Friday, April 16, 2010

Civil Fraud?

According the the Wall Street Journal today, the Securities and Exchange Commission has charged Goldman Sachs with "Civil Fraud," for part of their role in the whole mortgage backed securities/collateralized debt obligation mess that was at the center of the financial crisis.

Civil Fraud? Why not criminal charges? Why not a referral to the Justice Department for an indictment? Well, it is simple and sad.

By going with civil fraud - the equivalent of a lawsuit - the kids at Mary Schapiro's SEC get to look like they did their job when they have not. By going with the tough sounding civil fraud method, Schapiro gives the thieves at Goldman an easy and painless out. Schapiro basically gets to look heroic while making sure her pal Blankfein never has to break a sweat on this.

Why? Because within the next 12 months, Goldman will quietly settle with the SEC for a relatively small sum and not have to admit any wrongdoing. That is what almost always happens in these "civil fraud" cases. And once the settlement is paid and the papers signed, Goldman can go right back to the same stuff they were doing, but this time with impunity. And you can bet that the settlement will somehow be paid with our money.

Had Schapiro actually done her job at any level and brought criminal charges against Goldman executives, they would have had to defend themselves in a public trial. No secret settlement deal (likely to be announced on a Sunday). None of this pointless "without admitting any wrongdoing" that is so popular among the financial regulators.

In effect, Goldman will be paying the government to go away. With Mary Schapiro's blessing. By not having to defend their criminal actions, Blankfein and his band of financial pirates can happily sail off and look for other victims to pillage.

Given that the "financial crisis" cost the taxpayers of this country trillions of dollars and millions of jobs, one would hope that the lazy regulators might wake up and actually enforce a law. Throw handcuffs on Blankfein and see how he looks in an orange jumpsuit.

I find is somewhat mystifying that a CEO can go to prison for an umbrella stand, but not for literally fleecing a nation by illegally manipulating markets to maximize profit at the cost of their own investors and clients. In case nobody remembers, the execs at Enron went to jail for doing pretty much the same things.

Yet Blankfein (Goldman), Fuld (Lehman), Schwartz (Bear), Lewis (BofA), Mozillo (Countrywide), Thain (Merrill) and the rest are going to get away with it if the ever lazy and incompetent Schapiro has her way. She has no interest in actually enforcing the laws she has sworn to uphold. Her interest is in protecting her friends. Just like Bernanke, Geithner and the rest.

See, they think and say that their first priority is to protect the banks and Wall Street pirates. Not so. Their actual job - were they to do it - is to protect us from them.

But that won't happen. Not with this already failed crew. They showed us that in 2008 when they all ignored Lehman's manipulations and Lewis' lies. Mozillo's amazingly corrupt practices. Schwartz's criminal declarations of fiscal health while his firm was on life support. Dimon's manipulation of government to enhance his firm at our expense. Schapiro's total ignorance of Madoff and Stanford's fraud.

This I put squarely at the president's feet. He kept Schapiro and the rest of the gang that couldn't regulate in place. He rehired them from the Bush administration. After their failure was obvious. He has allowed the regulators to continue to not do their jobs while seeking more regulation to be ignored.

I have said it before and will say it again. We do not need more regulation or new agencies. There are already more than enough laws, regulations and agencies. We need effective agencies, regulators and enforcers. Not the Wall Street CEO sycophants we now have. We need actual people of integrity in these positions and not recycled failures like Schapiro, Geithner and Bernanke. This is Obama's failure and only he as president can fix it by firing this lot.

I challenge the president to fire these losers and hire people that were not at the core of the meltdown. People that do not cower when a Blankfein or Dimon speaks.

And come November, we need a new Congress. One that will actually take these clowns to task. A Congress that will stop dragging CEO's to meaningless hearings held for the sole purpose of saying they held a hearing. A Congress that will drag Schapiro in and ask her bluntly, "So when do you intend to actually enforce a real law?" A Congress that will ask Geithner why he cannot use existing regulation. A Congress that will call Bernanke out for concealing the shell game the Fed has played with our money.

At this point, my attitude is that if they were in office in 2008, then it is time for them to go. All of them. Because they all knew the game that was afoot and they all ignored it, lied to us and then went home to stash their loot.

Come November, the most important qualification for elective office is to not currently be in elective office.

Come November, we the long suffering people will have to effect the change we want ourselves. One vote at a time at the ballot box.

Come November, the choice is ours. More of the same lies and diversions or a government that actually works.

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