Department of Justice, like the SEC, knowingly misleads the American public about being tough on financial crimes that victimize Main Street. DOJ’s independent inspector general just released a report showing that the DOJ and the Attorney General himself “wildly overstated” the work of their so-called “mortgage fraud task force.” For example, the IG reported that, at a press conference in October 2012, the AG overstated the number of criminal defendants charged by a whopping 400% and overstated the estimated losses by an unbelievable 1000%. Proving that this was no accident, but an intentional policy, DOJ continued to use these false and misleading numbers for more than 10 months after knowing they were totally wrong. The IG report is couched in polite language and preposterously frames the matter as a reporting and classification problem, but it can’t hide the fact that DOJ has misled the American people about its failure to fight financial crimes. Unfortunately, pretending to be tough on financial crimes and Wall Street has also been common at the SEC, as reported here in February 2013 and again here in October 2013. While DOJ and the SEC fight a PR war to convince the American people that they are doing their job when they are not, the crime spree on Wall Street continues, the number of Main Street victims continues to go up, and the confidence of the American people in their government continues to go down, which is why Better Markets recently sued the DOJ for transparency, accountability, and oversight.
Fabrice Tourre fined for fraud. A New York federal court ordered former Goldman Sachs Vice President Fabrice Tourre to pay $825,000 for violating federal securities laws and defrauding investors in connection with Goldman’s infamous Abacus derivatives deal with hedge fund manager John Paulson. Of the dozens of people involved, Mr. Tourre (just one of thousands of mid-level Vice Presidents at Goldman) was the only person the SEC charged with wrongdoing in connection with this egregious transaction, as detailed in this report by Senator Carl Levin and the Permanent Subcommittee on Investigations. While the SEC uses this case to brag about how tough they are on Wall Street, it can’t hide the fact that the SEC and other financial regulators have failed to enforce the law against the powerful and well-connected executives and too big to fail banks on Wall Street who caused or contributed to the biggest financial crash since 1929 and the deepest recession since the Great Depression of the 1930s.
While Main Street continues to suffer from the economic wreckage caused by the financial crash, Wall Street Bonus Pool jumps 15% in 2013. New York Comptroller DiNapoli announced on Wednesday that the average bonus paid to Wall Street employees increased by 15%, bringing the bonus pool close to pre-crisis levels. The announcement comes at the same time that the budget request for the financial cops, the Commodity Futures Trading Commission, is being slashed by more than 10%. This is a huge victory for Wall Street and will allow them to return to the high-risk behavior that led to the financial crisis.
Sarah Bloom Raskin confirmed as Deputy Treasury Secretary. On Wednesday, the Senate confirmed Fed Governor Sarah Bloom Raskin to be deputy Treasury secretary. In this position, she will work with Treasury Secretary Lew who has already stated his support for a renewed push for strong reforms. This confirmation is good news for Main Street and the economy as a whole. Ms. Raskin has a proven track record of protecting the economy, community banks, and consumers.
The American people are not to blame for the financial crisis. You don’t want to miss Dean Starkman’s article exposing the corrupt, greedy practices of the financial institutions responsible for the subprime mortgage crisis which triggered the 2008 global economic collapse. Starkman absolves the American people from the pernicious, unsupported charge that they were equally responsible for the worst financial crisis since 1929 and the worst economy since the Great Depression, debunking the myth that attempts to shift blame from the bonus-bloated pockets of the guilty to the victims of a countrywide mugging. Saying “everyone is to blame” distorts reality, shields the guilty from criminal prosecution,and victimizes the American people who already have to pay the cost for the crisis Wall Street caused: $12.8 trillion. The consequences of this subprime shakedown continue to overburden the American people as a rapidly disappearing middle class pays the ultimate price, while the top 1% enjoy a robust economic recovery and top Wall Street executives cash in exorbitant bonuses. The American people deserve a free market without systemic corruption and a justice system which holds the guilty accountable for their crimes.
U.S. regulators must protect U.S. taxpayers, the financial system, and the economy. Better Markets submitted a comment letter on Monday to the CFTC addressing the implementation of strong, effective regulation of cross-border derivatives. The financial industry and its allies have been fighting cross-border regulation every step of the way and the CFTC’s request for comment is the latest example of industry’s influence. The request for comment could open the door to changes in cross-border regulation, which could create a huge, dangerous loophole that would enable too-dangerous-to-fail Wall Street banks to go back to very high risk derivatives trading with little or no oversight. American regulators must stay vigilant and not engage in a global race to the bottom on derivatives reform.
Recent Better Markets media coverage:
Big fine imposed on ex-Goldman trader Tourre in SEC case: Reuters by Nate Raymond and Jonathan Stempel 3/22/2014
Ex-Goldman’s Tourre Ordered to Pay $825,000 in SEC Case: Bloomberg by Van Voris 3/12/2014
Raskin Confirmed by Senate as U.S. Treasury’s No. 2 Official: Bloomberg by Ian Katz and Kasia Klimasinska 3/12/2014
Tourre Fined, Wall Street Left Standing: Corporate Crime Reporter 3/12/2014
Fabrice Tourre fined a “fabulous” $825,000 : CNN Money by Ben Rooney 3/12/2014
Wall St. counting days to Levin’s retirement: The Hill by Peter Schroeder and Bernie Becker 3/13/14
Massad Joins CFTC Nominees Facing Senate on Swaps Views: Bloomberg by Silla Brush 3/6/2014
DOJ official says groundwork laid for more white-collar crime enforcement: CNBC by Scott Cohn 3/5/2014
In Banking Overhaul Fight, a Ruckus Over an Obscure Product: The New York Times by Jesse Eisinger 3/5/2014
Robert Jenkins: The ‘new’ Barclays must explain why bonuses went up while earnings fell: Independent by Robert Jenkins 3/11/2014
CFTC Nominees Sail Through Senate Hearing, House Hears Warning: ValueWalk by Mark Melin 3/6/2014
Obama Budget Punishes CFTC While Providing SEC More Than Requested: Valuewalk by Mark Melin 3/4/2014
Articles of Interest: