Fraud on Wall Street is a topic I have written on now for almost 3 years. Simon Johnson Mario Draghi and Goldman Sachs Again
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Fraud On Wall Street
Sen. Ted Kaufman Speaks Out
Fraud on Wall Street is a topic I have written on now for almost 3 years.
Many at the time - and still today - write about mortgage fraud and many have gone to prison. In fact, there was one man who was sentenced to 300 years for scamming about $24 million. Yes, he was wrong and yes he deserves prison but even Bernie Madoff didn't get that much time. It was given, the judge said, to make an example and send a message too "mortgage fraudsters".
That being said, I hope this same example is used when our current gang of banksters are exposed, tried and convicted as Senator Kaufman is asking to be done. There cannot be, Kaufman says, "a two tier system of justice" as we have currently.
The problem I had when I began blogging, and still have today, is that fraud was rampant at all levels during the so called Real Estate bubble years led by Wall Street and their band of merry bankers Fraud still exists today - within the banking industry. Fraud within the banks and Wall Street - as Kaufman pints out - was "the cause of this crisis.
In 2008 as a guest writer for FlippingFrenzy - a mortgage and real estate fraud fighting blog - I published an article called Fraud, Fraud and more Fraud wherein I began to identify that the lower level fraud was enabled by the banks themselves.
“Rampant Fraud” as the Originator Times headline reads, oozed from every level of our society–from the naive to the highly educated to knowledgeable corporate executives. The extent of the fraud committed has no equal in our history. It was truly “Greed Gone Wild,” an epic we will be watching for years to come.At the time, it was ABN AMRO - a large bank holding company heavily imersed in the mortgage business. The following quote from my article came from Originator Times.
ABN AMRO To Pay $41 Million For HUD FraudMy next comment on this great "landmark" agreement was,
Office of the Comptroller of the Currency announced a more than $41 million settlement against mortgage giant ABN AMRO Mortgage Group for falsifying documents in tens of thousands of loans insured by the Federal Housing Administration (FHA). This landmark agreement represents that largest monetary settlement of an enforcement action in FHA’s history.
“Mortgage giant,” ABN AMRO falsified documents. But who are the people who knowingly allowed this practice to occur? Whoever they are, they must be held accountable for their actions as individuals. Where was senior level management? Twenty-eight thousand loans are in question here, and the article speaks only of several underwriters and a handful of others. Fraud of this magnitude could not have happened without upper management’s knowledge and direction.(all emphasis added for this post..editor)
Keith E. Gottfried, HUD’s General Counsel said, “This action demonstrates our steadfast and enduring commitment to making sure HUD’s programs are administered in accordance with the letter and intent of the law and are free from fraud and abuse.”
A settlement so insignificant to such a large corporation with no consequences for breaking the “letter and intent of the law” by any individual has no meaning.Folks, I wrote that back at the end of 2007. At the time this was the only case of fraud against a bank and there was no criminal prosecution. I say again and again, is fraud not a criminal offense? A perfect example of Kaufman's "two tier" justice system..
ABM Amor was not the only bank involved in fraud but no one in any of our regulatory or law enforcement agencies ever made an effort to expose fraud or criminal activity at any other banks to this day.
In 2008,in another article - The Truth About Wall Street - also in FlippingFrenzy, I wrote,
President Bush is right. Wall Street was drunk (with greed), and it opened the floodgates for the levees to burst, creating what can only be described as economic disaster of unprecedented proportions.
While drunk, Wall Street provided the vehicles for fraud, encouraged it and worse–closed a blind eye to it all the while profiting to the tune of hundreds of billions of dollars.
Not only are they complicit in the fraud we are learning about and fighting here through FlippingFrenzy.com, but Wall Street was instrumental in committing fraud against investors on a global scale… investors who bought the securities almost every mortgage was put into. Fannie and Freddie did the same. The rating agencies committed fraud by rubber-stamping each security issue “AAA,” never really looking at the integrity of the pools. Wall Street sold these securities knowing full well what the true worth and values of the pools were
The government had full knowledge of what they were doing, and in fact, may have encouraged them to do so to keep our economy flourishing. This was, in fact, the case during the Great Depression.
We needed a Senator Kaufman back then. We needed someone to listen and to take action. Had we done so we could have saved over a trillion dollars in bailouts, jobs and homes. (The foreclosure problem is also directly related to the banks fraudulent and criminal activities and they continue to perpetuate fraud by committing fraud on the courts).
I refer to these stories now to prove and emphasize once again that there was knowledge of the questionable and even unlawful activities from Wall Street. That Wall Street - as I said in 2008 and as Sen. Kaufman says now - caused this crisis. Had they been stopped early on the bubble would not have inflated, it would not have burst and it would not have allowed much of the lower level fraud against many homeowners looking to realize the American dream.
Specifically without Goldman Sachs, JP Morgan, Merrill Lynch, Bear Stearns and Lehman Bros and their - I will say it straight out - illegal activities, this country and the world would not be in the condition we are in today. Yet up until two days ago, no one in government spoke out. This has been not only the greatest fraud in the history of the world, it has been the greatest cover up by our government. Where have all those we charge with the responsibility to protect us been?
Now comes Sen. Ted Kaufman - U.S. Senator from Delaware - and speaks out publicly with a letter published on his web site - The Rule of Law and Wall Street. While the breaking news recently has been about Lehman Bros (unfortunately we don't have a LehmanBros666 site) and Lehman's Bankgrupcy investigation findings opened up Pandora's box, Sen. Kaufman believes the same illegal activities probably occurred with the other TBTF firms and they all should be investigated.
Mr. President, last Thursday, the bankruptcy examiner for Lehman Brothers Holdings Inc. released a 2,200 page report about the demise of the firm which included riveting detail on the firm’s accounting practices. That report has put in sharp relief what many of us have expected all along: that fraud and potential criminal conduct were at the heart of the financial crisis. Now that we’re beginning to learn many of the facts, at least with respect to the activities at Lehman Brothers, the country has every right to be outraged. Lehman was cooking its books, hiding $50 billion in toxic assets by temporarily shifting them off its balance sheet in time to produce rosier quarter-end reports. According to the bankruptcy examiner's report, Lehman Brothers’ financial statements were "materially misleading" and its executives had engaged in "actionable balance sheet manipulation." Only further investigation will determine whether the individuals involved can be indicted and convicted of criminal wrongdoing. (all bold emphasis added)At last, a high level public figure makes the comment I made years ago - "that fraud and potential criminal conduct were at the heart of the financial crisis." What is even better is that he brought it to the attention of the President of the United States as well as to the public at large. Now our outrage may be heard and more important acted on. The skeleton is out of the closet. If I were Goldman Sachs or one of the other Cartel banksters, I would be worried and they should be.
Mr. President, the SEC and Justice Department should pursue a thorough investigation, both civil and criminal, to identify every last person who had knowledge that Lehman was misleading the public about its troubled balance sheet – and that means everyone from the Lehman executives, to its board of directors, to its accounting firm, Ernst & Young. Moreover, if the foreign bank counterparties who purchased the now infamous "Repo 105s" were complicit in the scheme, they should be held accountable as well.Here are more excerpts from from Sen. Kaufman's letter:
Mr. President, it is high time that we return the rule of law to Wall Street, which has been seriously eroded by the deregulatory mindset that captured our regulatory agencies over the past 30 years, a process I described at length in my speech on the floor last Thursday.Please read the next part carefully. It is important. I will add some bold highlights as well.
The allure of deregulation, instead, led to the biggest financial crisis since 1929. And now we’re learning, not surprisingly, that fraud and lawlessness were key ingredients in the collapse as well. Since the fall of 2008, Congress, the Federal Reserve and the American taxpayer have had to step into the breach – at a direct cost of more than $2.5 trillion – because, as so many experts have said: "We had to save the system."
But what exactly did we save?
First, a system of overwhelming and concentrated financial power that has become dangerous. It caused the crisis of 2008-2009 and threatens to cause another major crisis if we do not enact fundamental reforms. Only six U.S. banks control assets equal to 63 percent of the nation’s gross domestic product, while oversight is splintered among various regulators who are often overmatched in assessing weaknesses at these firms.
Second, a system in which the rule of law has broken yet again. Big banks can get away with extraordinarily bad behavior – conduct that would not be tolerated in the rest of society, such as the blatant gimmicks used by Lehman, despite the massive cost to the rest of us.
Second, we must concentrate law enforcement and regulatory resources on restoring the rule of law to Wall Street. We must treat financial crimes with the same gravity as other crimes, because the price of inaction and a failure to deter future misconduct is enormous.
When Senators Leahy, Grassley and I introduced the Fraud Enforcement and Recovery Act (FERA) last year, our central objective was restoring the rule of law to Wall Street. We wanted to make certain that the Department of Justice and other law enforcement authorities had the resources necessary to investigate and prosecute precisely the sort of fraudulent behavior allegedly engaged in by Lehman Brothers.
We all understood that to restore the public's faith in our financial markets and the rule of law, we must identify, prosecute, and send to prison the participants in those markets who broke the law. Their fraudulent conduct has severely damaged our economy, caused devastating and sustained harm to countless hard-working Americans, and contributed to the widespread view that Wall Street does not play by the same rules as Main Street.
Is Lehman Brothers an Isolated Example?Yes, the Lehman BK findings are just the tip of the iceberg, one that former GS CEO Paulson probably never thought would be exposed when he let them fail. Now his former company - who has profited more then all the others from what I now call was a "bailout" scam - could be and should be at risk of exposure and criminal action. There is a rather long section where he talks about Goldman Sachs and specifically about their involvement in Greece. Some times the arrogant "Too Big To Fail" guys just outsmart themselves.
Mr. President, I’m concerned that the revelations about Lehman Brothers are just the tip of the iceberg.
Please read this entire letter...click here Pass it around and email it to everyone you know.
All of us here at GoldmanSachs666 have been working towards just this end. We all believe in justice and "The American Way". Our founder - Mike Morgan says it best in the Disclaimer he wrote and in the header to this blog;
This website provides information about Goldman Sachs to demonstrate how destructive they are to our lives and the hopes and dreams of our children.
"When the people and the government fear Banksters like Goldman Sachs and JP Morgan, there is economic dictatorship that will destroy the very fabric of our existence as a civilized society." - Mike MorganI am sure that Mike, although retired from this publication, feels the same gratification I do in Senator Kaufman's actions.
Finally someone with the voice and power to do something is speaking out. Perhaps the long awaited justice we all have been calling for will begin to be served.
A comment was made by a reader that this site "would soon be dead. Long live GS!!!". To that reader, thank you for your comment and thank you most of all for visiting and reading our blog. But this blog will be around to see the demise of Goldman Sachs and the other Wall Street firms.
In fact we will work harder to help expose them because now someone is taking action.
And talking about longevity, I wish to take this moment to personally thank all of our volunteers both past and present who have contributed and worked on all of our 666 sites. Without them we could not have come this far. Thank you all for your efforts and willingness to stand up for what is right and fight against what is wrong.
My special thanks to Mike Morgan for having the conviction to start this and the other 666 sites and for that same conviction to stand up to Goldman Sachs and not be bullied around. We all here hope you are in better health. Stay well Mike.
Together We Can Make A Difference...Larry Rubinoff