There is no three-strikes law for crooked bankers, not even a law for a fifth strike, as The New York Times reported in the case of Citigroup, cited last month in a $1 billion fraud case. Unlike the California third-striker I once wrote about whom a district attorney wanted banished forever to state prison for stealing a piece of pizza from the plate of a person dining outdoors, Citigroup executives get off with a fine and by offering a promise not to do it again, and again and again.
As the Times reported when Citigroup agreed to settle SEC charges last month: "Citigroup's main brokerage subsidiary, its predecessors or its parent company agreed to not violate the very same antifraud statue in July 2010. And in May 2006. Also as far back as March 2005 and April 2000."
Not that the bankers face prison time, since the Justice Department has refused to act in these cases, and the Securities and Exchange Commission is bringing only civil charges, which the banks find quite tolerable. This time, the fine against Citigroup was $285 million, which may sound like a lot except that the bank raked off as much as $700 million on this particular toxic securities deal. As the Bloomberg news service editorialized, "... there should be only one answer from Jed S. Rakoff, the federal judge in New York assigned to weigh the merits of the agreement: You've got to be kidding."
Not to pick on Citigroup, the too-big-to-fail bank that Clinton administration Treasury Secretary Robert Rubin helped make legal before he was paid off with a $126 million job on Wall Street; that corporation was not the only serial offender. "Citigroup has a lot of company in this regard on Wall Street," the Times noted, "nearly all of the biggest financial companies -- Goldman Sachs, Morgan Stanley, J.P. Morgan Chase and Bank of America among them -- have settled fraud cases by promising that they would never again violate an antifraud law, only to have the SEC conclude they did it again a few years later."
So forget relying on the federal government to hold the Wall Street swindlers accountable. Indeed, the Obama administration has been involved in negotiating a deal with state attorneys general to settle their complaints with the banks for a pittance of compensation for the victims. In return, the states would promise not to institute further legal proceedings against the banks.
The fix was in for what a New York Times editorial on Tuesday headlined "Letting the Banks Off Easy" described as "paltry" mortgage relief, reducing by less than $20 billion the balances of 14.5 million underwater homeowners who are "drowning in some $700 billion of negative equity." The deal has been stalled by the refusal of California Attorney General Kamala Harris to accept this sellout. Among its other disastrous concessions would be ending further investigation by the states into financial skullduggery connected with the housing meltdown.
In September, Harris, elected in a Democratic sweep of the state's top offices in 2010, went against the dictates of the Democrat in the White House, stating that she refused to release the banks from legal liability for the mortgage crisis. That is the nub of the pending White House-brokered deal with the banks. As the Times summarized it: "The proposed settlement reportedly would prevent the states from pursuing claims against banks relating to fraud or abuse in the origination of the bubble. It would also prevent states from pursuing claims for foreclosure abuses, like improper denial of loan modifications."
Traditionally the states provided the essential regulation of mortgage origination, ownership and sales as a transparent process duly recorded and subject to public examination at the county level. But in order to facilitate the gathering of those mortgages into the sort of collateralized debt obligations that the banks could then bet on and trade worldwide, homeownership became a murky matter. Many of the mortgages now in question, including the ones that Citigroup's "synthetic" derivative was based on, are no longer owned by the banks that originated them. They are instead part of the Mortgage Electronic Registration Systems (MERS) database, owned by a consortium of banks and residing in computers in Reston, Va.
The MERS system is described by the Times as "a land registry system implicated in bubble-era violations of tax, trust and property law." The Obama-supported settlement would make it very difficult if not impossible to investigate at long last the workings of MERS and other systemic sources of what is now a full-blown international economic crisis. As the Times editorial put it, "In effect, the legal waivers being contemplated would let the banks pay up to sweep wrongdoing under the rug."
Thankfully, we have a few state attorneys general, most prominently California's Harris, standing up for the American people, but it is outrageous that a president who avowedly committed to defending the public interest would now be subverting that effort rather than leading it.
The objective is to collect damages from the banks equivalent to $500 Billion to be divided among those states to completely retire their state debt instead of taxing their citizens
part of the funds should be set aside for "special scholarships" to students who want to go to:
Standford / UCLA / USC / NYU / Columbia / CORNELL and whatever top school are in Delaware (keep the money spent in the states):
for the following disciplines:
Accounting
Law
Computer Science
to form the equivalent to the Peace Corp circa 1962 - each would get a scholarship, room and board
in return for performance based service that "qualifies" - the best and the brightest for the biggest forensic investigation of all time
these people would create a 5,000 person task force to go after "every" document the BANKS have to get an iron clad judgment for civil claims, fraud and criminal charges led by "segregated" group leaders (so they cannot be compromised by the Banks ) from 5 top law firms - who agree to fixed and "low" variable fees
the spoils to be divided among the states
let Iowa AG et al - get paid off by the banks for nickels and dimes -
go for the long ball it is all there !!!
once you have them criminally they will pay anything to get free - whistleblowers will come out of the woodwork besides -
Obama Should Let Mortgage Vultures Clean Up Housing Mess: View- Bloomberg
"...Thankfully, the market has a solution. So-called distressed-asset investors, otherwise known as vulture funds, are ready to swoop in and buy delinquent loans for, say, 40 cents on the dollar. They would then put in the effort needed to boost the value by either negotiating principal reductions with the borrowers or fixing up and selling empty homes. Major investment companies, such as Invesco and its subsidiary WL Ross & Co., are committing their own and their clients’ money to the business.
The challenge, then, is getting the servicers -- as well as mortgage-finance companies Fannie Mae and Freddie Mac, which hold roughly $180 billion in seriously delinquent loans -- to sell their inventory to the vultures, who are better equipped to do principal reductions. This may be possible with no new legislation, and at minimal cost to taxpayers. Here are some things the Obama administration could do to clear a path..."
This isn't the banks fault. It's the government's failure.
People need to call the White House and Eric Holder at the "Justice" Dept and insist that Wall Street be investigated for their crimes against the American people.
http://www.rollingstone.com/politics/blogs/taibblog/finally-a-judge-stands-up-to-wall-street-20111110#ixzz1dK0p9hzO
L. Randall Wray: Why Mortgage-Backed Securities Aren't (Backed by Securities): How MERS Toasted the Banks
"In a series of pieces I have argued that MERS, a creation of the mortgage banking industry, has effectively destroyed the institution of private property in America. Ironically, MERS was created to facilitate quick and easy and cheap securitization of mortgages -- what are called mortgage-backed securities. In fact, what it did was to eliminate any backing of the securities by mortgages. Of the total securitized asset universe, something like $7 trillion are (supposedly) backed by residential mortgages. However, MERS helped to delink the securities from the mortgages. At best, they are unsecured debt -- there is no property backing the securities. What this means is that foreclosure is not permitted. As I have said before, it is likely that most or even all foreclosures occurring in the US are illegal seizures of property -- home thefts. We are talking about 100,000 completed home thefts per month, with another 250,000 new foreclosures started to steal homes every month. Projections are that 13 million homes will have been "foreclosed" (read: stolen) by 2012.
Worse, from the perspective of the banks, they've got to take back all the fraudulent MBSs, most of which are toxic..."
Where is Obama and why has he not turned Holder loose of these wall street thieves?
Or is that just a silly question?