We have become so jaded and used to banks having their way that when such "blood money" is reported, no one sees it as unusual. As has been said before, What kind of bank anticipates that it will have legal problems that require billions of dollars to take care of? What happened to honesty in banking where, when the law is adhered to, there should be no legal proceedings against the bank? How could a bank be so corrupt?
Yves Smith asks the question that so many have been asking: Why are the big banks getting off scot-free? We know that Goldman Sachs laid out the groundwork for their own position long before the meltdown took place. We know the names of their people who prepared the way: Robert Rubin, Henry Paulson, Gary Gensler, Arthur Levitt, Joshua Bolton, Kenneth D. Brody, Jon Corzine, Mario Draghi, etc. Their names are infamous. Their goal appears to have been achieved.
The following paragraph from Yves Smith's essay has Goldman Sachs written all over it:
The critical language comes in Rule 10b-5 of the Securities Act of 1934:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
Why are the big banks getting off scot-free?Read the entire article here
By Yves Smith - Salon
For most citizens, one of the mysteries of life after the crisis is why such a massive act of looting has gone unpunished. We've had hearings, investigations, and numerous journalistic and academic post mortems. We've also had promises to put people in jail by prosecutors like Iowa's attorney general Tom Miller walked back virtually as soon as they were made.
Yet there is undeniable evidence of institutionalized fraud, such as widespread document fabrication in foreclosures (mentioned in the motion filed by New York state attorney general Eric Schneiderman opposing the $8.5 billion Bank of America settlement with investors) and the embedding of impermissible charges (known as junk fees and pyramiding fees) in servicing software, so that someone who misses a mortgage payment or two is almost certain to see it escalate into a foreclosure. And these come on top of a long list of runup-to-the-crisis abuses, including mortgage bonds having more dodgy loans in them than they were supposed to, banks selling synthetic or largely synthetic collateralized debt obligations as being just the same as ones made of real bonds when the synthetics were created for the purpose of making bets against the subprime market and selling BBB risk at largely AAA prices, and of course, phony accounting at the banks themselves.
Louise Story and Gretchen Morgenson lament this sorry state of affairs in an article today on a $10 billion lawsuit expected to be filed today by AIG against Bank of American over dodgy mortgage securities:
The private actions stand in stark contrast to the few credit crisis cases brought by the Justice Department, which is wrapping up many of its inquiries into big banks without filing any charges. The lack of prosecutions — the Justice Department has brought three cases against employees at large financial companies and none against executives at large banks — has left private litigants, mainly investors and consumers, standing more or less alone in trying to hold financial parties accountable.
“When federal authorities don’t fulfill their obligation to enforce the law, they essentially give an imprimatur to the financial entities to do whatever they want and disregard the law,” said Kathleen C. Engel, a professor at Suffolk University Law School in Boston. “To the extent there are places where shareholders and borrowers can pursue claims, they are really serving the function of the government. They are our private attorneys general.”