[Peace-discuss] Yves Smith on the latest Obama fraud
C. G. ESTABROOK
cge at shout.net
Wed Dec 7 10:21:57 CST 2011
> Yves Smith on the latest Obama fraud
>
> WEDNESDAY, DECEMBER 7, 2011
> Obama Road Tests Hopey-Changey Big Lie 2.0: He’ll Reincarnate as
> Teddy Roosevelt if You Are Dumb Enough to be Fooled Twice
> Wow, I have to hand it to Obama’s spinmeisters. They’ve managed to
> find a way to resurrect his old hopium branding by calling it
> something completely different that still has many of the old
> associations.
> And we have a twofer in Obama’s launch of his new branding as True
> Son of Teddy Roosevelt. Never mind that Teddy, unlike Obama, was
> accomplished in many walks of life and had meaningful political
> accomplishments (such as reforming the corrupt New York City police
> department) before becoming President at the tender age of 42. The
> second element of this finesse is that Obama is using the
> Rooseveltian imagery to claim he will pass legislation to get tough
> on Big Finance miscreants. That posture, is of course meant to
> underscore the idea that you just can’t get the perps with the
> present, weak set of laws.
> Team Obama may have planned to wheel this new, improved image out
> later, with the timing accelerated by Judge Jed Rakoff’s decision
> against a proposed $285 million settlement between the SEC and
> Citigroup over a bum CDO in which Citi allegedly wielded
> considerable influence over its contents so it could bet against it.
> The SEC has gone on a full bore media offensive against Rakoff, with
> enforcement chief Robert Khuzami’s becoming uncharacteristically
> accessible to the media and also using scheduled speaking
> engagements to take issue with Rakoff’s ruling. And on top of
> Khuzami’s own efforts, the media has taken up some other dubious
> plants by the SEC. The biggest howler is a story in the Wall Street
> Journal earlier this week. Titled “Financial Crimes Bedevil
> Prosecutors,” not one of the sources for the story is a prosecutor!
> The centerpiece of the piece is one David Cardona, who just joined
> the SEC. Gee, you think he is going to do anything other than sell
> the party line? And what was his last job? At the FBI, investigating
> financial crimes, which by the way, resulted in pretty much no
> criminal cases, except, curiously, Taylor Bean. But doesn’t count,
> since the wronged parties were even bigger fish.
> Now why is Cardona’s opinion on these matters worthless? He was a
> cop, not an attorney. He is not a legal expert, and any opinion he
> has on the legal issues would come from the lawyers he worked with.
> And since neither the last nor the current DOJ has the slightest
> interest in getting tough on bank execs, you can be sure all he
> heard were persuasive rationalizations as to why all sorts of dirt
> he turned up just was not sufficient. It’s plenty easy to justify
> failure and timidity.
> And who were the other sources for this dictation masquerading as
> reporting? Well, there was a lone dissenting comment by Phil
> Angelides of the FCIC, noting that the FBI investigations of
> mortgage fraud were inadequate. That’s one paragraph out of 24.
> Khuzami is quoted, as well as a Department of Justice in-house flack.
> While we have the Feds insisting that it’s just too hard to go after
> miscreants in finance, this week we have Nevada Attorney General
> Catherine Cortez Masto continuing with her step-by-step, classic
> prosecution strategy of going after low level organization members
> to roll the higher ups. As we’ve indicated, she has targeted Lender
> Processing Services and is going after more mid level employees. Her
> effort has the potential to bust open bad conduct across all major
> servicers. LPS has among other things, allegedly engaged in escrow
> abuses and charging other impermissible fees, as well as foreclosure
> related abuses. LPS maintains that everything it did was with the
> full knowledge and approval of its clients, meaning the big servicers.
> And the reach of Masto’s effort, and the potential damage to the
> Administration’s credibility has just grown considerably. Yesterday,
> California attorney general Kamala Harris joined the Masto effort.
> This strongly suggests that Harris will also be seeking indictments.
> And remember, California, unlike Nevada, has a major bank
> headquartered in state (Wells) as well as other substantial banking
> operations (the legacy Countrywide units). For Harris, who is
> reputed to be, shall we say it politely, sensitive to the political
> winds, to make a shift like this, suggests a real change in the
> political climate is underway.
> So let’s return to the rebranding of Obama. From the Financial Times:
> Barack Obama outlined a plan to toughen penalties against banks that
> commit fraud in a speech on Tuesday that hardened his attacks on
> Republicans for “collective amnesia” in backing policies that caused
> the financial crisis and economic downturn.
> Speaking in Osawatomie, Kansas, Mr Obama summoned the spirit of
> another president, Teddy Roosevelt, who spoke in the same city a
> century ago about his “new nationalism” and the need for a fairer
> system that supported the middle class..
> Mr Obama was scathing about the banks’ opposition to new financial
> regulations, saying they were only feared by “financial institutions
> whose business model is built on breaking the law, cheating
> consumers or making risky bets that could damage the entire economy”.
> “I’ll be calling for legislation that makes [anti-fraud] penalties
> count – so that firms don’t see punishment for breaking the law as
> just the price of doing business.”
> The misdirection is blindingly obvious. The claim is that the
> Administration needs new tools to get tough on banks. No, it has
> plenty of tools, starting with Sarbanes Oxley. As we’ve discussed at
> length in earlier posts, Sarbox was designed to eliminate the CEO
> and top brass “know nothing” excuse. And the language for civil and
> criminal charges is parallel, so a prosecutor could file civil
> charges, and if successful, could then open up a related criminal
> case. Sarbox required that top executives (which means at least the
> CEO and CFO) certify the adequacy of internal controls, and for a
> big financial firm, that has to include risk controls and position
> valuation. The fact that the Administration didn’t attempt to go
> after, for instance, AIG on Sarbox is inexcusable. The
> “investigation” done by Andrew Ross Sorkin in his Too Big To Fail
> (Willumstad not having a good handle on the cash bleed, the sudden
> discovery of a $20 billion hole in the securities lending portfolio,
> the mysterious “unofficial vault” with billions of dollars of
> securities in file cabinets) all are proof of an organization with
> seriously deficient controls.
> But more broadly, it’s blindingly obvious this Administration has
> never had the slightest interest in doing anything more serious than
> posture. As we wrote in early 2010:
> Recall how we got here. Early in 2009, the banking industry was on
> the ropes. Both the stock and the credit default swaps markets said
> that many of the big players were at serious risk of failure.
> Commentators debated whether to nationalize Citibank, Bank of
> America, and other large, floundering institutions..
> This juncture was a crucial window of opportunity. The financial
> services industry had become systematically predatory. Its victims
> now extended well beyond precarious, clueless, and sometimes
> undisciplined consumers who took on too much debt via credit cards
> with gotcha features that successfully enticed into a treadmill of
> chronic debt, or now infamous subprime and option-ARM mortgages..
> The widespread, vocal opposition to the TARP was evidence that a
> once complacent populace had been roused. Reform, if proposed with
> energy and confidence, wasn’t a risk; not only was it badly needed,
> it was just what voters wanted.
> But incoming president Obama failed to act. Whether he failed to see
> the opportunity, didn’t understand it, or was simply not interested
> is moot. Rather than bring vested banking interests to heel, the
> Obama administration instead chose to reconstitute, as much as
> possible, the very same industry whose reckless pursuit of profit
> had thrown the world economy off the cliff. There would be no Nixon
> goes to China moment from the architects of the policies that
> created the crisis, namely Treasury Secretary Timothy Geithner,
> Federal Reserve Chairman Ben Bernanke, and Director of the National
> Economic Council Larry Summers..
> Obama’s repudiation of his campaign promise of change, by turning
> his back on meaningful reform of the financial services industry, in
> turn locked his Administration into a course of action. The new
> administration would have no choice other that working fist in glove
> with the banksters, supporting and amplifying their own, well
> established, propaganda efforts.
> Thus Obama’s incentives are to come up with “solutions” that paper
> over problems, avoid meaningful conflict with the industry, minimize
> complaints, and restore the old practice of using leverage and
> investment gains to cover up stagnation in worker incomes. Potemkin
> reforms dovetail with the financial service industry’s goal of
> forestalling any measures that would interfere with its looting. So
> the only problem with this picture was how to fool the now-
> impoverished public into thinking a program of Mussolini-style
> corporatism represented progress.
> The list of evidence supporting this view is so lengthy that I am
> certain to miss quite a few items: the lack of serious
> investigation, the phony stress tests, the perpetually missing in
> action DOJ, allowing the banks to exit the TARP pronto, the mortgage
> fraud whitewash investigation, the clever sidelining of Elizabeth
> Warren, the way too weak Dodd Frank legislation, which is being
> watered down further with the blessing of Timothy Geithner. And
> speaking of legislation, gee, if it was really that hard to
> prosecute bank miscreants, why wasn’t that incorporated in Dodd
> Frank? Awfully convenient to notice that supposed oversight now,
> with no hope of getting a tough bill passed at this juncture and
> statutes of limitations running out.
> Frankly, the fact that the Administration has joined Khuzami in the
> “oh, it’s SO hard to prosecute” messaging leads me to believe the
> SEC really will throw the case. It’s plenty clear this
> Administration has let the people who really count know it has no
> intention of ever carrying a stick.
http://www.nakedcapitalism.com/2011/12/obama-road-tests-hopey-changey-big-lie-2-0-hell-reincarnate-as-teddy-roosevelt-if-you-are-dumb-enough-to-be-fooled-twice.html
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