Settled But Not Resolved

Back on April 16th, before BP became the most hated corporation in America, the then most hated - Goldman Sachs - was sued by the SEC for fraud. I said then that Goldman would settle for very little money and not admit any wrongdoing.

Well guess what happened today? Financial Reform passed. And Goldman settled for $550 million and no admission of wrongdoing. They did admit to some errors in marketing, but no actual wrongdoing.

In other words, the administration's crack economic team accepted a fine that, in Goldman money, is the same as a traffic ticket and let them totally off the hook for any actual violations. In fact, Mary Schapiro's improved and more efficiently corrupt SEC pretty much acknowledged that Goldman played within the rules when they withheld important information from clients.

I knew it. I knew this administration wouldn't see it through. I knew Goldman would buy their way out of this. I knew the already failed economic team would let them off the hook.

This is why the Financial Reform bill is a waste of time and not needed. Because there is still zero appetite for actually enforcing the existing laws. Because all that will happen is Obama's pre-failed economic team will have more laws and regulations to not enforce and whole new agencies will be formed - probably headed by previously failed administrators - and they will also not enforce anything.

The settlement was predictable. It is how the SEC has operated for years and years. It is how almost all government regulation of large entities works. File some charges, hold a great press conference, wait 90 days and the quietly settle for a small fine and no actual wrongdoing.

And this administration obviously wants to follow in that tradition. Sure, we can send a CEO to prison for an umbrella stand, but prosecute a firm that was at the heart of the meltdown? Prosecute a firm that somehow profited from the meltdown? Nope. Not in the Hope and Change playbook.

See, it still comes back to the same song. Bernanke, Geithner, Schapiro and the rest are the same folks that brought you this meltdown recession. Why would they want to actually go to court where it might be revealed that their incompetence and laziness was a prime contributor to this mess. It was, after all, Geithner who saw to it that Goldman got paid every dime AIG owed when everyone else got bupkes. And it was Bernanke who granted a commercial bank charter on a Sunday with no waiting period to get Goldman their chunk of free TARP money. And Schapiro? She watched all of this unfold.

The last thing Obama's failed team wants is for this to be heard in a court of law. They cannot afford any sworn testimony as to their complicity in this mess. And who pays? Well, we do, of course. That $550 million is nothing when stacked next to the $13 billion Little Timmy Geithner and Benny Bernanke took from taxpayers to give to AIG to pay Goldman 100 cents on the dollar. Our money is paying the fine. And Schapiro endorses this - is even proud of it.

So the new financial reform bill? Pointless before it is law. The idea that new laws unenforced are any better than old laws unenforced is either a definition of insanity or a very well thought out scam. Either way, not good for us. Some promise repeal. Nonsense. Repeal just does not happen.

In 1994, Republicans took control of Congress on a promise to repeal the Brady Gun Control Act. Well, every word of Brady is still in place. Not even a change. Repeal is a lot harder to accomplish and is empty a promise as is Change. It sounds great to rally the troops, but it is not realistic.

Where is the Congress? They are pretending this is not even happening. Democrats are happily pointing to their shiny new law and declaring all problems magically solved. Republicans are pointing to the new law and raising money from Wall Street on the false promise of repealing it. In other words, same stuff, different day on the Hill.

We can change things a little by simply standing up on November 2 and voting the Congress out of office. One last great layoff of 470 or so corrupt Democrat-Republicans who have totally games the system to benefit themselves. On November 2, fire the stinking lot of them and let's get a real new team in place.

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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.

You Can Bank on the Lies

I just reread my post from yesterday and want to point out that I am not a financial professional in any way. To be totally honest, I don't really understand a good portion of the mumbo-jumbo uttered by the masters of deception in the financial industry. What I do know, however, is when someone is lying. And these guys have been lying at levels that would make Nixon blush.

This morning, the Wall Street Journal reports that the biggest banks - Goldman, JP Morgan, Bank of America, Morgan Stanley, et al - have been manipulating their balance sheets to make their financial condition look better than it really is. To be specific, they are moving debt around at the end of the quarter for reporting purposes and then putting it back after the reports are published.

In other words, they are cooking the books to make investors and regulators happy.

Sound familiar? It should. Just a few weeks ago a report was issued pointing out that this is exactly the behavior that sunk Lehman Bros. The Lehman report even let us know that the liars at the top of Lehman had a named procedure for this - "Repo 105."

Well, it seems Mr. Fuld at Lehman was not alone in this sham of a scam of a lie. In fact, based on the Journal's report, it is a common practice. Even everyone's fair haired boy Jamie Dimon at JP Morgan uses this tactic to enhance the numbers. Considering that Dimon may be history's largest recipient of government largesse in the form of Bear Stearns and Washington Mutual with tax dollars guaranteed to back up any losses, this is particularly wrong.

Not illegal, mind you. Barely legal, yes. Unethical, yes. Wrong, yes. But legal. Apparently, the bankers and Wall Street kids have twisted the laws to the point where cooking the books is now legal. And folks wonder why the banks are spending millions on an ad campaign against any kind of new regulation.

Before I go on, let me simply say that I am not in favor of a new agency or extensive new regulation. I believe that we have a ton of regulations already. What we don't have is willful enforcement. What we have are lazy regulators, a complacent government, a corrupt congress and a blind Federal Reserve. We need to close some loopholes in the regulations, but that is all. No new agency, and not a total revamp of the regulatory morass.

Congress can stop with the bogus show hearings and get to work today on establishing a serious investigation. Not more hearings where the Fools on the Hill recite prepared 3 minute questions leaving no time for an answer. Not more of the "J'accuse" style hearings so popular. What we need and still don't have is a forensic style investigation. One run by folks not seeking reelection and not looking for a big job on Wall Street. All Congress cares about is the next election. The only way Congress could be more out of touch would be if they were literally blindfolded.

In a previous post, I suggested that Dr. Elizabeth Warren and Fox Business' Eric Bolling (also a lifelong investor by trade) head up the investigation. Why those two? Well, they are pretty much the only 2 voices that are honest about this stuff. Warren already heads a commission to oversee TARP. She has never once hesitated to call it the way she sees it. Bolling is literally the only financial reporter to be honest about the way his friends deceived a nation. In other words, honest folks that have no secondary agenda. It is not a matter of conservative or liberal, Democrat or Republican. It is a matter of honesty.

Back to the machinations of the financial industry. One has to ask why this behavior is not being more strongly investigated. Why it took this long to surface. Well, it is simple. The so-called regulators at the Federal Reserve saw it happen, but decided it belonged to the Securities and Exchange Commission. The SEC felt it was a Fed issue. Truth? Both are so deeply intertwined with the entities they are supposed to regulate, they cannot see the violations for the cocktails. Or, as I like to put it, both the regulators and the regulated all belong to the same club.

So when the seemingly heroic Dimon makes his case against regulatory reform, what he is really saying is that he does not want to lose his ability to manipulate the numbers his shareholders see. He does not want to admit that his seemingly solid company is no more solid than Lehman was. Same for Blankfein at Goldman. He keeps sending out letters and press releases talking about fixing things and being more "transparent" but he is not. While proclaiming transparency he is cooking his books, too.

As we approach the April 15 tax deadline, American taxpayers are reporting honestly their income and expenses. Why? Because the IRS - the principle regulator for personal finance - can and will find any cheating. As they should. Like it or not (and nobody does) that is the law right now.

But, for some reason, the large banks and Wall Street firms do not feel this obligation. Why? Because their principle regulators are not so interested in regulating or honest reporting. Why? Because Fed Chairman Bernanke and Treasury Secretary Geithner have been in on this little game all along. They knew about it back at the beginning. And if they suddenly take action, then they will have to recuse themselves at best - if not resign in disgrace - because they helped game the system for their pals.

This is not a partisan issue. Geithner was president of the New York Fed when the big banks were cheating and gaming the system. It was his job to regulate them. Yet Lehman, Bear and the rest were allowed to run wild. Paulson - the ever present architect of this lie - was Treasury Secretary. He was point man on the scam of a generation. And Bernanke? Well, either he is a total fool or simply a very dishonest man. Either way, he is not doing his job as regulator. In fact he constantly seeks to protect these banks by hiding their transactions and interest free borrowing.

All of them promised transparency. And all of them immediately sought to thwart that. Here we sit, 2 years later, and we know nothing more of what really went on. No criminal investigations. Not even the blatant stuff like Fuld and Schwartz lying to shareholders about their companies. Not even Ken Lewis, who actually admitted to lying and concealing the real costs of the Merrill deal.

Where is the administration on this? Well, they want all new regulations and agencies. Without even a clue as to what is needed. They seem to think that somehow creating a new agency will be a magic wand and simply stop the bad practices by its very existence. They are wrong. The people Obama has hired to look at this are all part of the same crowd that got us here. We don't need a new agency.

We need the existing ones to do their existing jobs. And that is exactly what the administration won't do. Point out the failure of government. Thus we still have Geithner, Bernanke, Schapiro, Rubin and the rest of the usual suspects. Why Obama appointed them is beyond me. They already had failed. So, in traditional government methodology, they got promoted rather than fired. Obama routinely points to the "previous administration." Memo to the president - you hired most of that "previous administration's" financial/economic team. It is now the current administration and still ineffective, incompetent and likely corrupt.

So again, I have to call for that independent investigation. If I am right about Bolling and Warren, they will proceed independently anyway. They do care about the truth and do care about transparency. They care about getting the truth and creating an environment where I can safely invest and not worry that some Jamie Dimon type is really just scheming to take my money.

Until there is an open investigation outside the Congress and administration, we should wait. One of the biggest failures of government over the decades has been the tendency to leap before they look. To do something - anything - so they look good. Well, right now, government doesn't look any too good. Nor do the banks.

Down our throats.....

I find it highly amusing that Senate Minority Leader McConnell has the sheer audacity to complain about legislation being jammed down our throats. Of course, he is talking about health insurance reform. This is the same Mitch McConnell that ignored not only his party, but also "the American People," as he likes to say so often, in ramming TARP and AIG down our throats. Apparently, McConnell only jams things down our throats that benefits banks and Wall Street. The same McConnell that thought nothing of tossing a trillion dollars to the crooks that put us in this recession.

Hold the applause Democrats. Your leaders are no better. Harry Reid, the Majority leader that helped shove TARP down our throats is unwilling to use his authority to help regular people. And the illustrious Chris Dodd who actually circumvented the US Constitution in passing TARP (more on that next paragraph) is now instrumental in making sure that the same banks and Wall Street cheaters that put us here are not reined in.

In order to jam TARP down our throats, Dodd used a tiny little trick to get around Article 1 of the Constitution that requires tax and spending bills to originate in the House of Representatives. Back when TARP was pending, the House - in a rare moment of responsibility - rejected it. Twice. Not good enough for Dodd, McConnell, Reid and company. They picked up an old House bill that had died in the Senate, stripped out everything except the "HR" designation that made it a House bill and then amended the entire TARP package to it. The same TARP that the House had just rejected. It this legal? Sure. Is it Constitutional? Barely.

But is is wrong and against the will of the same people that McConnell and Reid purport to represent. Yet there they were, leading the charge to ignore the will of the people. And here they come again, skewering any level of financial regulation or reform, despite the will of the people.

Apparently the needs of Goldman Sachs is important enough to jam down our throats, but getting access to health care for the poorest among us is not. Ask yourself this next time you write a check to an insurance company or to pay for an overpriced prescription that your insurance has chosen not to cover: "Did TARP really help me?" Unless you work on Wall Street, the answer is going to be no. Then ask yourself: "I wonder how much McConnell, Dodd, Reid and the rest of those liars pay for their health care?" The answer will be "very little if anything."

So the same gang of Senators that decided to take over a trillion dollars from you and me for their pals on Wall Street have also decided that health care is too expensive and that any kind of financial reform would be bad for the banks.

In other words, to quote a long famous phrase - follow the money. We the people that seem so important to these charlatans on Capitol Hill apparently cannot afford the entry fee to the club that actually get taken care of.

For the record, both Obama and McCain endorsed Reid, McConnell and Dodd's shady actions by voting yes on TARP. Both disregarded the rules and the people and the Constitution. Sadly, the only time we see bipartisan action in the Senate is when it is time to reward the big contributors and ignore the people.

One important difference between us and Wall Street - we can fire the Senate come November. Even the mighty Goldman Sachs can't do that.