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Richard (RJ) Eskow
Published: Friday 27 April 2012
Whether it’s JPMorgan Chase settling bribery charges in Alabama, Wells Fargo settling charges of laundering drug-cartel money in Mexico, or the nation’s five largest banks buying their way out of widespread foreclosure fraud and tax evasion, never in history has so much evidence led to so little action.

Burden of Proof: Geithner, Obama, and Wall Street’s Unpunished Crimes

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Forgery. Perjury. Investor fraud. Bribery. Money laundering. The body of evidence against individuals at the nation’s biggest banks is overwhelming. Nothing speaks louder about the banks’ guilt than this evidence - nothing, that is, except the billions they’ve paid to settle the charges.

The Administration reacted indignantly this week to suggestions it’s still slow-walking its investigation. And then, despite all this evidence, the Treasury Secretary of the United States proclaimed that no laws had been broken. And the White House wonders why its word is no longer enough?

A source in the office of a key figure in the investigation has denied a new story that they’re ruled out criminal prosecutions. But the burden of proof has shifted. Nothing will convince the public now except action.

Straw Men

Whether it’s JPMorgan Chase settling bribery charges in Alabama, Wells Fargo settling charges of laundering drug-cartel money in Mexico, or the nation’s five largest banks buying their way out of widespread foreclosure fraud and tax evasion, never in history has so much evidence led to so little action. Investigators pinpointed the fraudulent activity of individual accountants in GE Capital’s settlement with the SEC, only to be dumbfounded to discover that no criminal indictments were handed down.

So it was nothing short of astonishing to hear the Secretary of the Treasury assert yesterday that no crimes were committed by America’s banks, saying that “most financial crises are caused by a mix of stupidity and greed and recklessness and risk-taking and hope” and adding “you can't legislate away stupidity and risk-taking and greed and recklessness.”

That’s a straw-man argument, since nobody has suggested outlawing character traits. The Administration’s critics are pointing to a mound of evidence implicating bankers in criminal activity and asking the simple question: Where are the prosecutions?

Free Pass

Geithner was doubling down on an assertion his boss made last December, when President told 60 Minutes that ““Some of the most damaging behavior on Wall Street — in some cases some of the least ethical behavior on Wall Street — wasn’t illegal.”

Deliberately or not, that sent a message to bankers that they could stop worrying about indictments - that is, if they ever had worried. Why would they? There’s been no investigation, no grilling, and no subpoenaing of bank executives’ emails or phone records. And as far back as 2010, Eric Holder and his Justice Department were trying to pass off long-standing investigations as part of a major assault against financial fraud called “Operation Blind Trust.”

The DoJ's claims were quickly debunked and “Blind Trust” was shown to be nothing more than a deception which a Bloomberg columnist said used “trumped-up numbers.” The Columbia Journalism Review summed up their recap of “Blind Trust” coverage with the headline, "Obama Administration’s Financial Fraud Task Force Stunt Misfires."

Burden of Proof

But we were told those days are over. Now the President’s really cracking down on Wall Street, we were told. In the face of widespread criticism for his proposed foreclosure fraud settlement with five top banks, the President eventually accompanied that deal with a promise of tougher enforcement. He appointed New York State Attorney General Eric Schneiderman, who had been pursuing banks and resisting previous deals, to his previously lethargic mortgage fraud group.

“The mortgage fraud task force I announced in my State of the Union address retains its full authority to aggressively investigate the packaging and selling of risky mortgages that led to this crisis,” the President said on February 9. “Working closely with state attorneys general, we're going to keep at it until we hold those who broke the law fully accountable."

But then there were stories that the task force’s proposed staff, whose proposed numbers were already absurdly low when compared to those used to pursue criminal behavior under Reagan after the much smaller savings and loan scandal of the 1980s, hadn’t even been hired.

The Administration responded swiftly. Unnamed Justice Department employees joined Schneiderman’s press secretary in telling The Nation’s George Zolnick that the task force’s five co-chairs are in “constant communication” and “meet regularly.” Fifty attorneys and other employees were already working on the project, Zornick was told. (It was not made clear whether they were assigned to the task force full-time.)

The Candidate

Yesterday Zornick published a piece saying quoting former Democratic Rep. Brad Miller, an outspoken advocate for bank investigations, as saying he was strung along by the task force after being led to believe he was a leading candidate by Schneiderman’s office. What’s more, he made the explosive suggestion that, in Zornick’s words, “the working group was afraid of Wall Street.”

Miller told Zornick that he knew “Republicans were watching the work of the task force very closely and very critically, and that they would oppose my playing that role.” Most explosively, he said he had been told that ““People being indicted and looking at the possibility of prison sentences—they were saying they did not expect any of that. They expect civil litigation or civil enforcement but not criminal prosecution.”

If the task force had abandoned any thoughts of criminal prosecution, and with Schneiderman's assent, it would be a political and legal bombshell. But a source in Schneiderman’s office who said he was Miller’s point of contact denies that suggestion - “vehemently,” he added.

The source said Miller was a candidate for the job, but that some felt he lacked prosecutorial experience. In addition, I was told, there were concerns were expressed about appointing someone with a political background. “That would give Republicans another avenue of attack against the whole task force,” the source said. (The Republicans have already been harassing the group at every opportunity.) Schneiderman’s office recognizes that statutes of limitation present a real problem.

“But abandon prosecutions altogether,” the source added, “and let the word get out that everybody’s off the hook? How silly would that be?”

The Problem

The real problem isn’t that they haven’t appointed the right Executive Director for the task force, although that’s extremely important. The real problem is that the Administration didn't take more aggressive action in 2009 or 2010 to investigate criminal behavior on Wall Street. Now the wrongdoers - and their political sympathizers - are trying to run out the clock.

The real problem is that the senior officials in the same Administration are making public proclamations about the innocence of people who should, by all rights, be suspects in a criminal investigation.

The real problem isn’t that somebody’s lust for vengeance isn’t being fulfilled. It’s not even the fact that senior officials find it understandably difficult to contemplate criminal investigations of people they’ve known for years as colleagues, friends … and yes, as donors.

The real problem is this: As long as bankers know they won’t be prosecuted for committing crimes they’ll commit them again. Officials in the Justice Department and elsewhere privately express fears that it will be difficult to obtain convictions after so much time has passed, or in cases where intent is difficult to prove.

But they don’t even look like they’re trying. Comments like Mr. Geithner’s only add to the perception that bankers have a free pass to commit crimes without fear of prosecution. That’s not just an injustice. It’s also a threat to our economic security.

This perception can only be changed if the Administration moves aggressively to hire and staff this Task Force with the best people and best managers possible. The public needs to see action, and it needs to see it now.



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ABOUT Richard (RJ) Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology.

Just ass

Just ass

Like most of us who are NOT

Like most of us who are NOT surrounded by cameras 24/7, Obama believes we can't really see what he's doing. It's not that he's so corrupt, but he makes up stories to cover the fact that if he DID prosecute Wall Street en masse as they deserve, they would suddenly withdraw ALL of the money that floats his boat, and ONLY give to the Reich.

And in this money/media climate, that would spell the RUIN of the Dems, because even people I know watch and believe FAUX Noise for no rational reason whatever. They actually think they are getting the whole, unbiased story from FAUX, and are actually GRATEFUL that FAUX is "on their side" -- unlike the rest of the "left wing" media.

Personally, I'd LIKE to see the "ruin of the Dems" come barreling down the pike. because then, the lines would be drawn clearly. The New Cop would finally emerge, out of the Koch Brothers' deep-money disguise, and we could all see just what we are dealing with.

This "dying by halves" does us no favors. Get it over with, I say, because the sooner that happens and we all see what we are dealing with, the better for everyone.

(Hard to hide the rampant encroachment on our freedoms and rights, when there ARE no poster-boy "socialist" "opponents" to yell about and distract us with).

Once we can SEE our Masters, we can aim at them.

Tony Pirog's picture

What economic security? They

What economic security? They already stole that.

The People Want Justice!

The People Want Justice! Justice will Not be Served Until the Banksters serve LONG Prison Sentences! Occupy needs to Double Down on this! We the People must hold our Government accountable~ it's their job to prosecute those who break the law.

A homeless man steals $100 and gets 15 years in prison, while rich serve no time... or a reduced sentence. http://front.moveon.org/take-a-look-at-just-how-differently-two-theft-cr...

WE the People must stand and

WE the People must stand and fight. Contact our elected representatives EN MASSE and DEMAND they go after the Lehman Bros/Ernst & Young top officials - AS A START. Yes, criminal prosecutions are in order. Put the bastards in jail and throw away the key.
CBS aired an interview with ANTON VOLUKAS, investigator appointed by the federal bankruptcy court. He came up with a 2200 page report, with enough evidence to prosecute the top officials of Lehman and Ernst & Young. If we raise enough Hell - and don't stop - with our elected officials, we CAN get the ball rolling. If the president doesn't want to do this, it will be out of his hands. Let it be known, the election coming in November can mean BIG, no HUGE changes in this country. WE CAN DO THIS! ! ! !

WE the People must stand and

WE the People must stand and fight. Contact our elected representatives EN MASSE and DEMAND
DO YOU REALLY SUPPORT THE WAR ON DRUGS ????

WHICH ONE IS NOT GUILTY OF INSIDER TRADING ???
WHICH ONE ON THE ETHICS PANEL ?????
TAXES -.- ONLY THE PUBLIC PAYS TAXES... THE LITTLE GUY

NOT AN INSULT BUT A JOKE...LOOK AT WHICH WERE PUNISHED ?? WHICH DO YOU THINK WILL BE PUNISHED ?? WHO GOT CAUGHT WITH A HOME IN THE CARIBEAN WHICH HAD A FREEZOR FILL OF MONEY...lock them up / in a regular prison ??? / as americans are locked up every day ?? REMEMBER SCOOTER LIBBY

YOU'VE GOT A BETTER CHANCE OF VOTING THEM EN MASSE.......

How can you honestly expect

How can you honestly expect the Obama administration to go against these robbber barons when the electorate has shown themselves to be so fickle. When the electorate is able to be so persuaded by the most obvious shils of the corporate system to vote them in power in the house of representatives, how can you be surprised that the DOJ is reluctant to move. America is now at a crossroad! We must decide whether or not we are going to come together and retrieve our country from these obviously unscrupulous plutocrats, or partake in the politics of division, (racial, class,etc) and fall, it's really that simple. We say we're a Christian nation, however we bare no fruit-love for our brother! We are proving prophesy true because in this nation our love is waxing cold!

Tony Pirog's picture

The thinkers agree that we

The thinkers agree that we must come together etc. The Fox News enthusiasts agree with Hannity, O'Reilly etc. America will never be in full agreement. To suggest that is possible and that there is some kid of collective "WE" is absurd. Nevertheless the thinkers must keep pressuring the so-called "decision makers" regardless. As for prophesy, that's just stupid mythological magical thinking and has no place in a rational discussion.

The nation has never been the

The nation has never been the same since the Bush v Gore decision was handed down. That was the first day of outright Fascism in America. They did not steal the election with good intentions in mind. They only "allowed" Obama to win because it was understood he would not even consider investigating the Bush Administration for war crimes or the banks for fraud. You can draw your own conclusions about 9/11.

Which mayor of D.C was

Which mayor of D.C was convicted on drugs sent to prison gets out and gets re-elected
YOU GET WHAT YOU VOTE FOR.........war on drugs????
insider trading and then complain about the broker ??
VOTE THEM ALL OUT OF OFFICE -,- OR SIT DOWN AND SHUT UP
..YOU GET WHAT YOU VOTE FOR.....WHAT YOU VOTE FOR.... OTHERS MIGHT DESERVE BUT YOU DO.....
VOTE....FOR... THE ...COUNTRY....NOT THE POLITICIAN

They didn't let Obama win but

They didn't let Obama win but couldn't stop him.....think of with who ?? wink-wink
the democrats jammed it down our throats - white woman or black man we will have change -.- like it or re-elect Bush ??? but no chioce

Tony Pirog's picture

Yup. Sure looks that way.

Yup. Sure looks that way.

Perhaps a different

Perhaps a different perspective is in order for the young people ie: the republicans and the democrats both are arguing over where the money is coming from to pay for the jump in student loans!! If the dems or the republicans where on our side they would tell the banks to eat the interest that you are not going to get that and you only can get the current rate of interest for the loans you gave out no money needed U.S. hispanic citizens honor the laws of the land however the opportunity for progress is not there thus high crime rate. Immigration needs to get a handle on the border so labor stabilizes most republican hispanics are small business people which is an avenue to progressive change.Both parties need to go away so we can start a real democracy

Norman Allen's picture

Don't expect things to change

Don't expect things to change on their own and because politicians promise change. Europeans have sacrificed countless lives and they are still grappling with thieves, thugs and pirates in high places. We have to learn that no one is going to give you anything for free unless you make them keep their promises. "Covenants without swords are but words". Take control of your lives by boycotting elections and whatever the corporate world is selling you. You have to learn to make them work for you instead of the other way around. For that, you need to ask and support tried leaders and those who have sacrificed their lives for the common people: Kucinich, Nader are the two the comes to mind. So do the leaders of the Greenpeace and a few others. None of the current so called leaders can see beyond the green of the corporate CEOs and board members.

Tony Pirog's picture

Bernie Sanders!

Bernie Sanders!

Obama NEVER had any intention

Obama NEVER had any intention of allowing his thieving Wall Street "Savvy Businessmen" billionaire buddies to be criminally prosecuted.
He refused to look back and stated that fact early on in his presidency, and he will continue to do everything in his power to criminally obstruct and oppress any criminal prosecutions of his thieving Wall Street "Savvy Businessmen" billionaire buddies while pretending to do otherwise.

Assigning 55 new people for the task is a pathetic joke when President Ronald Reagan appointed a thousand investigators in each region of the country to go after the Savings & Loan thieves, 1200 of whom ending up in federal prison for thievery.
Obama's Kabuki theater is infantile.

Obama's Treasury Secretary Timothy Geithner just chirped in that no laws were broken so there's no basis for a criminal prosecution -- this self-serving verbal diarrhea from a serial tax cheat who failed to file income tax returns for the 8 Bush/Cheney years when he was President of the New York Federal Reserve Bank and Assistant Treasury Secretary under Henry Paulson in the Bush/Cheney administration.

Mr. Hill is absolutely

Mr. Hill is absolutely correct. I would add that one must follow the money. Wall street was a significant contributor and government is bought and sold. This country, sadly, has the govenment it elected and deserves and to change the paradigm will take a considerable amount of will.

The problem is, what were

The problem is, what were once crimes are now legal and this is the primary reason that prosecutions have not taken place. America has become an oligarchy, or worse, a Plutocracy. The 1% writes the laws that the two Houses pass. Little consideration is given towards the public good. Part of the reason is that corporate shareholders are now first priority. Up until the 1930s, companies were not allowed to incorporate unless they could prove that they were serving the public at large.

WTF we do live in a fascist

WTF we do live in a fascist state. "Fasten your seat belts it's going to be a bumpy" ride darling.

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