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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

Tuesday, February 21, 2012

Again, Goldman Sachs Is Used As a Case Study

The video is entitled, "Crooks on the Loose? Did Felons Get a Free Pass in the Financial Crisis?" And the answer is Yes and the video will tell you why.

I listened very carefully to this video and came away disappointed. But in order to make some sense of what was on the video, I chose to make a rough comparison of the four panalists with the perceived reactions of the population of the United States to the Great Recession of 2008.

That is to say, about 50% of Americans seem to respond to the financial crisis (especially if it didn't affect them directly) as something that happened and the government and justice department are doing everything they can to make things better by passing laws and making agreements with the banks to make some restitution to foreclosed homeowners. Everything about the crisis is complex and diffused. Tough people are working hard and creating relationships. The justice system in the US is majestic. That represents what came out of Lanny Breuer's and Mary Jo White's mouths. In other words, everything is fine; we are going to catch the bad guys, we've already caught thousands of them and the world will be all right soon.

About 25% of the American population seems to think that something went very wrong before and after the financial crisis. They are asking questions such as What happened? Did the revolving door from banking to government make things better or worse? What role is politics having in resolving the financial crisis? How did the terrorist attacks on 9/11 deplete the resources that could be used to investigate and bring to justice those who committed white collar crime before 2008? That is the tone that Neil Barofsky brought to the panel discussion.

About 25% of the American people are fully informed about who caused the financial crisis and want to know why there have not been prosecutions of the executives of the banks, like Blankfein of Goldman Sachs, for the role they played in committing fraud (accounting control fraud, to be exact). Why haven't any investigations been undertaken into the securities frauds committed by the banks? Why has the government agreed with the AGs to settle the foreclosure fraud through throwing money at it? Eliot Spitzer was the only panelist that named names (he used Goldman Sachs as his case study and had many good suggestions on how to investigate for criminal wrong-doing and how to make civic fraud settlements include deterrence.) But his is a lone voice in the wilderness that seems to become more muted as time passes. He is not in a position to bring about the change that he knows must happen.

That is what I got from listening to this panel discussion. It bodes ill for the future of investigations and prosecutions. So watch out, everyone, for the next big financial crisis!!

"Crooks on the Loose? Did Felons Get a Free Pass in the Financial Crisis?"

Posted by Yves Smith - Naked Capitalism

You can see the video here


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