Voices from Russia

Saturday, 15 September 2012

Four Years After Lehman Collapse: No Top Wall Street Prosecutions in Sight

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On 15 September 2008, investment bank Lehman Brothers filed for bankruptcy, igniting a financial firestorm that sent the global economy careening toward the abyss. Four years on, not a single senior Wall Street executive has faced prosecution over the disaster. According to securities experts and former regulators, this absence of criminal accountability for a crisis that cost the American economy trillions of dollars in GDP and wiped out billions more in personal wealth amplifies the risk of a similar financial meltdown in the future.

John Coffee, a professor at Columbia Law School in New York, a prominent expert on securities law and white collar crime, said, “The US government’s entire response to 2008 suggests this could happen again someday. It’s clear that the Justice Department hasn’t been able to find criminal charges it could prosecute, either because it’s very hard to prove complex criminal cases in the financial world or because they were under pressure not to bring such cases, or simply because no one committed fraud. I think that last explanation is a little too simple”.

At the heart of the crisis were complex financial instruments based on “subprime mortgages”… housing loans with a high risk of default… that generated enormous profits for major Wall Street investment banks. Billions of dollars of taxpayer money rescued many of these institutions when the underlying value of these instruments collapsed. The crisis, which began in 2007 and was accelerated by Lehman’s filing for bankruptcy protection, cost the American economy at least 12.8 trillion USD (391.8 trillion Roubles. 9.75 trillion Euros. 7.9 trillion UK Pounds), according to a report released this week by the independent financial reform watchdog Better Markets… and it called its estimate conservative.

The Securities and Exchange Commission extracted several settlements from major Wall Street players… including a 550 million USD (16.85 billion Roubles. 419 million Euros. 339 million UK Pounds) settlement from Goldman Sachs over charges that the firm defrauded investors in its subprime mortgage products. However, Goldman wasn’t required to admit wrongdoing as part of the deal. Last month, the US Department of Justice said it wouldn’t prosecute Goldman because the “burden of proof to bring a criminal case couldn’t be met based on the law and facts as they exist at this time”. The US Senate Permanent Subcommittee on Investigations made a criminal referral to the Justice Department accusing Goldman of misleading investors in mortgage products, prompting a harshly worded statement from the committee’s co-chair, Senator Carl Levin (D-MI), who said, “The integrity of our financial markets and the strength of our economy demand that we make sure that actions such as Goldman Sachs’ and other recently discovered misdeeds by financial institutions are ended”.

The Justice Department didn’t respond to a request for comment Friday about the lack of prosecutions of top executives involved in the financial crisis or about the possibility that such prosecutions may be coming in the future. Regulatory bodies like the SEC don’t have prosecutorial powers, although they can exact civil penalties and make criminal referrals to the Justice Department. Former SEC staff lawyer Gary Aguirre However said, “A revolving door between Wall Street and the SEC creates a situation in which regulators are hesitant to vigorously pursue investigations of malfeasance by companies that could be their future employers. If we were to have a war on drugs, and you wanted to bring some tough prosecutors into the Department of Justice, would you reach out to the cartels and ask them for their recommendations?”

Aguirre pointed up that SEC officials can leave the agency and take their expertise to Wall Street firms, where they’re paid tenfold what they earn as public servants. Aguirre was acrimoniously fired from the SEC in 2005 after he began investigating insider trading at the major hedge fund Pequot Capital Management. The investigation was dropped the following year, and, in 2010, the SEC agreed to pay him a 755,000 USD (23.1 million Roubles. 575,000 Euros. 465,000 UK Pounds) wrongful termination settlement. The SEC declined to comment on criticism that it maintains a revolving door personnel policy. However, its director of enforcement, Robert Khuzami, said in comments to Reuters last month that his staff “wouldn’t risk reputation and career and even jail by undermining an investigation for a possible future job prospect”. Khuzami served as general counsel at Deutsche Bank from 2002 to 2009.

President Obama told CBS News in an interview last December that whilst many of the practises that precipitated the crisis were unpalatable, “some of the most damaging behaviour on Wall Street, in some cases, some of the least ethical behaviour on Wall Street, wasn’t illegal. That’s exactly why we had to change the laws. That’s why we put in place the toughest financial reform package since FDR and the Great Depression”, citing the Dodd–Frank Wall Street Reform and Consumer Protection Act he signed into law in 2010.

William Black, a former federal bank regulator and a professor of economics and law at the University of Missouri-Kansas City, said that the deluge of Wall Street money pumped into political parties creates a political atmosphere in which officials may be unwilling to push for criminal prosecutions of the financial élite. According to the Center for Responsive Politics, which tracks money in politics, Wall Street contributed 154 million USD (4.7 billion Roubles. 117.5 million Euros. 95 million UK Pounds) to political candidates and campaigns this year, whilst Obama and his Republican challenger, Mitt Romney, received 4 million USD (122.5 million Roubles. 3.05 million Euros. 2.475 million UK Pounds) and 11.5 million USD (352 million Roubles. 8.75 million Euros. 7.1 million UK Pounds), respectively, in contributions from Wall Street in this presidential campaign. Professor Black, who served as the US government’s director of litigation during the savings and loan crisis, which resulted the conviction of more than 1,000 financial executives, said, “None of these people was bribed… no prosecutors were bribed, but they didn’t have to be. It’s very convenient not to see a leading donor as a potential criminal”.

15 September 2012

Carl Schreck

RIA-Novosti

http://en.ria.ru/business/20120915/175965611.html

Editor’s Note:

Let’s keep it focused. The 2007 Meltdown had an immediate cause in the inane Bush II tax cuts to the rich and his concurrent expensive warmongering in foreign parts, but its ultimate cause was Slobberin’ Ronnie‘s Great Deregulation. It’s time to roll-back anarchistic Social Darwinist Neoliberal Libertarian “reform” and return to the regulated pre-1981 economy, as that was more fair than the present rapacious buccaneer system. It’d also be fair to have a one-time tax surcharge on all taxpayers with a net worth of over 5 million present-day baloney dollars. These are the people who’ve raped the country since Ronnie’s day, and, truly, they’ve got to pay for having screwed people over. It’s not an “impossible dream”…

Reflect on this… the “evangelicals” (and the pseudo-Orthodox who ape them) support “Greed is Good” Neoliberal Libertarianism… that’s not even Christian, kids. After all, Our Lord Christ did NOT say, Come unto me all ye who are rich and high in estate, for it is unto these the Kingdom of Heaven belongs. Nope, He sure did NOT say that.

BMD

Friday, 11 May 2012

US Court Upheld the Use of Torture

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The United States Court of Appeals for the Ninth Circuit in San Francisco rejected the suit of American José Padilla, against John Choon Yoo, the author of the Bush administration’s policy on torture. In a statement, filed in 2008, Padilla demanded that the court acknowledge that the use of interrogation methods approved of in the so-called Torture Memos penned by US Justice Department staffer John Yoo violated the US Constitution. In 2009, a district judge rejected John Yoo’s plea for immunity, allowing a further case review. However, the case review led to the rejection of the claim. Once again, this situation pointed up that the torture of prisoners remains a pressing problem in America. Even if the Padilla case is a legacy of the Bush era, we shouldn’t forget that Obama hasn’t fulfilled his promises to do away with the use of torture as policy.

Chicago police arrested José Padilla, a former gang member who accepted Islam in prison, in May 2002 on suspicion of involvement in terrorist conspiracy. According to a US executive order, US officials considered Padilla an enemy combatant, automatically depriving Padilla of the possibility of having his case heard in civil court. The authorities placed him in a military prison, where they used torture, including sleep deprivation, the use of psychotropic drugs, and prolonged solitary confinement. John Yoo’s (then, a Deputy Assistant Attorney General) memo approved of these and other methods of “influencing” prisoners.

Padilla received a sentence of 17 years and four months imprisonment, which was much milder punishment than the prosecution demanded. Notwithstanding, Padilla said that the 3½ years he spent in military custody without charges caused serious damage to his mental and physical health. When he submitted his claim against Yoo, he demanded a symbolic compensation of one dollar. However, as the Court of Appeals decision demonstrated, Padilla’s hopes for justice didn’t fly. The court decided to dismiss the claim, stating that at the time John Yoo wrote the memo, the concept of torture in US law wasn’t clearly stated. In addition, the court ignored the plaintiff’s statements that the physical conditions at the military prison and that the torture inflicted on him caused considerable damage to his health.

Despite the fact that Padilla elicited little sympathy as a terrorist accomplice, one can’t help but notice that the line of conduct of the American government is highly questionable. To reject his claim, the court resorted to well-known bureaucratic tricks. Don’t forget that any American can face charges of abetting terrorism; this isn’t just a relic of the Bush era, it’s true today, too. Once again, recent scandals involving the FBI‘s use of entrapment to enmesh people proved that it’s much easier to find oneself in a military prison than one realises. A striking example of this was the arrest of Kalifah al-Akili, a Pittsburgh resident, who managed to send a letter to human rights organisations that told them of his victimisation by a conspiracy of government agents. It is worth noting that in an interview in The Guardian, former FBI informant Craig Montell said that the Bureau used spies to shadow Muslims and to attempt to create artificial terrorist plots.

Be that as it may be, once you’re in a military prison you’ve virtually no chance of avoiding torture. As shown by numerous examples, the situation hasn’t changed much since the international scandal caused in 2004 when the American media outlet CBS reported on the abuse of prisoners in military custody at Abu Ghraib, where people were humiliated, beaten, and tortured with electric shocks. After all, if the court satisfied Padilla’s claim, it could create a very undesirable precedent for the US government, therefore, the court’s decision to reject the prisoner’s claims are hardly a surprise to anyone. At the same time, one should note that these methods could only promote an atmosphere of mistrust towards the authorities and ultimately foster the growth of extremist tendencies amongst certain groups of Americans.

5 May 2012

Vladimir Gladkov

Voice of Russia World Service

http://rus.ruvr.ru/2012_05_05/73867816/

Editor’s Note:

If you had told Ike Eisenhower, Jake Javits, Rocky, Barry Goldwater, or Gerald Ford that the Republican Party would unashamedly and publicly defend torture and “preventive detention”, they’d be aghast and rightly so. “That’s NOT American! That’s what the Nazis did!” Oh, I forgot… King Rush and Queen Ann call them “Republicans In Name Only!” Oh, dear… my bad! I have to remember… only Republicans AFTER Slobberin’ Ronnie (the Father of the McJob and the Defender of the McMansion Set) count… and, then, only some of them (the ones with impeccable records of sucking up to the teabaggers or their equivalent).

Barack Obama isn’t perfect by a long shot… but he’s not even a tithe of what Willard Romney and his beetle-browed heavily-armed Born Again Storm Troopers would do, if given half the chance. Mr Gladkov wrote, it’ll “foster the growth of extremist tendencies amongst certain groups of Americans”… yes, the over-armed rightwing kooks and ignorant bubba yahoos. That’s what we have to fear, and that’s why we need to re-elect the President. An imperfect centrist democracy or a Radical Right semi-theocracy (with the Born Agains having veto power)… what do you want? VOTE this November…

BMD 

Tuesday, 17 August 2010

Barclays Bank Received a Fine from the USA for Doing Business with “Rogue States”

Uncle Sam sez, “Pay up, or you’re next!” I think I know what state is a “rouge state”… it “exports democracy” on the weapons-racks of Reaper UAVs. THIS is the true face of the Tea Party…

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Barclays Bank, a British financial institution, must pay a fine of 298 million dollars (9.107 billion Roubles 231.963 million Euros 190.064 million UK Pounds) for conducting “illegal” financial transactions with countries that the US State Department considers “rogue states”. According to the US Department of Justice, amongst the bank’s customers were Cuba, Iran, Libya, Sudan, and Myanmar. Economic and trade sanctions have been imposed against all these countries by the White House. Barclays will pay 149 million dollars (4.554 billion Roubles 115.982 million Euros 95.032 million UK Pounds) to the United States government, and an additional 149 million dollars in accordance with an agreement with the New York County District Attorney’s Office in New York City. It violated both federal and state of New York statutes, sending hundreds of millions of dollars through the US financial system on behalf of banks from Cuba, Iran, Libya, Sudan, and Myanmar, according to prosecutors. In total, the transactions amounted to approximately 500 million dollars (15.28 billion Roubles 389.2 million Euros 318.9 million UK Pounds). However, it’s possible that Barclays will not pay anything, at least, for now. It entered into an agreement with the US Department of Justice for a stay of prosecution for two years. During this period, Barclays agrees not to violate American laws, according to RBC.

17 August 2010

Voice of Russia World Service

http://rus.ruvr.ru/2010/08/17/16031500.html

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