The Fourteenth Banker Blog

May 10, 2010

Financial Crime, the Statute of Limitations, and Simon Wiesenthal

Filed under: Uncategorized — thefourteenthbanker @ 2:44 AM

It was asked, what would the 14th Banker find essential in Financial Reform legislation?  I will take one piece of that question today because today I am angry.  I was thinking about Civil versus Criminal consequences and the lack of prosecution that has gone on in regard to the financial crisis.    Today the European Union announced a bailout of immense proportion to try to stabilize the Eurozone and bring the immediate market turmoil to an end.  One reason that such is required is that there has been theft.  The usual bunch of suspects are implicated.

I am certain that the penalties for financial crimes are lax.    I am equally certain that financial crimes were committed and that these are egregious, premeditated, and extremely lucrative.  If somebody (the SEC for example) fines a company after the fact for crimes that were committed by individuals who were enriched by the crime, justice has not been served.  Individuals must be held responsible.

I looked at the FBI web site.   This tells me that the value of all property crime in America in 2007 was $17.6 Billion.   That’s just a Thursday’s work on Wall Street.   In 2008 approximately 2.4 million Americans served time, most for drug or property crime.  How many of these had worked on Wall Street?   I’m sure it’s not many.

The transactions that have contributed to the financial crisis are immensely complicated and the firms engaging in them can effectively obfuscate.    Identifying individuals, providing just punishment, and the removal of such individuals from society will take a long time.  It is certain that the vast majority will go unpunished.  The New York Statute of Limitations seems grossly insufficient given the magnitude of these crimes.  Further, the class of felony that such crimes fall into should be reviewed.

If Goldman or others had information on the financial status of Greece that was not public information, then traded on that information in the CDS or currency markets, they have traded on inside information.  This is in addition to the multitudes of other violations which are already alleged.  Where are the arrests?   I understand the investigations may take a long time.  Quite honestly, the effective prosecution of such crimes may take decades.

Who is our Simon Wiesenthal?  Who will track down these criminals in the coming months, years, decades?  Perhaps we need some old men to spend their last years in prison after thinking they effectively fleeced the world.  Perhaps the cycle of crises can be mitigated if the prosecution for these particular crimes continues for decades and every so often Wall Street is reminded that there is no sanctuary and that individuals will be hunted down at whatever time in whatever place.

Do not tell me these are small matters.  People starve when you manipulate markets to speculate the price of corn up 100%.   People die when you do not put proper safety equipment on a well to save a half million bucks and then destroy an ecosystem.   Some people jump onto subway tracks.  Some have heart attacks when their life savings are gone.  Some burn to death in street riots.  Do not tell me these are small things, errors in judgment, rogue actions.  If we have figured out anything, have we not figured out that these are systemic problems and that the institutions involved make decisions that the rewards justify the risks, not just financial risks, but also the risks of sanctions or prosecution of any sort?  Are we going to do anything to alter the balance of risk and reward so that the rational decision is to do the right thing?

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15 Comments »

  1. Your observations are, of course, spot on. And maybe Vocalbanker’s suggestion for a Million OUTRAGED Consumers (or should we say “victims”?) march is in order. I have marched those streets before, and can again.
    I fully agree that not aggressively pursuing these as the crimes they are is unconscionable. It turns the phrase, “justice delayed is justice denied” around 180 degrees.
    Of course, people are injured and die due to the negligence and arrogance of the corporate honchos. Why do we still find their total lack of giving a rat’s posterior surprising???
    I have often wondered how the men and women who run companies that rampantly pollute and cause environmental destruction, can do so if they have children and grandchildren. Do they honestly believe their money will shield their family members from the effects of such activities? Whether you believe humans are causing climate change or not, the facts are more and more certain that climate change IS HAPPENING. This is only one area where the leaders of the corporate world do great harm.
    This is the total denial their getting away with it has brought about. They have gotten away with grand larceny in one way or another for decades. Until or unless we do as you suggest, and start prosecuting these thugs like the criminals they are, we won’t see anything change.
    Anyone know where we can find an honest law enforcement official to take them on? How about RICO laws?

    Comment by Sandi — May 10, 2010 @ 4:17 PM | Reply

  2. Victim, very true, bankers, consumers, borrowers , we have all been abused and victimized by this systematic corruption.

    But we all need to know one thing-INACTION is a CHOICE as is ACTION. True the banksters chose to ACT but we are choosing to INACT and that will be costly.

    How about a million signatures condemning cogress, white house, senate and all on their poor show of financial reform sent with love to Obama?

    A chain of email forwarded and supported by a million Americans!!!! Final words by Mr 14!

    I say we do it!!!

    Comment by Vocalbanker — May 10, 2010 @ 5:58 PM | Reply

    • Where do I sign? LOL. Seriously, regarding mailing anything – I spoke to one congressman whom I do trust and he said never snail mail anything you want members to see in a timely manner – the anti-anthrax, etc. screening takes too long. He said either fax it or mail it to their home (district) office.
      I was thinking about this last night, because we do want to act ASAP. I wondered about faxing, but decided it would probably be too costly and cumbersome. Also, emails don’t always work because most congressmen and senators have their webpages set up to only accept email from constituents. Unless we could bundle names from each district? Any ideas?

      Comment by Sandi — May 10, 2010 @ 6:25 PM | Reply

    • Where do I sign? 🙂 Seriously, regarding mailing anything – I spoke to one congressman whom I do trust and he said never snail mail anything you want members to see in a timely manner – the anti-anthrax, etc. screening takes too long. He said either fax it or mail it to their home (district) office.
      I was thinking about this last night, because we do want to act ASAP. I wondered about faxing, but decided it would probably be too costly and cumbersome. Also, emails don’t always work because most congressmen and senators have their web pages set up to only accept email from constituents. Unless we could bundle names from each district? Any ideas?

      Comment by Sandi — May 10, 2010 @ 6:26 PM | Reply

  3. Martin Wolf has some good suggestions, IMO, in the Financial Times –
    http://www.ft.com/cms/s/0/cca02e40-522d-11df-8b09-00144feab49a.html?ftcamp=rss

    Comment by Sandi — May 10, 2010 @ 6:56 PM | Reply

  4. Very good answer. I recall past financial reforms attempting to address the issue that you brought forth. What can be done differently this time around to ensure the issue at hand is actually resolved?

    Comment by 15th Banker — May 10, 2010 @ 7:51 PM | Reply

  5. I’d like to subscribe to your blog via email or twitter….is this possible?

    Comment by Pete — May 10, 2010 @ 5:26 PM | Reply

  6. Agree with Martin Wolf’s suggestions, but also recognize this is a longer-term solution. In the meanwhile, banks will continue to manipulate the market like we saw in last week’s precipitous drop/half-recovery.

    Never underestimate the value of the regs/laws currently in place, as short-term plugs. There’s nothing like a little jail time to get bankers’ attention.

    Comment by lucyhoneychurch — May 10, 2010 @ 11:16 PM | Reply

  7. I believe your thesis — that without stronger criminal consequences, and a far more likely chance of being charged, tried, and found guilty — the people perpetrating crimes are going to continue.

    I wonder whether some of them even know what they do; others, quite obviously know what they do. If they didn’t, they’d be far more willing to clearly and completely answer questions in public places, including Congressional hearings.

    But I also believe that the reforms and consequences have to go all the way to revamping corporate structures. As long as someone can claim that it was their ‘fiduciary duty’ to maximize profits, we’ll continue to enable individuals to condone (in their own minds) reprehensible conduct — as long as Goldman or other bank employees can claim that their duty to corporate profits overrides social obligations, we’re toast.

    Frankly, it’s in the banker’s interest to push for tighter criminal standards, if only to protect a business sector that currently seems to have become almost a synonym for criminality and mob-like extortion.

    A Simon Wiesenthal would start by creating a narrative of deaths, traumas and harm done to individuals and families. And then he’d build from there into a larger, epic story.

    Comment by readerOfTeaLeaves — May 10, 2010 @ 8:47 PM | Reply

  8. For all readers of this blog, please watch “The Corporation”

    it’ll make your stomach churn!!!! But will go a long way in proving that the ultimate solution to all this some day might be a million people on Capitol Hill.

    Comment by Vocalbanker — May 10, 2010 @ 11:40 PM | Reply

    • Thanks for the tip, Vocalbanker – I will order it today. Meanwhile, I read the NYTimes review from 2004 – the reviewer basically said it proves that the unrelenting pursuit of profit at all costs (pun intended), has become sociopathic in its result. Since corporations have been given personhood, they should be held to the same standards that individual persons are, and society should be able to throw the book at the whole management team. Send ’em all to jail!
      It is the lack of such adherence to “the rule of law” when it comes to the powerful and well connected that all Americans should be up in arms over.

      Comment by Sandi — May 11, 2010 @ 7:30 AM | Reply

  9. Neil Barofsky has issued a scathing report about the inept handling by Treasury of the bail-out, regarding keeping good records, etc.

    http://www.huffingtonpost.com/2010/05/11/treasury-bailout-records_n_571226.html

    “When a brief telephone call can mean the difference of tens of billions of dollars, it is a basic and essential element of transparency and accountability that the substance of that call be documented,” Barofsky writes.

    So, my question is, assuming we were to get some real criminal investigation going, how much evidence has fallen through the cracks, and more importantly, was it deliberate? Not to sound too paranoid about it, but how much “protection” has Wall St. REALLY gotten from government officials?

    Comment by Sandi — May 11, 2010 @ 8:37 AM | Reply

  10. […] 14 here.  Please see previous post, and post, and post and post. […]

    Pingback by No Criminal Charges Against AIG Execs « naked capitalism « The Fourteenth Banker Blog — May 22, 2010 @ 12:01 PM | Reply

  11. Simon Wiesenthal is a fraud just like the entire holoco$$t industry is a fraud. The myth of 6 million Jews dying in gas chambers was invented to justify the creation of Israel. It’s turned into a racket. Do a google search of just how many holoco$$t films have been made and how many books by ‘survivors’ have been written that turned out to be a fraud. The entire industry is a fraud.

    http://www.ihr.org/jhr/v15/v15n4p-8_Weber.html

    Comment by mike — July 25, 2010 @ 10:42 AM | Reply


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