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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsFederal judge asks: Why haven’t any top executives been prosecuted for financial crisis?
http://www.rawstory.com/rs/2014/01/02/federal-judge-asks-why-havent-any-top-executives-been-prosecuted-for-financial-crisis/
As the five-year statute of limitations nears for crimes that led to the Great Recession, a federal judge wants to know why no high-level executives have been prosecuted.
U.S. District Court Judge Jed Rakoff said he could not be sure whether intentional fraud was committed in any particular case, but he pointed out that government agencies had found significant evidence to suggest wrongdoing in their own investigations.
“The stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary,” Rakoff writes in the New York Review of Books. “For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word ‘fraud’ no fewer than 157 times in describing what led to the crisis, concluding that there was a ‘systemic breakdown,’ not just in accountability, but also in ethical behavior.”
He dismissed claims by Department of Justice officials that proving intent would be too difficult, pointing out that federal prosecutors routinely did so by establishing that defendants acted in willful or conscious disregard of the law.
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Glassunion
(10,201 posts)Lots of it.
madokie
(51,076 posts)and only a small part of what was stolen from the people at that. Sorry bunch, bankers
TBF
(32,060 posts)
Romulox
(25,960 posts)NobodyHere
(2,810 posts)What's Obama's excuse?
seveneyes
(4,631 posts)Perhaps the Judge should consider volunteering for the job of prosecutor and get the case in front of an honest judge. It would be a direct action that might do some good, and it would be a positive move.
iandhr
(6,852 posts)FreakinDJ
(17,644 posts)Just sayin
westerebus
(2,976 posts)just sayin
just sayin
skydive forever
(444 posts)But certainly not Elizabeth Warren's
Just sayin
better?
uponit7771
(90,339 posts)ChisolmTrailDem
(9,463 posts)There will be no big-time prosecutions of the largest robbery in the history of mankind that has harmed and ended untold lives.
No prosecutions for the fake-assed TARP emergency bullshit, none for Countrywide and BofA or any of the other goddamned Banksters!
You know why? Because we're just pieces of shit to our "leaders" and justice only applies to us proles, not the rich fuckers.
And as a citizenry, we are cowards and love being shit on by our masters.
Hotler
(11,421 posts)Response to xchrom (Original post)
skydive forever This message was self-deleted by its author.
Blue_Tires
(55,445 posts)Because Wall Street being in bed with the SEC, and their prolific revolving-door "buddy-buddy" system along with their famous boardroom "fine-negotiation-in-leiu-of-an-actual-trial" sessions have been extensively reported on, even in mainstream news media...
LittleGirl
(8,287 posts)right? Wall Street wrote the laws...so nothing they did was illegal.
That's what I believe and that is why there have been no arrests or threats of arrest.
edit typo
1StrongBlackMan
(31,849 posts)Why haven't there been (criminal) prosecutions of high-level (bank) executives? Because (from the article):
“A top-level banker, one might argue, confronted with growing evidence from his own and other banks that mortgage fraud was increasing, might have inquired why his bank’s mortgage-based securities continued to receive AAA ratings,” Rakoff writes. “And if, despite these and other reports of suspicious activity, the executive failed to make such inquiries, might it be because he did not want to know what such inquiries would reveal?”
The SCOTUS has recently ruled:
I would suspect the good judge would concede that his above scenario would find a difficult course in his own court room, as the prosecutor would have to prove either: intent in the "fraud" or intent to shield one's self from the reports of suspicious activity.
I think this is why we're saying CIVIL cases (where the standard of proof is significantly lower) rather than criminal cases. Further, there is a saying in the law: Bad cases make for bad law. If the DoJ were to take one of these cases to criminal trial and lose on the "intent/willful blindness" issue, it would likely foreclose on future criminal AND civil cases.
pscot
(21,024 posts)I guess we'll never know. Willful blindness is a test that can be applied to politicians and prosecutors as well.
1StrongBlackMan
(31,849 posts)bad cases make bad law.
Besides, criminal prosecution of high level executives will do nothing (very little) to curb the conduct. The better approach (IMHO) would be, to borrow from Eddie Murphy's line in the movie Trading Places ... "the best way to get back a rich man is to make him a poor man" ... So if there is an appetite for curbing the conduct (rather than just seeking to punish) the DoJ could name these executives in the civil suits and upon verdict or settlement, bar them from the industry for life and issue fines (restitution) sufficient to capture all of the executive's (and their immediate family's) current and future wealth.
pscot
(21,024 posts)Why should bankers be exempt? Get busted 3 times for pot or cocaine and you'll be gone for a long time. Loot the banking system and we can't be bothered to "look back" at your crimes? That's not a system likely to engender broad respect for or trust in Justice for all or equality before the Law, is it?
1StrongBlackMan
(31,849 posts)"Get Busted" ... The bankers have clearly engaged in some level of misconduct; the problem is, HOW to prosecute them ... None of those so vocal in that desire, has provided a mechanism for doing so, that will lead to a likely conviction.
Blanks
(4,835 posts)There should be plenty of victims to bring a civil suit. I would think that the attorneys to pursue that would be private sector attorneys and not DoJ attorneys.
The bankers would probably not do as well in a civil suit in front of a jury of their peers. OJ didn't fare too well in that situation.
1StrongBlackMan
(31,849 posts)though very few make it to a jury. Most have been settled (for way too little, IMHO).
I think there are so few non-DoJ civil suits because the banks have way too much money for most plaintiff lawyers to tackle, even as a class action.
pscot
(21,024 posts)There's a cry to stir the blood.
1StrongBlackMan
(31,849 posts)but require the banks to wall off deposits and require a 1 to 1 reserve.
TexasTowelie
(112,189 posts)because those actions will tighten the market for loans which provide businesses the liquidity to maintain operations.
In addition to tightening the loan market, the banks would also be able to justify charging higher interest rates since there will be more people chasing after a limited amount of money available for borrowing. The interest rates charged by banks would rival those of the payday loan industry.
The fact that the capital requirements were low in previous decades meant that there was capital available for borrowing by both private and public interests that spurred economic development. While I am in favor of a sound financial sector, trying to implement a 1-1 reserve (the current total capital requirement is 10.5%) within a short time frame would result in less financial liquidity and most likely an economic calamity.
Think about bank runs, FDIC takeover of banks, the exposure to taxpayers and it is easy to realize that it isn't very likely that we'll ever go the route of requiring more capital than those adopted in July 2013 to satisfy the Basel III requirements. If we did, then we might as well eliminate fiat currency and return to the gold standard.
1StrongBlackMan
(31,849 posts)I'll admit my "solution" isn't/wasn't well thought out! 
Blanks
(4,835 posts)
MFrohike
(1,980 posts)No judge will impose fines or restitution high enough and, even if one does, it will be invalidated as "unconstitutional" by the Supreme Court. The Court has an odd idea of constitutionality when it comes to punishing bad behavior by the wealthy and powerful.
You pursue criminal convictions for two reasons. The first is to show that the law applies to everyone. Jamie Dimon should be on the same cell block as the crack dealer from the boulevard. The second is the fear of going to prison. That provides a hell of a bargaining position to deal with bad actors. Why give up such powerful leverage?
1StrongBlackMan
(31,849 posts)I suspect that it won't be in banking; but rather, in the rating agencies.
This thread got me to thinking ... If I were heading up the prosecution team, I think that's where I would start ... There are already email trails, directly to and from, their executives indicating that it was widely know that the ratings were junk. And without the junk ratings, institutional investors would have by law (in the case of public funds and public pensions) or by charter (in the case of private funds) been barred from buying into the toxic vehicles; but despite the knowledge that the ratings were junk, the decision was made to keep issuing unsupportable ratings.
Then, I would use that to pressure the rating agencies with criminal (intentional) fraud AND their executives with, at the very least willful blindness (will have the emails). I would, then, offer the agencies continued existence* and their executives relatively light sentences in exchange for cooperation to pierce the willful blindness shield ... testimony from rating agencies players that the banking executives knew (were told, hinted to or implied by the rating agency folks) that their ratings were suspect and unreliable, would close the "knew or should have known" loop.
But this prosecution strategy would take years to produce a single criminal case.
(* I'm not certain whether I would allow the agencies to continue to operate ... this decision would turn on the level of disruption, killing them would do to the markets.)
MFrohike
(1,980 posts)The only problem I see is evidence. You'd probably end up immunizing a ton of financial execs in order to get the evidence against the ratings agencies. Plus, you face the problem of the 1st amendment defense from the ratings agencies. You really need to show a conspiracy between the agencies and the financial firms in order to prove the case. A simple showing that the agencies took money from the firms for higher ratings probably would not work.
If you want to show fraud, you can't start with the ratings agencies. The fraudulent party in this case is the seller of the security, not the rater. The key relationship is between buyer and seller, not between rater and public. The ratings agencies would best be pursued under a products liability theory, similar to the Good Housekeeping case of the 1960s. I doubt there's any criminal statute in the securities laws covering that sort of thing, but it's the closest analogy. Fraud doesn't work for the ratings agencies because they weren't the perpetrator of the fraud, nor did they make the necessary misrepresentations. The rating is a box to check, but the deal is made on the numbers. The ratings agencies didn't generate the numbers.
I have a half-formed idea that would be a longshot, but it would have the virtue of being the ultimate hail mary for securities law. My idea is to go after the law firms that issued opinions to shield financial firms from prosecution. Those firms were the necessary conduits for fraud to occur. I'll admit that I'm not quite sure how this would work since I haven't really done the necessary research to find a theory for prosecution. It just occurred to me that the lawyers were integral to every deal and could provide a bulwark against future fraud if they had to face prosecution for this sort of thing.
1StrongBlackMan
(31,849 posts)the evidence (the emails) are already discovered and the 1st Amendment argument of "puffery" is making its way through court ... though the 2nd Circuit has already ruled.
I don't know ... I seem to recall an email in which a rater-grunt raised a concern about the viability/reliability of their ratings, his management essentially told him that they current and future revenues were based on their willingness to produce positive (inflated) rating ... and that bankers came to them, "negotiating" ratings ... establishing a quid pro quo. It's not a leap to tie the banks and raters into a conspiracy to defraud the end purchaser. Much like, the fraud cases brought by the banks against real estate appraisers and mortgage brokers, where the brokers sought out and paid those appraisers willing to provide inflated appraisals.
This was the holding in the 2nd Circuit case; but many commentators (including the DoJ) are skeptical.
Novel ... But an opinion is an opinion. The most that can come out of that would be a heck of a mal-practice suit. No?
Its good kicking this around with someone versed in the law. I would love for a bunch of attorney log onto a blog and argue prosecution/litigation strategies with the intent to "discover" viable ways to navigate this minefield. But as with most things, "those talking don't know; and those that know, ain't talking."
MFrohike
(1,980 posts)You have a citation for the 2d Circuit case? I'd love to read it. I'm curious to see if the federal courts are going to move away from the pointless formalism that's been creeping back into the federal judiciary.
My idea would probably work best as a state bar disciplinary proceeding, but some of them could be hit up as criminal. To tell the truth, I was really thinking of Linklaters whitewashing the Lehman 105 and other dubious behavior done by US firms. For criminal sanctions, it would probably be best to focus on law firms aiding control frauds as opposed to the MBS fiasco. It's kind of a mix of feeling and thought and it's definitely not fully formed.
I also wonder why Sarbanes-Oxley hasn't been used. I'll freely admit that securities law is not my specialty in the least, but it strikes me that failure to properly vet the loan pools and then holding billions of dollars worth of the securities based on those pools should be some kind of internal control failure. It's not against the law to lose money, but this isn't a case of simply losing money. Shoddy investment products were created and risk evaluation was minimal at best. It seems like a big show was made of pretending to have done due diligence on loans comprising the pools and the risk of default, but that it was just a show.
Hey, I love learning new things and you definitely seem to have a handle on this stuff. I wouldn't mind reading a blog like that myself. It's fun sometimes to play law nerd.
Jerry442
(1,265 posts)...and lose on the 'intent/willful blindness' issue, it would likely foreclose on future criminal AND civil cases."
This is that future. There are no cases. The moment DoJ is supposedly keeping their powder dry for is nearly gone.
1StrongBlackMan
(31,849 posts)"keeping its powder dry", it IS bringing civil cases. I'll say it again, if they were to bring cases to criminal trial and lose on the 'intent/willful blindness' issue, it would likely foreclose on future criminal AND civil cases."
westerebus
(2,976 posts)The judge may have concluded that criminal prosecutions do have a purpose in finding what a jury may determine based on the evidence presented at trail.
If it walked like a duck, swam like duck, quacked like a duck, it is entirely possible a jury would find it is a duck.
By not prosecuting in criminal court the duck may claim it is neither fish nor foul.
1StrongBlackMan
(31,849 posts)that's a pretty difficult case to make ... proving intent or a deliberate scheme to avoid knowing.
westerebus
(2,976 posts)The government does not have to prove anything, but, that a fraud was committed.
The facts of the case speak for themselves.
Is it easier to prove a duck is a duck in civil court, where the duck can haggle a deal? Sure.
The duck gets to keep its money and pay a fine and goes about ducking the next dumb duck.
Try the duck in criminal court were the duck can end up in jail and a whole flock of ducks might just start quacking about who knew what, when, where and how.
I do like your idea of suing them for everything they own. You would have a harder time with that in a civil court than just claiming they laundered drug money and have the DEA seize all their assets. Oh wait...
1StrongBlackMan
(31,849 posts)True. But in the legal world, if one is prudent, one must weigh the likelihood of success versus the damage done by bringing and losing a case. These are such cases because as you mention "Is it easier to prove a duck is a duck in civil court", but not because the duck can haggle; but rather, because the standard of proof is much lower.
That is a patently untrue, uninformed statement.
westerebus
(2,976 posts)1StrongBlackMan
(31,849 posts)westerebus
(2,976 posts)He said: No, but he was the reason some were written.
1StrongBlackMan
(31,849 posts)criminally prosecute these bank executive ... write new laws.
westerebus
(2,976 posts)You are of the opinion that there is now no way, given the current set of laws, that the DOJ can't successfully prosecute a criminal case of fraud so they shouldn't try?
1StrongBlackMan
(31,849 posts)that given the current standard of proofs, it is exceedingly difficult to successfully prosecute a criminal case of fraud. And, bringing such cases and losing on the intent/willful blindness issue, would foreclose on any future criminal AND/OR civil fraud case.
I don't know how to make that point more clearly.
Okay how about this ... I can use the shouted threat of kicking someone's a$$ to get them to do something, up to the time that I try and fail ... from that point on, all I would have is my shouting, as my threat would have no (little) effect.
What allows the DoJ to bring and settle civil suits against the banks is the threat of a criminal case, since there is little doubt that the intent/willful blindness issue would be decided favorably in civil court (because of the lower standard of proof). However, if a criminal case was brought and lost, there is little hope that another criminal case would be brought, unless it fit the elements established in the lost criminal case ... and there would be little incentive for the banks to settle any civil cases because there is no greater punishment out there for them to face.
Understand?
westerebus
(2,976 posts)A sitting US District Court Judge calls into question the DOJ on this matter.
I'm going to agree with the Judge.
I do not buy your argument.
It appears neither does the Judge.
I don't see much support for your argument here on DU either.
We disagree.
1StrongBlackMan
(31,849 posts)we disagree ... My opinion is informed by the study and practice of law, including prosecutorial decision making; your's, an out-lyer Judge.
This kind of case MIGHT get a favorable hearing, IF it found itself on his docket; but it would likely be immediately overturned upon appeal.
The fact that I would disagree with a Judge, does not bother me ... it has happened dozens, if not, hundreds of times and I've been just as frequently vindicated upon appeal. And disagreeing with folks here at DU, means even less.
So, I'll leave it at ... I hope Holder's DoJ stays the course and only brings a criminal case when there is actual evidence of intent/willful blindness, as opposed to hoping a panel will fill in the blanks.
Peace.
JDPriestly
(57,936 posts)My question has always been how the bankers could watch housing prices go up, yet continue to grant mortgages to people earning low incomes. They cheated. They committed fraud. That is how they did it. "Willful blindness."
Triana
(22,666 posts)Anyone remember that snivelling little weasel who claimed that "no wrongdoing could be found/proven" or some such nonsense, then went to work for one of these big Wall St. outfits?
http://www.washingtonpost.com/blogs/capital-business/post/lanny-breuer-chief-of-dojs-criminal-division-returns-to-covington-and-burling/2013/03/27/3b27d7a6-9703-11e2-b68f-dc5c4b47e519_blog.html
malaise
(268,998 posts)but the process has been very slow.
answer is that the CFO's, CEO's, are above the law, they're basically teflon coated. Only a handful were made xamples of, but not nearly enough to make others quiver in their boots.
American politicians simply adore the uberwealthy.
IMO, OWS made some serious errors, one, they were not that well organized, two, they should have marched-demonstrated in DC, not in front of Citigroup or Wells Fargo which gained only awareness and didn't cause change.
Xyzse
(8,217 posts)They are so rich that they have escaped most if not all ill consequences for their actions resulting in an inability to empathize, and skewed perception of reality. Judges seem to place it as a mental condition and just gives them a slap on the wrist, if that.
El_Johns
(1,805 posts)WillyT
(72,631 posts)
woo me with science
(32,139 posts)CORPORATE FASCISM.
CrispyQ
(36,464 posts)One set for the elite & another for the proles.
[font size=3]Paulson with Co-Conspirators
Now THIS is Bi-Partisanship.
Better get used to it.
Hahahahahahaha
Egalitarian Thug
(12,448 posts)Pull any thread from this ratty cover-up and the whole thing will unravel.
bvar22
(39,909 posts)...pay for their own Gambling Losses,
or be prosecuted for their crimes,
especially when THEIR "portfolios" might take a negative hit too.
Main Street is on their own.
DeSwiss
(27,137 posts)indepat
(20,899 posts)proportions, a mockery of the equal justice under the law doctrine, and a royal 'effin' of the rule of law. 
rhett o rick
(55,981 posts)In a sociopathic-capitalistic society the accumulation of wealth is the goal. Those that accumulate the most are looked on as gods unless they steal from the uber-class. Even those in the lower classes look at those with the wealth as successful.
BlancheSplanchnik
(20,219 posts)
Nuclear Unicorn
(19,497 posts)It's good for ignoring any law that is too inconvenient.
winter is coming
(11,785 posts)
tclambert
(11,086 posts)*except the rich and powerful, politicians, organized crime bosses, celebrities, and members of the Saudi royal family who gave financial support to the terrorists behind the 9/11 attacks.
wildbilln864
(13,382 posts)
markpkessinger
(8,396 posts)Spitfire of ATJ
(32,723 posts)DeSwiss
(27,137 posts)
- Geeze judge, would you at least try to keep up? They'll be changing AG's again soon and you're just asking that question??? NOW?
Justice is blind, deaf and dumb. And late.
K&R
jtuck004
(15,882 posts)March 2009, to the thieving bankers, many of whom presided over organizations that had contributed heavily to the Democratic victory of the year before.
He then proceeded to force them, allegedly over their protestations, to borrow trillions of dollars to stay solvent, which they used, in part, to begin to foreclose on over 7 million families over the next few years, and from which they sucked profit until they reported record numbers above $42 billion in the second quarter of 2013. About the same time the number of people in poverty leveled out at roughly 50 million.
As those who prosecuted the Savings and Loan officials years earlier for the same breach of trust pointed out, the FBI needed staffing to investigate, and that staffing was never provided by the two entities that could have, either Congress or the President of the United States:
From the office of the Attorney General...
...
The mission of the Office of the Attorney General is to supervise and direct the administration and operation of the Department of Justice, including the Federal Bureau of Investigation, Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives, Bureau of Prisons, Office of Justice Programs, and the U.S. Attorneys and U.S. Marshals Service, which are all within the Department of Justice.
...
Perform or supervise the performance of other duties required by statute or Executive Order.
That judge knows why they weren't prosecuted and, I would wager, so do you.
rhett o rick
(55,981 posts)jtuck004
(15,882 posts)Have you seen "Inequality for All", Reich's new movie?
You can tell his heart got broken while he was there, watching the whole administration go corporate. He talked about how he literally became a pain in the ass, but it didn't do any good. His stats on what NAFTA has done to us are perhaps the saddest thing I have read in a while. And now they want TPP.
Good movie, if you get a chance.
rhett o rick
(55,981 posts)jtuck004
(15,882 posts)
NBachers
(17,110 posts)
SamKnause
(13,106 posts)The reason could be because the United States government is a cesspool of corruption and greed.
It is their job to protect their partners in crime; Wall Street, corporations and global CEO's.
The two tier justice system in this country is nauseating.
Corrupt politicians are bleeding this country dry.
They sold their souls, (if they had any to begin with) to those who control Wall Street and the global economy.
President Obama should be in prison for protecting the warmongering Bush administration and for allowing Wall Street to bankrupt the citizens of the United States.
Both administrations should be in prison for drone assassinations, warmongering, and corruption on a scale that is unimaginable.
DC thieves one and all.
Nanjing to Seoul
(2,088 posts)Doctor_J
(36,392 posts)Everyone in Congress, all of the prosecutors, the president...everyone.
