--the lack of media coverage of whistle blowers and their importance;
--little or no support for whistle-blowers by the Department of Justice;
--only one whistle-blower has emerged as a credible witness, i. e., Edward J. O'Donnell, and he is not well known;
--accounting control fraud has become de-listed as a criminal offense;
--banks do not make criminal referrals against their executives;
--the FBI have to wait for criminal referrals in order to act;
--the government has not supported or "praised" the actions of past whistle-blowers;
--O'Donnell's courageous actions have been ignored by the DOJ press.
This blog has mentioned some lesser whistle-blowers (see here, here and here) who have come forward in this financial crisis but it would have been enormously helpful, for example, if Goldman's frauds had been revealed in such a way that Goldman would have to face criminal charges and not just be given small slaps on the wrist and a fine. Oh, for such a whistle-blower!
One more reason that Goldman does not create whistle-blowers is that Goldman carefully vets its employees and grooms them for loyalty so that they become embedded in the Goldman Culture itself.
One could draw the conclusion from the article below that no one working for Goldman Sachs has the "competence, courage or conscientiousness" to be a first-class whistle-blower.
Why are there no famous whistleblowers in this crisis?
By William K. Black - New Economic Perspectives
. . . .
Financial CEOs led the unholy war against adoption of the whistle-blower provisions of the Dodd-Frank Act. Once the Act became law their principal goal became perverting the SEC rules implementing the provision to deny any financial reward to whistle-blowers unless they alert the firm before they alert the SEC to the senior officers’ fraud. That prior warning would allow fraudulent senior officers to coerce the whistle-blower to try to prevent him from alerting the SEC, allow the officers to cover up the evidence of the fraud, and alert the officers so that they would not make any admissions that might be overheard by the whistle-blower or through electronic surveillance. Both Republican SEC Commissioners voted against the rule because it rejected the industry’s demand for a rule requiring the whistle-blower to first alert the senior officers that he had discovered their frauds. That effort to pervert the Dodd-Frank whistle-blower provision into a rule that would aid elite frauds will succeed if the Governor Romney wins the election.The fact that the business community fought ferociously against doing anything to encourage whistle-blowers is an example of what we call “revealed preferences” in economics. Honest CEOs should encourage whistle-blowers. CEOs often say that they encourage whistle-blowers. Their SEC filings reveal their true beliefs.We have far too few whistle-blowers and because of the worst epidemic of accounting control fraud in history and the death of criminal referrals by the banking regulatory agencies our need for whistle-blowers has never been greater. Indeed, our federal prosecutors are the people who most desperately need to encourage whistle-blowers to come forward who worked at the financial control frauds.Given that desperate need how would a rational administration respond? The President and the Attorney General would hold a press conference with a group of whistle-blowers. He would praise their performance, give a few specifics of how valuable the information they provided was to the nation, urge the tens of thousands of Americans who have information about other frauds to come forward, provide a web site for future whistle-blowers to use, and help arrange a publicity tour in which the select group of whistle-blowers appeared on a series of major television and radio programs where their efforts could be extolled and they could ask others to follow their lead.The DOJ web site would extoll whistle-blowing and give examples of how their actions helped the nation. It would showcase video interviews with whistle-blowers that could be picked up by You Tube.
Read the whole article here