It is a puzzle, in a country that prides itself on the fairness of its justice system, its freedom of expression and its disdain for corruption and bribery, how it has been caught up in the slow decline of all these areas.
People in the highest reaches of the government have instead opted to paper over the debt crisis of the banks who have not had to acknowledge the debt that is still on their books. (Paper over as a euphemism for fraud?)
We are beginning to understand just how banal and insidious is the slow path towards corruption and fraud that we witness in banks like Goldman Sachs (see the reports above).
But perhaps what will eventually happen is a death by a thousand cuts (lawsuits) as there have been a large number of these suits and Goldman Sachs has set aside $3.4 billion in anticipation of having to settle them. At present, however, Goldman Sachs has one of the lowest brands in corporate reputation rankings.
The latest lawsuit against Goldman Sachs involves Thornburg Mortgage Inc. whose court-appointed trustee is suing Wall Street banks and alleging "collusive" and "predatory" schemes that led to the bankruptcy of Thornburg. Goldman Sachs is being sued for $71 million for trying "to seize hundreds of millions of dollars of investment-grade mortgage bonds that Thornburg had pledged as collateral."
Jeffery Sachs observes and comments on corporate fraud in America:
The Global Economy's Corporate Crime Wave
By Jeffrey D. Sachs - Project-Syndicate
NEW YORK – The world is drowning in corporate fraud, and the problems are probably greatest in rich countries – those with supposedly “good governance.” Poor-country governments probably accept more bribes and commit more offenses, but it is rich countries that host the global companies that carry out the largest offenses. Money talks, and it is corrupting politics and markets all over the world.
Hardly a day passes without a new story of malfeasance. Every Wall Street firm has paid significant fines during the past decade for phony accounting, insider trading, securities fraud, Ponzi schemes, or outright embezzlement by CEOs. A massive insider-trading ring is currently on trial in New York, and has implicated some leading financial-industry figures. And it follows a series of fines paid by America’s biggest investment banks to settle charges of various securities violations.
There is, however, scant accountability. Two years after the biggest financial crisis in history, which was fueled by unscrupulous behavior by the biggest banks on Wall Street, not a single financial leader has faced jail. When companies are fined for malfeasance, their shareholders, not their CEOs and managers, pay the price. The fines are always a tiny fraction of the ill-gotten gains, implying to Wall Street that corrupt practices have a solid rate of return. Even today, the banking lobby runs roughshod over regulators and politicians.
Read the entire article and see the video here