Wednesday, November 18, 2009

Financial Fraud Task Force & Wall Street Rules


Treasury Secretary Tim Geithner went from tax challenged to bag man for Goldman Sachs to Sheriff in cases of financial malfeasance. He was at the podium announcing a financial fraud task force. The LATimes reported:


President Obama is taking a page out of his predecessor's playbook by creating a multi-agency task force to pursue criminals who bilked investors and consumers during the financial crisis.

The task force of top federal officials will work with state and local authorities to pursue financial fraud cases stemming from the crash of the housing market and the Wall Street meltdown, administration officials said Tuesday.

"Mortgages, securities and corporate fraud schemes have eroded the public's confidence in the nation's financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street," Atty. Gen. Eric H. Holder Jr. said.

The Financial Fraud Enforcement Task Force will attack what Holder called "unscrupulous executives, Ponzi scheme operators and common criminals."

But Holder said the mandate of that task force wasn't broad enough to go after all the types of crimes involved with the financial crisis.

Not on the list?

1. Fraud that led to the financial crisis, including energy futures manipulation.
2. Insider trading by New York Fed Chairman Stephen Friedman (purchase of GS stock)
3. Insider trading by Senator Dick Durbin (purchase of Berkshire Hathaway)

Wall Street doesn't play by the same rules as Main Street. Neither do the Beltway Boys. As long as the Beltway's revolving door is greased and spinning, neither group will.

Update: The Chair of the House Oversight Committee asked the Federal Reserve to provide all documents relating to a rule waiver that allowed then-New York Fed Board Chairman Stephen Friedman to hold and purchase stock in Goldman Sachs.

Update 1-26-14:  Someone else noticed the insidious nature of the Government-Corporate Monstrosity in the complete lack of prosecutions for illegal activity that resulted in the 2008 financial crisis.  I appreciate their lamentation.

Update 5-25-15:  Not on the list financial fraud list are crimes from 2007 to 2013.  Cash payments are enough to make these go away under the Obama administration.

Update 10-18-15:   Holder defended his non-prosecution with "We were simply unable to do it under the existing statutes that we had, and given the ways the decision-making worked at those institutions."  He didn't indicate his role in the way decision-making worked at the U.S. "Just Us" Department.  Holder is the current benefit of fat cat gratitude.