deterrent effect there is," he said.
And while the Justice Department points to a provision in the Dodd-Frank law passed after the crisis extending the statute of limitation to six years in some cases, Rakoff is skeptical.
"The government has indicated that it views the six year statute of limitations under Dodd-Frank as retroactive, that a crime that cannot otherwise be prosecuted now can be because Congress changed the law after the crime was committed. That is sure to be a litigated issue in any case brought under that approach, and therefore I have no opinion on that subject whatsoever because that issue might come before me."
Wants Someone To Pay, Before Statute of Limitations Runs Out
From hereisthecity.com:
A federal judge in New York who wrote a scathing opinion article questioning the lack of high-level financial crisis prosecutions says he was offering his views "not as a judge but as a citizen."
Still, U.S. District Judge Jed S. Rakoff is making no apologies.
"Judges have to be neutral, but they don't have to be eunuchs," Rakoff said.
Rakoff spoke exclusively with CNBC in some of his first public comments following the controversial essay in the January 9 edition of the New York Review of Books headlined "The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?" In the article, Rakoff writes that if the financial crisis is a result of intentional fraud, "the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years."
In the interview, conducted by phone while the judge was in his chambers in New York, Rakoff said he wrote the article because he was puzzled by what he called "seeming inconsistencies;" some parts of the government - like the independent Financial Crisis Inquiry Commission - concluding there was fraud, while the Justice Department has so far declined to prosecute top Wall Street executives.
Rakoff said the explanation by some prosecutors for the lack of high-level cases is "implausible," and called the suggestion by some top officials including Attorney General Eric Holder that some prosecutions would damage the economy - the so-called "too big to jail" argument - "a doubtful proposition."
It is rare for sitting judges to offer opinions about issues that could come before them, rarer still to grant interviews to journalists. But Rakoff says he has been careful not to cross any ethical boundaries, repeatedly pointing out, for example, that he has no opinion as to whether fraud actually occurred.
"I did my very, very best to couch my article in terms that were fully within the bounds permitted by judicial ethics," Rakoff said. As a result, he said, he is unconcerned that his comments might complicate a future case in his court.
Rakoff said his restraint did leave him open to what he called "a cheap shot" by Justice Department spokesman Brian Fallon, who complained in a statement following the article that "the judge does not identify a single case where a financial executive should have been charged, but wasn't."
"That would be inappropriate for a federal judge, even when giving his opinions as a citizen, to say I think X should have been prosecuted or Y should have been prosecuted, and I think the Justice Department well knew that I couldn't do that," Rakoff said.
Fallon also noted that the department has prosecuted thousands of defendants following the financial crisis, and pointed to the record $13 billion settlement last month with JPMorgan Chase as an example of authorities being tough on big institutions for their role in the meltdown.
But Rakoff is critical of a growing emphasis by the Justice Department on prosecuting corporations as opposed to individuals.
Manhattan United States Attorney Preet Bharara, whose office handles most securities fraud cases, declined to comment on Rakoff's article. Bharara has argued in the past that charging or threatening to charge a corporation can have a longer lasting impact, forcing a company to change its culture. Rakoff disagrees.
"I have huge respect for Preet Bharara, a great U.S. Attorney by any measure. But even great men can make mistakes," Rakoff said.
"If you prosecute a CEO or other senior executive and send him or her to jail for committing a crime, the deterrent effect in my view vastly outweighs even the best compliance program you can put in place."
Bharara has argued for prosecuting both individuals and corporations. But Rakoff, himself a former white-collar prosecutor, says that is often impractical, because prosecuting high-level executives often requires the use of confidential informants and undercover investigations. If the company itself is a target, Rakoff says, that cover is blown.
"When you get a report from the outside counsel as to what's wrong in the company, at that point it's too late for anyone to wear a wire," he said. "No one who is involved in a higher level isn't already on notice that the government is looking into this."
The 70-year-old judge, a Clinton appointee who has been on the federal bench since 1995, has never shied away from upsetting the apple cart.
In 2009, he initially refused to approve a settlement between the Securities and Exchange Commission and Bank of America over executive bonuses at Merrill Lynch, which the bank acquired during the depths of the crisis. Rakoff called the proposed deal "a contrivance designed to provide the SEC with the façade of enforcement," and sent the parties back to the drawing board.
And in 2011 he blocked a proposed $285 million settlement between the SEC and Citigroup because it allowed the bank to resolve the charges without admitting or denying guilt. The SEC has appealed the ruling but has since revised its policy allowing companies to "neither admit nor deny" wrongdoing.
He said the time is right to speak out about the financial crisis because the five-year statute of limitations for many potential cases is running out.
"I think it's common sense to say that the longer away from a crime it gets prosecuted, the less deterrent effect there is," he said.
And while the Justice Department points to a provision in the Dodd-Frank law passed after the crisis extending the statute of limitation to six years in some cases, Rakoff is skeptical.
"The government has indicated that it views the six year statute of limitations under Dodd-Frank as retroactive, that a crime that cannot otherwise be prosecuted now can be because Congress changed the law after the crime was committed. That is sure to be a litigated issue in any case brought under that approach, and therefore I have no opinion on that subject whatsoever because that issue might come before me."
AND as well, thanks to judicial inaction, crooked corporate execs will soon be "Too Late to Jail"... Ain't it great??kbot wrote: Nothing will happen. Not with this government we have.
"Too big to fail", you know.......
Like George Carlin mused, the table is tilted, the game is rigged, yet good honest citizens, many of modest means, continue to vote for two-party ----suckers that don't care about THEM at all - which lead him to the conclusion, it's called the "American Dream" because you have to be asleep to believe it.
Just saw this on the news. Imagine anyone else being able to get away with having your record quickly expunged - over and over and over and over and over.......
Brokers increasingly getting investor complaints removed from records
Your financial professional could have a secret: A history of complaints that have been wiped clean.
A study is shaking up the financial industry, revealing that in an alarmingly high percentage of cases, brokers are getting investor complaints removed from records that can be viewed by the public.
When the bell opens a new trading day, you want your investments in the right hands.
That's why Damon Petraglia thoroughly checked out his financial advisor.
But, Damon Petraglia is not just an investor. He's also a private investigator. People check out their stock brokers.
All financial pros with a federal license can be found on the Financial Industry Regulatory Authority, or FINRA's, website.
You can find out if a broker is licensed, and where he or she has worked.
But, we've learned there's a loophole.
The secret is revealed in a new study which shows how stock brokers can erase problems.
Brokers can request that a complaint be expunged from their record if it's false.
Federal guidelines say expungement is supposed to be an "extraordinary relief".
But this study found between mid-May 2009 to 2011, when cases were resolved by settlements, arbitrators approved brokers' requests to remove complaints from the record nearly 97 percent of the time.
http://www.kob.com/article/stories/s326 ... sdFRcKA2M8
Brokers increasingly getting investor complaints removed from records
Your financial professional could have a secret: A history of complaints that have been wiped clean.
A study is shaking up the financial industry, revealing that in an alarmingly high percentage of cases, brokers are getting investor complaints removed from records that can be viewed by the public.
When the bell opens a new trading day, you want your investments in the right hands.
That's why Damon Petraglia thoroughly checked out his financial advisor.
But, Damon Petraglia is not just an investor. He's also a private investigator. People check out their stock brokers.
All financial pros with a federal license can be found on the Financial Industry Regulatory Authority, or FINRA's, website.
You can find out if a broker is licensed, and where he or she has worked.
But, we've learned there's a loophole.
The secret is revealed in a new study which shows how stock brokers can erase problems.
Brokers can request that a complaint be expunged from their record if it's false.
Federal guidelines say expungement is supposed to be an "extraordinary relief".
But this study found between mid-May 2009 to 2011, when cases were resolved by settlements, arbitrators approved brokers' requests to remove complaints from the record nearly 97 percent of the time.
http://www.kob.com/article/stories/s326 ... sdFRcKA2M8
There you go man, keep as cool as you can. Face piles and piles of trials with smiles. It riles them to believe that you perceive the web they weave. And keep on thinking free. (Moody Blues)