Bill Black: Geithner dismisses fraud as cause of crisis

Too bad there are no Bill Blacks in today's Treasury or the SEC. 

Tim Geithner is still parroting the lie that "stupdity" mixed with "greed" caused the financial crisis.  Never mind that most of Geithner's alleged "stupids" are still in charge at their Too Bigger To Fail Wall Street banks, and whatever that portends for future crises....  What Black can't fathom is how Obama's regulators dismiss, a priori, the possibility of fraud as a cause of the crisis. 

After the S&L debacle, a much less costly financial crisis for America, Black was partly responsible for referring 1,100 cases of fraud to prosecutors.  800 people ended up in jail.  This time, not one senior executive has even been charged with a crime.  That's a crime in itself.

Geithner Channels Greenspan and Airbrushes Fraud out of our Crises

By Bill Black

May 2, 2012 | Capitalism Without Failure

URL:  http://www.capitalismwithoutfailure.com/2012/05/bill-black-geithner-channels-greenspan.html?source=Patrick.net#4597477945260832217

Taibbi: Obama CHOOSES not to prosecute Wall St. fraud

Obama and Geithner: Government, Enron-Style

By Matt Taibbi

December 20, 2011 | Rolling Stone

URL: http://www.rollingstone.com/politics/blogs/taibblog/obama-and-geithner-government-enron-style-20111220#ixzz1hk2FddlZ

Another bailed-out Wall St. crook gets off with a wrist slap

Yeah, those poor dumb Wall Street guys had no idea their mortgage-backed securities (MBS) were crap. They weren't greedy, just dumb.

NOT !

Here's how the NYT described Citigroup's crime:

"... this week the Securities and Exchange Commission unveiled its latest charges involving mortgage-backed securities. In what may be a new low for conduct by a major Wall Street firm in the walk-up to the financial crisis, Citigroup settled charges (without admitting or denying guilt) that it defrauded investors by creating a package of mortgage-backed securities for which it selected a pool of mortgages likely to default, bet against the security for the bank's benefit by shorting it and then foisted it off on unwitting investors without disclosing any of this.

"According to the S.E.C., one trader characterized this particular security in an all-too-candid e-mail as 'possibly the best short EVER!'"

To add insult to injury, Citigroup has been the biggest recipient of special Fed bailouts: more than $2.5 billion!

And in case you think Citigroup is an isolated case, remember that Goldman Sachs and J.P. Morgan (who received over $800 billion and $390 billion on bailout funds, respectively) already settled with the SEC on similar charges of selling their investors assets and then betting against (shorting) those same assets. Unfortunately those settlements totaled only $700 million, chump change for these bailed-out TBTF banks.

Moreover, not a single Wall Street CEO has gone to jail yet, nor even been fined or reprimanded. The crooks are still in charge. There's no accountability... even though corporations are people.

So... if OWS doesn't work, we're just going to have to try something else....

Citigroup paying $285M to settle SEC fraud charges

By Daniel Wagner and Marcy Gordon

October 19, 2011 | Associated Press

URL: http://news.yahoo.com/citigroup-paying-285m-settle-sec-fraud-charges-154206940.html

The next big scam after Madoff?

The new documentary Chasing Madoff is about Harry Markopolos, half crusader, half cuckoo, whose warnings about Ponzi-schemer Bernie Madoff were ignored by the SEC for years. The next big financial scam, according to Markopolos, is foreign exchange fees fraud:

"'The investment managers were saying they're reporting this much and the pension funds were saying we're receiving this much. The gap should've only been fees but there was something extra missing, 30 basis points for currency overcharges.'

"Markopolos said the Madoff case was 'a total wakeup call' for the SEC, which now has more financial examiners to go with all the lawyers. It 'remains to be seen if [the SEC] becomes a credible law enforcement agency. If they're not doing big cases 18 months from now, we have a big problem.'"

Madoff whistleblower: Here's the next big fraud

By Margo D. Beller

August 28, 2011 | CNBC

URL: http://usat.ly/o4gt7X

Taibbi: Feds should prosecute Goldman Sachs

If Goldman Sachs hadn't given so much damn money to Obama and everybody else in DC, we might get a federal prosecution case out of this, at the very least for perjury during Goldman exec's' Congressional testimony. As Taibbi describes, a Congressional panel has laid the prosecution's case in the government's lap.

Here's the meat of it:

"[Goldman Sachs mortgage chief] Sparks followed up that [December 14, 2006] meeting [about lowering Goldman's exposure to mortgage loans] with a seven-point memo laying out how to unload the bank's mortgages. Entry No. 2 is particularly noteworthy. 'Distribute as much as possible on bonds created from new loan securitizations,' Sparks wrote, 'and clean previous positions.' In other words, the bank needed to find suckers to buy as much of its risky inventory as possible. Goldman was like a car dealership that realized it had a whole lot full of cars with faulty brakes. Instead of announcing a recall, it surged ahead with a two-fold plan to make a fortune: first, by dumping the dangerous products on other people, and second, by taking out life insurance against the fools who bought the deadly cars.

"The day he received the Sparks memo, Viniar seconded the plan in a gleeful cheerleading e-mail. 'Let's be aggressive distributing things,' he wrote, 'because there will be very good opportunities as the markets [go] into what is likely to be even greater distress, and we want to be in a position to take advantage of them.' Translation: Let's find as many suckers as we can as fast as we can, because we'll only make more money as more and more shit hits the fan.

"By February 2007, two months after the Sparks memo, Goldman had gone from betting $6 billion on mortgages to betting $10 billion against them — a shift of $16 billion. Even CEO Lloyd 'I'm doing God's work' Blankfein wondered aloud about the bank's progress in "cleaning" its crap. 'Could/should we have cleaned up these books before,' Blankfein wrote in one e-mail, 'and are we doing enough right now to sell off cats and dogs in other books throughout the division?'"

Shorting the mortgage market was/is not a crime, but Goldman misled its clients to buy these crap mortgage-backed assets while Goldman itself was making massive bets against them. Broker-dealers like Goldman are required by the SEC to disclose "material adverse facts" to their clients which includes among other things Goldman's "adverse interests" in selling off these bad assets.

The People vs. Goldman Sachs:

A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges

By Matt Taibbi

May 11, 2011 | Rolling Stone

URL: http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511

YES! SEC alleges securities fraud by Goldman Sachs

Boo-yah! This is what we've been waiting for. Finally, we have a chance at some kind of reckoning with the sleazeballs responsible for the financial crisis, although Goldman ex-CEO and ex-Treasury Sec. Hank Paulson is sadly still off the hook.

Basically, Goldman was selling its clients these crazily leveraged and risky mortgage-backed securities, while Goldman was betting against them. As Matt Taibbi pointed out months ago, Goldman's behavior was exactly securities fraud.

But by far this is my favorite part of the article:

"In the half-hour after the suit was announced, Goldman Sachs's stock fell by more than 10 percent."

[Their stock fell about 13 percent by the end of the day's trading.]

Hit 'em where it hurts, boys!

U.S. Accuses Goldman Sachs of Fraud in Mortgage Deal

By Louise Story and Gretchen Morgenson

April 16, 2010 | New York Times

URL: http://www.nytimes.com/2010/04/17/business/17goldman.html?ref=global-home

Goldman Sa -- er, the SEC names kid in his 20s to oversee Goldman Sachs

SEC's new enforcement COO Adam Storch: "Gee, um, mind if I audit you, sir? Can I? Can I? Pleeease?"

Jesus, these guys have big brass ones! They don't even try to hide it when they're putting in the fix. The SEC, which is run by Goldman Sachs, hired some snot-nosed, starry-eyed kid from Goldman Sachs to regulate Goldman Sachs. I'm sure his, um, 5 (?) years of work experience and that summer internship have amply prepared him for taking responsibility for enforcing securities regulations for the world's largest economy. To borrow a phrase from Garfield: Aaaaaarrrrgh!!!

Why didn't they just hire Goldman CEO Llody Blankfein's secretary and make this anal intrusion on U.S. taxpayers a total public "Thanks for letting us cornhole you, America" greeting card?

This is the most ridiculous freaking thing I have read in ages. And that's including The Baby Who Could Fly or whatever the top story was today on FOXNews.com.

I'm so mad I accidentally spat on my computer screen. And it's not even my computer.


SEC Names Goldman's Storch as Enforcement Unit Operations Chief

By Joshua Gallu

October 16, 2009 | Bloomberg

The U.S. Securities and Exchange Commission named Adam Storch, a 29-year-old from Goldman Sachs Group Inc.'s business intelligence unit, as the enforcement division's first chief operating officer.

Storch, who joined the SEC Oct. 13, was named to the newly created post of managing executive in the enforcement unit, charged with making the division more efficient, the SEC said today in a statement. At New York-based Goldman Sachs, he had worked since 2004 in a unit at that reviewed contracts and transactions for signs of fraud.

"Adam's skill in technology systems, workflow process, and project management will greatly benefit the division," SEC enforcement chief Robert Khuzami said in the statement. "He will help to make us more efficient and nimble and permit us to put more of our investigators on the front lines."

[Here's your first project, Adam: The Throw Ex-Boss In Jail Project. Can you "manage" that? - J]

Khuzami announced the position in August as part of the unit's biggest overhaul in three decades. He is taking steps to add investigators, speed inquiries and create specialized units after the agency was faulted for missing Bernard Madoff's $65 billion fraud.

Storch holds degrees in accounting and finance from the State University of New York at Buffalo and studied at New York University's Leonard N. Stern School of Business. He has certifications in accounting, fraud examination and auditing.

Before joining Goldman Sachs, Storch was a senior analyst at accounting firm Deloitte & Touche and an intern at Neuberger Berman LLC, a New York-based asset management firm.

[See, he was a "senior" analyst at DTT when he was only in his 20s! (Jimbo/Keanu Reeves voice): Dude, check it out, this guy's like waaaay qualified!!! - J]

Khuzami has created specialty units of investigators and is giving people more incentive to cooperate with investigations. The five groups will investigate cases in asset management, structured products, municipal securities and public pensions, foreign corrupt practices and market abuse, Khuzami said in an Aug. 5 a speech in New York.