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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, June 19, 2011

Goldman Sachs Guys Have a Definite Point of View That Affects Their Decision-Making Abilities

Goldman Sachs guys have a definite point of view that affects their decision-making process when they enter government service. For example, it matters what a person's previous experience or background was before he/she becomes a government official; those qualities influence policy decisions. We would like to think that Gensler at the CFTC could quickly bring together rules for transparency of derivatives and control over speculation because of the role these things have played in the recent financial crisis. But OTC derivatives and speculation are Goldman Sachs's bread-and-butter issues and Gensler spent 18 years learning Goldman Sachs's rules for profit-making. The conflict of interest appears to be intense: the rules have been delayed, apparently at the request of Wall Street.

Likewise when a Goldman Sachs guy becomes Treasury Secretary he brings his knowledge of Wall Street wishes and biases to the job. How can he not be conflicted in his interests? That may help explain Paulson's desire to bail out the Wall Street banks even though he had paid lip service to helping those more in need on Main Street: "Paulson identified the wide gap between the richest and poorest Americans as an issue on his list of the country's four major long-term economic issues to be addressed, highlighting the issue in one of his first public appearances as Secretary of Treasury."

It matters that Elizabeth Warren is organizing the Consumer Financial Protection Bureau (CFPB). She is special adviser to "oversee development" of the Bureau and her focus as an attorney and law professor is on the customer, the little guy rather than the big players that "threaten our entire economic system."

Russell Mokhiber in counterpunch relates some ideas about choosing people to run government offices:

Neil Barofsky on TARP, SIGTAP, IGS and Elizabeth Warren
Too Big to Fail Redux?
By Russell Mokhiber - counterpunch

e spent $700 billion to bail out the too big to fail banks on Wall Street.

And yet, we might have to do it again.


Because the big banks are still too big to fail.

And next time, we might have to spend $5 trillion.

It ain't a pretty picture.

As Neil Barofsky knows better than most.

He was the Special Inspector General for the Troubled Asset Relief Program.

Known in Washington as SIGTARP.

He's now a adjunct professor at New York University Law School.

"The largest banks are now 20 percent larger today than they were going into the crisis," Barofsky told Corporate Crime Reporter in an interview last week. "They are systemically more significant, they are bigger, they are more important. And we just haven't seen the political or regulatory will to take on the fundamental problems that are presented by these institutions."

"Standard and Poors recently put the U.S. government's credit rating on watch. And one of the things they talked about was the contingent liability to support our financial institutions. And they estimated that the up front costs of another bailout could be up to $5 trillion."

"And when you think about the focus on our budget issues, our deficit and our debt – what happens with the next crisis and we have to come up with another $5 trillion to bail out our system once again?"

"It's a terrifying concept. One of TARP's biggest legacies is that it emphasized to the market that the government would not let these largest banks fail. And we haven't done anything to address this problem. So, we are going to be right back where we were in late 2008 – if not in a worse position."

During the debate over financial reform, the Senate voted on the Brown-Kaufman amendment, which would have limited the size of big banks – making them no longer too big to fail.

The measure was voted down, with only 33 Senators voting for it.

Barofsky says that it would have passed had the Obama administration gotten behind it.

Instead, Treasury Secretary Timothy Geithner lobbied against the bill.

"The reason it didn't pass was because the Treasury Secretary lobbied individual Senators to convince them to vote against this bill," Barofsky said.

And what was Geithner's argument against the amendment?

"As it was explained to me, it was – this was too blunt of an instrument to accomplish this. It would be better to give the regulators the power to treat the problem with a scalpel."

And your response to that?

"The regulators have failed spectacularly in the run up to the financial crisis," Barofsky said. "They have demonstrated that they are human beings. They are fallible as human beings. They, like the rest of the market, have repeatedly proven to be unable to see bubbles as they are being formed, and to comprehend the consequences of the concentration of risk and size."

. . . .

Barofsky believes TARP would have been better off with someone like Elizabeth Warren on the inside – instead on the outside looking in.

"It is striking how overwhelmingly the key decision makers in the TARP program came from Wall Street."

"When you look back on it, it shouldn't be that surprising that TARP, a program that was designed to help both Wall Street and Main Street, has done a phenomenal job in helping Wall Street and a terrible job in fulfilling its Main Street goals."

"This is not because the people who came from Wall Street were corrupt. It's not because they were out to screw the little guy. It's because of the lack of diversity. They did what they knew best and what they thought was best."

"But you had this uniform group of people from Wall Street – Hank Paulson from Goldman Sachs, the people who were running TARP who came from Merrill Lynch and Goldman Sachs, the investment officers came from a series of Wall Street banks, right down to the housing person who came from Bank of America."

"So, it's not that surprising that your policies reflect Wall Street's priorities."

"Think about how much different this program would have been had Elizabeth Warren – instead of being appointed to provide oversight of TARP – was instead put inside the bubble and was part of the decision making process in designing TARP's response."

"You'd see a much different and a much better program."

. . . .

Read the entire article here


Anonymous said...

Lawyers and Accountants Once Put Integrity First


NEARLY a year after President Obama signed into law a huge overhaul of financial regulations, little on Wall Street seems to have changed. Regulators appear to be dragging their feet on finalizing the tough new rules that the law, known as Dodd-Frank, authorized them to write. The Consumer Financial Protection Bureau has yet to get off the ground. State attorneys general are still pressing mortgage servicers for a financial settlement over the widespread fraud and abuse in lending practices.

It will take decades to fully untangle the causes of the 2008 financial crisis, but as our economy fitfully heals, it would be prudent to ask whether lawyers and accountants offer the same protection against corporate misconduct that they once did.

Wealth was reserved for business owners (and generally for corporate executives), talented investors and investment bankers who risked their own capital.

Anonymous said...

So you feed the homeless you get hauled into jail... steal trillions the cops don't show up...good system?

Picnic Of Terror Near Disney

Anonymous said...

Politics and the Power Elite

Daily Bell: Thanks for sitting down with us again. It's been a while. We'll ask some follow-ups to previous questions. Where do we stand with the US stimulus? Will we see QE3? Will it work any better than the last ones?

G. Edward Griffin: Well, it's always a little dangerous to make predictions about what's going to happen, but I think in this case the risk factor is pretty low, because that's all these fellows know how to do ... what is called QE1, QE2. Quantitative easing is merely a more sophisticated phrase for creating money out of nothing and pumping it into the economic sectors, wherever they have friends, wherever they have places they need to re-enforce, to their own economic benefit.

They always make it sound like it is for the purpose of improving the economy, but make no mistake about it, we are dealing with a pretty corrupt system and there are a lot of people in that system that need to be taken care of.

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