Why Isn't Wall Street in Jail?

Well, I was gonna make a comparison to them as being a "legal" government Mafia, but no, the mafia at the very least didn't target non-mafia citizens. Not sure, but I think the mob families actually did more good for the people than wallstreet, hell Al Capone opened up soup kitchens back when the financial giants were starting to flex their muscle and power.

reply to post by DimensionalDetective

Good question, and S&F for bringing all this up. Brief answer...

Remember the phrase, "Too big to fail?" Well, all these wall street executives are, "Too wealthy for jail."

With extreme wealth comes power and influence. Granted, Madoff's Ponzi scheme brought him down because it was ONE man and ONE big lie. These "banksters" are huddled together like a large pack of greedy jackals, laughing as they eat the flesh of their kill. Madoff, from my understanding of the situation, was like an "outsider," --he was not a "bankster." Not one of the fold, so he fell.

The banksters have long ago purchased the influence in D.C. as if it were stock market shares. Really. Almost (if not all) politicians successfully operating in modern US politics (D.C.) have been somewhat (if not totally) bought by the banksters and their special interests.

An honest man with integrity is the most dangerous thing in D.C. Therefore, no one will really work with/for him (BTW, I say "man" in the classic sense, representing he and she, it's just faster, okay?). An honest man in politics gets little accomplished. White Knights must accept minor blemishes before people will assist; it is, after all, a "you help me and I'll help you" political world. It's a constant struggle to compromise morals and integrity in order to accomplish positive things for constiuents.

After a period of "compromises," the politician looking back from the shaving mirror is no longer the young, ideallic White Knight. He has become what he abhorred. He has been corrupted by the lavish lifestyle and gaines of a congressman, a statesman, a politician. Sure, he has also accomplished some good, but in order to do so, he has made "sacrifices" and turned the other way and passes laws in favor of Big Business and Big Pharma and Big Farming and other global corporations... Or worse. But, he can sleep at night in his lavish estate knowing that he has paved secure routes for his children's futures into the fold...

So, why aren't banksters in jail? Too rich for jail. They own the law-makers. After the confusing smoke screen clears, the American Public realizes that they've been violated and left out in the cold, not knowing really what happened. And the wheel continues to turn as another bankster throws a $7 million birthday party for his daughter...

Originally posted by ogbert


If that is the case; then why don't we try them for owning other corporations, under the slavery laws? If Corporations are considered people, then, how to they get away with owning other corporations/people?

I say lets go there too. I think they havent yet been tried like this because they have so slowly been worming their way into personhood incrementally. But hey they got a big boost this spring, with the right to free speech, so I say, lets use it against them. You bring up a fabulous option. I love it.

I honestly dont think any lawyers have yet thought of really pounding them with the personhood issue, but I think thats where we should head. You want to be a person? You dont just get the benefits of that, you get the liabilities too.

Originally posted by Flatfish
reply to post by DimensionalDetective

 

Why has it become so hard to prosecute the rich? It's almost as if they all have diplomatic immunity.

Close. They have "financial" immunity. "Too wealthy for jail," is the slogan.

reply to post by GhostLancer


Which is why I love that quote from the article in the OP. About throwing them into a "pound you in the butt prison" and how their criminal behavior would just come to a dead halt if that happened. I think it would too. I bet they would be much less likely to commit crimes if they knew they would do real time, in real prisons.

We need the distinction between white collar crime and other crime to go away. It just needs to be crime. One standard for all. In my opinion, someone who causes someone to lose their home, or life savings, or crashes the economy, is far, far worse than someone who holds up a convenience store. I understand the weapon issue, but people lose their lives when the economy crashes, they lose their job, and they lose their health insurance too. People die because of white collar crime, its just a longer cause and effect chain. I say the person at the top of that chain is still responsible.

reply to post by mbkennel


OK. the gent who signed a document with full knowledge that he would be over his head with normal cash flow, thinking that he would be able to pull equity out of the house through increased value to cover the difference and then went belly up is not a criminal, he's just a fool. Fine, than he should be sued civil court and his house taken away and that is exactly what happened.

This business is all about one thing and that is this nonsensical "American Dream" of home ownership.

- The Bankers were creating instruments that were legal to create. Did some of them push the envelope and break the law? Sure and a number of them went to jail. 99% of them however were doing something not only legal, but supported by the general public and the government. The public because they wanted to ride up this housing bubble and make money and the government because they want to spout their ability to create and sustain the American Dream.

- Why were the rating agencies allowed by the government to only include the top two tiers of debt bundled in a CDO and base the rating on those, ignoring the lower tier of trash debt? Because if they included the lower tier the securities would not be AAA, they would be in the B range and nobody would buy them, putting a stall on the housing boom. Did the homeowners care about that? No, all they cared about was the easy money that allowed them to continue to ride the bubble. Should they have known? No because the government should have insisted that adquate transparency was in the market and they purposefully reduced that transparency.

- They also did not want the lower tier scrutinized because it would expose the fact that the Community Reinvestment Act was a sham and that the government was forcing the banks to make bad loans. What would that show? In many cases that minorities in this country were simply not financally equipped to become home owners, something no politician wants to explain. They don't want to talk about it because there is no solution to the problem, at least not a short term one. What happens if that discussion happens in the open? Dudes like Jackson and Sharpton march on Washington to extort more handouts from the government. Hell, at least when the folks who could not afford a house got a house they went to Home Depot for a few gallons of paint and put some money into the economy - hey its all good, as long as the real truth is not being told.

- The housing bubble generates great statistics like housing starts, first time home ownership and the like. The government loves to have those statistics on their watch. Hell, they are just looking at the next election and all of these happy new homeowners are great voters. Who cares what happens 5 years down the road, I'm not planning to run again and even if I do, this business will be such a mess and so much blame to toss around I'll get elected anyway - think Barney Frank and Chris Dodd.

- To suggest that the Harvard educated trader should have dug into the contents of the CDO and is somehow liable in this mess displays a complete ignorance of how investment banks work. It is like saying that a Harvard educated doctor who prescribes an FDA approved drug that was either purposefully or inadvertainly tainted by the manufacturer is liable for the harm done to his patient. The doctor is certainly not on the hook to perform a chemical analysis of each dose of each drug, or do you think he should be? In the same manner and investment bank has a distinct manufacturing arm and a sales arm. In most cases those groups have no interaction and in some cases there are legal separation of duties that are put in place to purposefully abstract the trader from the contents. The trader is selling AAA just like the doctor is perscribing FDA approved. All he knows is that his product is like Viagra - its selling like hotcakes and thats great because the more of a market there is for it the more he makes.

- The public, many of which were in a buying frenzy to pull cash out of homes pushed up the demand on these instruments. The government, anxious to have a happy, home owning public relaxed the standards and ignored pleas, many of those pleas coming from the investment community and they forced the banks to continue to create liquidity to further fuel the bubble.

- The government, having placed capital requirements on banks that were unsustainable based on the types of debt they were being forced to take on, further forced the banks to become increasingly creative in thier methods of packaging debt.

- Again in 99% of the cases, the banks were doing what was not only legal but strongly encouraged by the government and supported significant demand by the home buyer who wanted his piece of the American Dream.

What do you suppose would happen if a major banker stood up publically said in a very visible way, "look, this situation is a sham. The government has put in place policies that require us to lend money to folks who can not afford the loans. We are being told that if we don't loan money to these under qualified folks we'll get redlined and be put out of business. So be it, red line us." There would be outrage and headlines like "Bank executive says no to loans to blacks" "XYZ Bank refuse to service poor neighborhoods" Stuff like that.

The next day there would be a march on Washington led by Mr. Jackson and Mr. Sharpton.

Finally, when this business blew up, those evil bankers went to the government and asked for the "Mark to Market" requirements be lifted at least on a temporary basis to enable them to not foreclose on their clients. "Mark to Market means that the bank has to value the debt at the current value of the product, in other words, if a house is currently appraised at $300K but has an outstanding debt of $400K the bank is forced to categorize that as a bad debt on their balance sheet. The capital requirements placed on banks means that they can only carry a certain amount of those loans on their books (thanks to the FDIC). What that meant is that a gent who had paid his loan every month for 15 years who lost his job went to the bank and asked them to help him out, the bank said "no. You are in default on this loan. I can't refinance it (due to market to market rules) and I'm going to have to foreclose on you. Now once we have foreclosed, we can do business, because I've got the debt off my balance sheet. Lets talk about a $300K loan - Oh, sorry, but I can't give you a loan because you've foreclosed on a house"

Its a messy circle with equal blame to go around

Originally posted by DimensionalDetective

Why Isn't Wall Street in Jail
------------------------------------------------------------------

Mackey1224uk........

Thats easy to answer. It's because, In God We Trust. "which I think is bollocks" in my context.

Well, Thats only part of the illusion.

edit on 17-2-2011 by mackey1224uk because: (no reason given)

Perhaps some Feds are interpreting
'Too Big to Fail' as 'Too Big for Jail.'

reply to post by dolphinfan


informative!

something else was going on at the same time. for example, people who had investment firms investing their money into this thing or that, were put on the madoff train, after all, he had a 5 year record to base it on. how'd that happen again? . and they lost all their accumulated savings and investments, not just some, but ALL. and we're not talking about just one economic bracket, but several. what it did was essentially steal the life savings and earnings from investments, no matter how small or large, and zeroed them out. what a mess that was.

my question is, how did this (house bubble crash, madoff, etc) all manage to happen and come to a head at the same exact time?

a) Do you have any idea how much money it takes to put people with a lot of money behind bars? (let alone thousands of them)

That is why.

this entire thing is the result of increasing marxist programs. had they let the black people enter entrepeneurship the good old fashioned way, instead of using them like a ready-made voting block of poor people, and thereby not only furthering their impoverishment but driving up the cost of living of everybody else in the country (including successful blacks and businesses), they'd have jobs right now and be able to buy their homes the normal way, just like the rest of the country. damnit.

reply to post by undo


Well there are two different issues

In the Madoff business, he was a crook who played off of greedy fools. You never give money to an individual and if any individual who is an investment person tells you should, run away because he is not an honest person. The check should be written to "Smith Barney" or some other firm, never the broker. A professional investment advisor would tear a check made out to him and tell you to write a new one. At the minimum you should consider it no different than giving your money to someone you don't really know and have them bet the pass line on a craps table for you. These folks were looking at 20+%/year returns from this joker. Any professional investment professional will tell you that that kind of return (for 18 years no less! A positive return for something like 40 out of 45 quarters) is impossible. The rich folks who know the market knew it was a scam and thought they could get in and get out while the getting was good.

As far as the industry, it all comes down to counter party relationships. Banks understand their likely redemption obligations on a daily basis. Its naturally an estimate because they can't 100% predict how many folks will take money out, sell money market funds, etc. When they need additional money to cover that spread, they get it from a counter party in the form of commercial paper. A money market trader at Lehman calls up a gent at Goldman and tells him he'll sell him $100m of Lehman 60 day debt. The gent at Goldman says OK. Now he says OK because down the road he may need to call the same gent and sell him some Goldman debt. They agree to a price and buy/sell the debt.

Word gets out that Bear Sterns is in trouble. That their debt is not any good. Redemptions come into Bear Sterns and they need to raise some money to keep their money market fund whole at a dollar/share. If a bank can't value their money market fund at $1/share they "break the buck" and since a money market fund is cash, there is likely to be a run on that bank. Banks will do practically anything not to break the buck. The gent at Bear calls around and nobody is willing to buy Bear Sterns commercial paper. They all think its junk and that they won't get paid when the notes come due. The counterparty system fails and its clear that Bear will break the buck on Monday and the boys at the investment banks and Sec Treasury get together and figure out that if Bear breaks there could be a run on all of the banks so they divy up the leverage and Bear Sterns goes out of business. The next bank that looks to be in trouble is Lehman and none of the counterparties will lend Lehman any money, so Lehman goes under. Then the government comes in and creates TARP which is essentially a cash account which will tell the public that all of these firms have solvency backed by the feds. They force all the banks to take the money so as not to advertise which banks are in trouble and figure that once the situation stabilizes the money can be paid back. Thats where the "too big to fail" comes in.

One break in the counterparty system and there is a whole lot of trouble

Originally posted by TheRemedial
a) Do you have any idea how much money it takes to put people with a lot of money behind bars? (let alone thousands of them)

That is why.

Then maybe it's time again for the old tried and true tar, feathers, and riding them out of town on a rail. Seriously, if the justice system fails to indict when indictment is due, then, eventually, the people will resort to self-help. God help the white collar thieves when that happens.

reply to post by dubiousone


I liked the visual of lining them up in front of the stock exchange and using a firing squad, but tar and feathers is pretty good too. If the tar is nice and hot, and takes off several good layers of dermis.

I do think they should have their day in court, however. Although if the system were rigged against them to ensure their loss, I wouldnt be sad. After all, isnt that how they play the game?

Tyler Durden - The people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances, we guard you while you sleep. Do not # with us.

I think if we can't get them through legal means it's up to us as individuals to make them pay.
If I ever happen to be in a dark alley alone with one of the evil elite, It's on like donkey kong.

reply to post by TheRemedial


sure taking them to court is a long costly process
But it only takes one competent sniper in the right place at the right time to serve justice on these bastards.

reply to post by dolphinfan


investors didn't know that though. they just went with whatever their investment firms said was a good risk. and why did he choose just that time to admit to his son that he was running a ponzi scheme? weird timing.

reply to post by undo


Well, nobody did what their investment firms were telling them in the Madoff deal, they did what old Bernie was telling them to do, huge difference.

When these investors, mostly super high-net worth folks began to lose cash in other areas - they undoubtably had money invested in areas other than in Madoff's scheme they were either unable to continue to feed his scheme or cashed out, causing the whole thing to collapse.

The best thing that happened out of that who mess was the elderly woman who's husband got close to $20bn
out of Madoff before it blew up. The gent died. Over that period, the government was in the process of trying to get the money back. Thats called a claw-back and its really difficult to prove since you can argue that you did not know the thing was a sham and were an innocent player who happened to get out at the right time. She told the feds not to bother and cut them a check for $20bn that was distributed to the folks who lost their cash, starting with the less affulent folks who lost everything in the mess.

reply to post by DimensionalDetective


Sorry for reposting this if someone else has. I don't have the time to read 9 pages of comments to see if it has as I have to go to sleep because I'm getting up very early to go rappelling and zip-lining in a rainforest tomorrow.

Following is a link to a PBS interview by Bill Moyers of William K Black, former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. There' very interesting and revealing facts about the US financial meltdown / mortgage fraud that's still haunting far too many people.

The best way to rob a bank is to own one!

reply to post by eNaR


oh.my.gosh.
it's worse than i thought. that video is just......i'm at a loss.