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Tag: Gretchen Morgenson

You Have To Prosecute Individuals


You Have To Prosecute Individuals

There has been much anger in the financial press about JPMorgan having to pay a multi-billion dollar fine. It has been strangely charged that this is a government attack on capitalism. No, actually the bank broke the law and failed over and over again to act in an intelligent manner about its investments or its clients. But Gretchen Morgenson is absolutely right. This kind of fine isn’t really getting tough with the banks. It’s merely carrying on the long tradition of banks paying some proportion of the losses they caused while criminal prosecution as individuals is off the table. 

There is no real penalty here. The billions are just the cost of doing business. The bank has paid out fines before. The bank will pay out fines again. The fun and enormous profits of reckless speculation will remain.

There will only be an effective deterrent when wrongdoers are punished personally by fine and imprisonment.

You can’t attack prevent crime by attacking organizations with minor financial penalties. You could effectively if you were willing to pull the corporate charter from the bank and destroy it, or seize all of its assets. But I see no willingness to do that. The only effective tool present is the power to prosecute individuals.

It is bizarre to tell students to act with business ethics when they can read everyday in the news of the incredible money being made by individuals under the cover of banks deliberately, knowingly breaking the law. But even that is eclipsed by the simple and horrible fact that we do not impose penalties on individuals.

Without justice, how we expect people less favored than bank executives to believe in the law?

James Pilant

Why JPMorgan May be Getting off Easy

In a criminal investigation, JPMorgan Chase is facing action from federal authorities who suspect that the bank turned a blind eye to Madoff’s Ponzi scheme. That’s yet another headache in a week of migraines for America’s largest bank; last Friday JPMorgan Chase reached a tentative $13 billion settlement with federal prosecutors for its alleged manipulation of mortgage securities, which helped trigger the Great Recession. There may be more pain to come as the megabank faces litigation on a number of fronts.


From around the web.

From the web site, Democracy Now!

The TARP Bank Bailout Saved Huge Financial Institutions But the Benefits Failed to Trickle Down to Most Americans

Gretchen Morgenson writing for the New York Times has an article called The Rescue That Missed Main Street in the paper today.

Here’s the lead in paragraph –

FOR the last three years we have been told repeatedly by government officials that funneling hundreds of billions of dollars to large and teetering banks during the credit crisis was necessary to save the financial system, and beneficial to Main Street.

She explains that we were right to be concerned that benefits were designed to help all. For one thing, the bank bailout was not 600 billion but double that. That information was only available by use of the Freedom of Information Act (Our thanks to Bloomberg, Business and Financial News). It seems our government felt that telling us that they had bailed out banks for 600 billion when the actual number was double was information we could not be trusted with.

Another fact that concerns the public that has been widely publicized are the enormous profits culminating in record bonuses for the executives of the bailed out institutions. This is particularly disturbing in the light of likely fraud and other illegal misconduct during the course of the bank meltdown. Of course, since the federal government has failed to launch any prosecutions and the statute of limitations has expired, we will never know what level of misconduct was involved in the catastrophe.

But we do know that incompetent executives often acting without regard to their fiduciary duties to their clients have made a great deal of money and have not been penalized in total contrast to an American public placed under incredible strain.

The public, innocent of almost destroying the world economy, suffered the loss of tens of millions of jobs, roughly one third of their retirement investments and now suffer increasing economic insecurity.

The contrast between the winners and losers, the undeserving and the deserving can hardly be more pronounced.

Let the article explain further –

This important topic of bailout inequities came up in Congress earlier this month. Edward J. Kane, professor of finance at Boston College, addressed a Senate banking panel convened on Aug. 3 by Sherrod Brown, the Ohio Democrat. “Our representative democracy espouses the principle that all men and women are equal under the law,” Mr. Kane said. “During the housing bubble and the economic meltdown that the bursting bubble brought about, the interests of domestic and foreign financial institutions were much better represented than the interests of society as a whole.”

THIS inequity must be eliminated, Mr. Kane said, especially since taxpayers will be billed for future bailouts of large and troubled institutions. Such rescues are not really loans, but the equivalent of equity investments by taxpayers, he said.

But the inequity will not be eliminated.

We do not live in a society where the needs of people below a certain income level need be considered. Increasingly this nation is a society of haves, have nots, and those who are losing ground.

Those who are losing ground still harbor hope in elections and democracy. Whether or not this hope is justified will be evident soon.

James Pilant

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Criminal Investigation Against Mozilo Dropped

Criminal Investigation Against Mozilo Dropped

From the New York Times article by Gretchen Morgenson.


Federal prosecutors in Los Angeles have dropped their criminal investigation into Angelo R. Mozilo, the former chief executive of Countrywide Financial, once the nation’s largest mortgage lender, according to a person with direct knowledge of the investigation.

The closure of the case after two years of inquiry follows last October’s settlement by Mr. Mozilo of insider trading allegations made by the Securities and Exchange Commission. Regulators had contended that Mr. Mozilo sold $140 million in Countrywide stock between 2006 and 2007 even as he recognized that his company was faltering. Countrywide and Bank of Americapaid $45 million of Mr. Mozilo’s $67.5 million settlement, and he was responsible for the rest.
I was very unhappy about this, finding it difficult to believe there was no criminal conduct on his part. Furthermore, it’s difficult to encourage good business ethics when bad business ethics goes unpunished.
But I am not the only one upset.

“All of these senior people got huge payouts and left behind the carnage, which has hurt many hundreds of thousands.”

From 4closureFraud.

Hundreds of billions of dollars have been lost by investors while millions of borrowers have lost their homes. Few of the people who ran the institutions that contributed to the disaster have been found liable.

Women Born Transsexual

Is it not clear to anyone by now that it is men like this who, even with the penalties levied against them, are still sitting pretty with large bank accounts as American’s are still losing their homes? Tell me it was the American people’s fault for signing into hefty monthly payments….go ahead, I dare you.

The Tumultuous Times

Mozilo’s settlement with the S.E.C. was for a bit over 10% of his estimated net worth of $600 million. It was surely a good deal for him if he could avoid admitting guilt and, especially, escape being criminally prosecuted for fraud.

House of Bread

Last week, California’s new AG fined Mozilo roght around $6 million, if I recall, and I opined that were he to have forgotten his checkbook, he could likely pay the amount using change found in his car.


Un-fucking-believable. It looks like the rich and corrupt can get away as long as they pay. Since this comes from the Eric Holder-led DOJ, I wouldn’t be surprised this was done to keep all those Democrats, who received sweet-heart deals, out of court records.

Scotty Starnes’s Blog

Countrywide Exec walks away with your money and no criminal charges

Your Daddy’s Politics


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Wall Street Looked The Other Way?

In an article written for the New York Times by Gretchen Morgenson, she discusses what major investment banks did after they discovered that many of their loans were going south.

The answer is brief, they kept the ball rolling. The profits were too good and the risks (for them) were to low for them to back out.

This is a quote from the article citing a remark from Massachusetts Attorney General Martha Coakley, as follows -“Our focus has been on the borrower,” she said in an interview last week, “but as we’ve peeled back the onion we’ve gotten the picture of the role Wall Street played through the financing of these loans.”

This is Gretchen Morgenson on a program called “Dialogue.” Here she explains in some depth her views on the financial crisis (28 minutes).

This is capitalism run off the tracks. Greed out weighed simple good judgment. Obvious signs of trouble, not just obvious but certain evidence of approaching disaster, were ignored as money piled up.

The market was supposed to be self regulating. Read a little Milton Friedman. This economic freedom to innovate was supposed to lead to better lives for all Americans, perhaps the whole world. This utopia, this nirvana, has thus far failed to appear. But incomes in a handful of the well placed are measured in the billions.

Justice is not coming. These people are immune to justice. They go to the right churches, have the right friends and are protected by the government while that same government ignores or casts their citizenry away from the door of the statehouse or congress. The people of the United States, the hard working American who lives a moral, ethical life; their goodness counts for nothing. They will have mortgages that will find no help. They will not have jobs and when they can find no work they suffer the slings and arrows of an economic elite that claims they cannot get along with other workers and do not work, that they are lazy. That’s right, Americans, the most productive workers in the world, the ones that work more hours and more days than other workers in the entire world, they are lazy, they can’t get along, they brought this upon themselves.


James Pilant

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