Obama played the populism card during the campaign, making fodder of Countrywide, then the nation's largest mortgage company and a dominant player in the subprime scandal: "These are the folks who are responsible for infecting the economy and helping to create a home foreclosure crisis—2 million people may end up losing their homes." We are, in fact, north of 3 million, and the widely expected criminal prosecution of Angelo Mozilo, Countrywide's chief during the heyday of predatory home loans, hasn't materialized. Mozilo's case was merely channeled to the SEC for civil sanctions.

The SEC accused Mozilo and two top aides of selling $140 million in stock based on inside knowledge of the riskiness of credit that Countrywide extended while it told investors that the loans were secure. A Mozilo e-mail called one subprime loan "the most dangerous product in existence...There can be nothing more toxic" and another "poison." It would seem as if a criminal securities fraud case could be made against Mozilo and his crew. The Justice Department wouldn't confirm or deny pending indictments, but Mozilo is probably safe. Usually, when there's going to be a prosecution, the SEC refers the case to the DOJ and doesn't press it alone.

You would think that AIG's Joseph Cassano would also be prosecuted for securities fraud. As boss of AIG Financial Products, Cassano made ungodly amounts of money by selling credit default swaps (CDS), which were side bets on collateralized debt obligations (CDO) swelled to the gills with subprime-mortgage toxins. In fact, the AIG arm sold so many credit default swaps that it lost track of the number, but they totaled more than the total value of AIG, which was one of the world's biggest companies. The ensuing collateral calls to satisfy the deals choked AIG nearly to death, triggered the financial crisis of September 2008 and led to the biggest bailout of all: $182.5 billion to keep AIG afloat as an 80 percent government-owned company.

U.S. Treasury Secretary Tim Geithner had a front-row seat to the recent financial meltdown at his post as New York Fed chairman. Critics complain that he fiddled while Wall Street
imploded and question whether he has the will to hold the culprits in the financial collapse accountable now.
AFP PHOTO/Carl de Souza
U.S. Treasury Secretary Tim Geithner had a front-row seat to the recent financial meltdown at his post as New York Fed chairman. Critics complain that he fiddled while Wall Street imploded and question whether he has the will to hold the culprits in the financial collapse accountable now.
President Obama ran on promises to make the financial regulatory system more transparent, but his record so far has been much the same as his predecessors.
White House Official Photographer/WENN.com
President Obama ran on promises to make the financial regulatory system more transparent, but his record so far has been much the same as his predecessors.

A grand jury was reportedly convened to look at Cassano, trying to figure out whether his actions were merely risky or perhaps criminal. Again, the DOJ won't confirm nor deny the existence of a probe, but given the remarks of Cassano's lawyer, F. Joseph Warin, in September, the grand jury probably exists. Warin said that his client was cooperating and that AIG had known about all of Cassano's deeds. Will the Justice Department seek to indict AIG's leadership, including its CEO, chief financial officer and boardroom audit committee? No comment.

You have to go back to the Bush era for the only real prosecution related to the subprime crisis. Two Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, are accused of securities fraud for not telling investors in 2007 about the shaky nature of their fund—based on subprime mortgages—before it collapsed. While the act was typical of the times, the two are far from the top rungs of Wall Street, and there seems to be little else going on in the justice process. Elite white-collar defense attorneys report no clamor for their counsel from major financial managers. Regulators talk of no demand for their services and for evidence from prosecutors. As they say in the trade, there's no "buzz."

----

So far, then, the common person has reaped little relief. Well, maybe clearer credit card statements, plain vanilla mortgages with slightly less fine print, and probably some "green" infrastructure jobs. But these have been slow to come on stream, and so far, there is no great morality-based thrust as there was in the New Deal with the WPA, CCC, AAA and TVA, the labor-intensive alphabet soup of that era that was fed to the bottom first. About a billion dollars have been dedicated to putting and keeping "cops on the street." Remember the poignant vignette during the State of the Union address in which Obama talked about saving 57 police jobs in Minneapolis? Well done and warranted, yes, but keeping the public safe from financial criminals is another story: The administration and Congress have failed to bulk up white-collar fraud enforcement with either new FBI agents or new forensic specialists.

That annoys the hell out of proven financial-crime fighter Bill Black. Athletic and red-bearded, Black looks more like a lumberjack than a scholar, criminologist and bureaucrat who in 2005 wrote The Best Way to Rob a Bank Is to Own One, the definitive history of the S&L debacle as well as an insider's report. A legend among regulators, he faced down House Speaker Jim Wright and the "Keating Five" senators (including McCain), who fought tooth and nail to protect that corrupt industry, and also overcame stiff resistance from within the Reagan administration and from Keating himself. Wright, who later resigned in disgrace over ethics charges, called Black a "red-bearded son of a bitch." Keating hired detectives to get dirt on Black. When that failed, the thrift magnate told his Washington lobbyists to "kill him dead," which he probably meant figuratively, in the sense that Keating wanted Black's power shut off. It wasn't, and Keating, though he was as plugged into the Republicans as Franklin Raines is to the Democrats, ended up doing hard time.

« Previous Page
 |
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
All
 
Next Page »
 
My Voice Nation Help
0 comments
Sort: Newest | Oldest
 
Dallas Concert Tickets

Around The Web

Loading...