“The Corruption Is Complete”: Where’s The Cop On The Wall Street Beat?
Bankers gone wild! Let’s tally some of their crimes:
JPMorgan Chase engaged in massive, systematic fraud to foreclose without cause or due process on innocent homeowners, tossing thousands of families into the streets.
Goldman Sachs profited by marketing an investment package that was designed to fail, collecting fat fees on each sale to unsuspecting investors who lost millions, while the bank also collected millions more from a side bet it made that, sure enough, its package would be a loser.
For years, HSBC has been butt-deep in a swamp of despicable, illegal money-laundering schemes, willingly processing billions of dirty dollars for vicious drug cartels and peddlers of arms to terrorist forces at war with America.
Many more examples abound. These are not poor saps desperately robbing a bank branch for a few hundred dollars, but criminal enterprises run by multimillionaire Wall Streeters who run in the finest social circles, are celebrated by the media and hobnob with the nation’s political elite.
Their corruption is complete; their crimes are documented. Yet, unlike sad-sack bank robbers, none of these Robbing Bankers have even been prosecuted, much less jailed. In fact, as revealed on PBS’s Frontline program earlier this year, frustrated prosecutors who served in the Justice Department’s criminal division two years ago report that “when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”
Why is that? Where are the cops on the Wall Street beat?
Up in the suites, coddling the culprits, whom they know on a first-name basis. That’s because Attorney General Eric Holder and the chief of his criminal division, Lanny Breuer, have previously enjoyed lucrative careers as lawyers defending the very barons they’re now supposed to be prosecuting. Holder and Breuer both hail from the same Washington law firm, Covington & Burling, that specializes in representing corporate clients with legal issues at the Justice Department.
The moral here is clear: When engaged in high crimes, it literally pays to have friends in the highest places.
To transport them there, a secret cosmic door connects the parallel universes of Washington and Wall Street. It’s not the proverbial revolving door, but a wide-open passageway for easy flow back and forth — reserved for those in the know.
Lanny Breuer is one definitely in the know, passing with impunity from the job of defending Wall Street wrongdoers in cases before the Justice Department to being the department’s chief prosecutor of Wall Street wrongdoing.
Four years ago, he left Covington & Burling, where he represented Wall Street clients, to head the criminal division of Justice. Dismissing criticism that his long service to Wall Street banksters created an inherent conflict of interest with his new duty to the public, Breuer insisted that he’d be a better prosecutor “because of my deep experience in the private sector.”
That claim would’ve proven more convincing had he brought even a single case against the Wall Street executives who’ve been publicly exposed as self-enriching perpetrators of widespread fraud and other destructive financial crimes. But, no, not one.
Why? Call me cynical, but perhaps because he was using his four years at Justice to pad his résumé and enhance his value to Wall Street. Protecting bankers from prosecution could be a good career move.
No surprise, then, that Breuer headed back through that cosmic door, rejoining Covington in a specially created position to expand its role in defending corporate clients charged with foreign bribery, money laundering, securities fraud and such. “I’m a zealous advocate,” said the guy who studiously refrained from being a zealous prosecutor. “I look forward to being a zealous advocate for our clients again,” he added.
Sheesh, couldn’t he at least pretend to have some ethics? Instead, Lanny was relieved to be back on Wall Street’s side: “It’s my professional home,” he confessed.” Oh, did I mention that his starting salary at Covington will be $4 million a year?
By: Jim Hightower, The National Memo, April 10, 2013
“Politically Worrisome”: What Are The Worst Things We Could Find In Romney’s Tax Returns?
Mitt Romney’s campaign is taking heat for declining to disclose more than the two most recent years’ worth of his tax information. Even conservative commentators such as The Washington Post’s George Will and the Weekly Standard’s Bill Kristol are saying it’s past time to come clean. Of course, members of Romney’s team, unlike their friends on the outside, presumably know what the documents would reveal, so we should probably assume that they have fairly good reason not to release them. Could the criticism Romney would suffer over the contents of the returns be worse than the criticism he’s getting for not disclosing them? Here are some guesses about legal — but potentially embarrassing — things in Romney’s tax returns:
Profits from the financial crash
The vast majority of American families lost wealth in the housing bust of 2007-09 and the financial crisis that came in the middle of it, and millions lost jobs or earnings. But it was possible for a canny or lucky investor to profit from the chaos — especially for a wealthy individual with access to unusual financial products. Maybe Romney made a lot of money through bets on skyrocketing foreclosures or well-timed investments in bailed-out banks. There’s nothing wrong with smart financial planning, but making money on the crash could be awkward for a politician. There’s a tension between promising to make things better and profiting off human misfortune.
A low tax bill because of the crash
There’s also the possibility that Romney’s investments lost some value during the crash years and that he combined this with aggressive exploitation of loopholes to pay a strikingly low tax bill. One rumor was that he managed to pay nothing in taxes, something his campaign has denied. But would paying $2.75 really look all that different from paying $0? A super-low tax bill would turn Romney into the poster child for President Obama’s very popular “Buffett rule” proposal, which aims for a minimum tax level on high-income individuals.
Swiss bank amnesty
We know from the tax documents Romney has released that he once had a Swiss bank account, a fact that the Obama campaign has played up in ads. But his 2010 tax return did not include a Report on Foreign Bank and Financial Accounts form (“FBAR” to accountants) detailing his offshore investments. In 2009, the Swiss government began to relent on its traditional banking secrecy rules, and banks turned over information about tens of thousands of American tax scofflaws to the U.S. government. To help deal with the crush, the IRS staged a limited-time amnesty in 2009 for American citizens with previously non-disclosed foreign accounts to pay their back taxes without penalty. It’s possible that earlier tax documents or the 2010 FBAR would show that Romney took advantage of the amnesty. While legal, this would amount to a problematic confession of past wrongdoing.
None of the above
The possibilities are endless. Romney’s vast wealth has already provided plenty of campaign fodder — from his car elevator to his proposed $10,000 bet with Texas Gov. Rick Perry during a debate — so almost any additional details about his finances would add fuel to the fire. But the most likely candidates for compromising revelations could relate to the 2008-09 period. Romney isn’t disclosing his 2006 or 2007 taxes, but by his own two-year standard he would have had to if he had won the 2008 Republican nomination. That makes the time between his presidential runs — a period that coincides with major upheavals in financial markets and bank secrecy practices — far and away the most likely window for something more politically worrisome than a reputation for reticence.
By: Matthew Yglesias, The Washington Post, July 20, 2012
A Threat To “Religious Freedom”: Are Church Foreclosures By Banks Off Limits To Criticism?
Here’s a sad item from Reuters’ Tim Reid:
Banks are foreclosing on America’s churches in record numbers as lenders increasingly lose patience with religious facilities that have defaulted on their mortgages, according to new data.
The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance.
Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group.
In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before.
The church foreclosures have hit all denominations across America, black and white, but with small to medium size houses of worship the worst. Most of these institutions have ended up being purchased by other churches.
The highest percentage have occurred in some of the states hardest hit by the home foreclosure crisis: California, Georgia, Florida and Michigan.
Do you perhaps think the closure of churches in the midst of a Great Recession might be as much a threat to the free exercrise of religious expression as, say, a requirement that church-affiliated institutions allow their insurance companies to provide contraception coverage for their employees? I haven’t heard a peep about it from major religious leaders, much less conservative politicians. Bankers wanting their payments are apparently off-limits to criticism, unlike a president trying to ensure something within shouting distance of equality in access to health care.
By: Ed Kilgore, Washington Monthly Political Animal, March 10, 2012
“Blind Trust Ruse”: Romney Does Not Dispute He Profited From Foreclosures In Florida
ThinkProgress reported Wednesday that former Massachusetts Gov. Mitt Romney (R) has profited from thousands of Florida foreclosures through a Goldman Sachs investment fund. Former House Speaker Newt Gingrich (R) blasted Romney on the trail today for those investments, and re-upped those attacks in tonight’s CNN debate.
Romney attempted to explain away the investments, saying he didn’t control them because they were part of a blind trust:
GINGRICH: Governor Romney has investments in Goldman Sachs, which is today foreclosing on Floridians. So maybe Governor Romney, in the spirit of openness, should tell us how much money he’s made off of how many households that have been foreclosed by his investments.
ROMNEY: First of all, my investments are not made by me. My investments for the last 10 years have been in a blind trust, managed by a trustee. Secondly, the investments they’ve made, we’ve learned about this as we made our financial disclosure, have been made in mutual funds and bonds. I don’t own stock in either Fannie Mae or Freddie Mac. There are bonds the investor has held through mutual funds. And Mr. Speaker, I know that sounds like an enormous revelation, but have you checked your own investments? You also have investments through mutual funds that also invest in Fannie Mae and Freddie Mac.
Watch it: http://youtu.be/A8Dg4wpZNRo
Notably, Romney never denied the charge that he made money off of foreclosures. Later in the debate, Romney was asked about the $3 million he kept in a Swiss bank account before it was closed in 2010. Again, Romney attempted to brush aside the question, saying, “I have a trustee” who manages a blind trust.
Romney’s reliance on blind trusts is interesting, considering it was he who called them “a ruse” when running against former Sen. Ted Kennedy (D) in 1994. And as ABC News noted, the trusts are “not so blind,” since they have been noted on his financial disclosure forms. The trusts are also maintained by Romney’s personal lawyer and don’t meet federal standards for elected officials. Romney’s original investments into Fannie Mae and Freddie Mac, meanwhile, were never in a blind trust.
By: Travis Waldron, Think Progress, January 26, 2012
Have Banks Been Robo-Signing Credit Card Documents Too?
Several months ago, the nation’s biggest banks became embroiled in the “robo-signing” scandal, when it became clear that they had been approving thousands of foreclosures without verifying the proper documents or guaranteeing borrowers due process. The banks submitted fraudulent documents to courts and were forced to halt their foreclosures processes entirely as they sorted out what happened. “I had no idea what I was signing,” said one Bank of America employee. “We had no knowledge of whether the foreclosure could proceed or couldn’t, but regardless, we signed the documents to get these foreclosures out of the way.”
Robo-signing people into foreclosure is bad enough. But as it turns out, the practice may not have been limited to residential mortgages. American Banker, in fact, notes that JP Morgan Chase may also have been robo-signing credit card deals:
JPMorgan Chase & Co. has quietly ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments…It is unclear whether Chase has stopped pursuing collection on many claims nationwide, or if intends to pursue the debts in some other fashion. The bank has not explained its apparent moratorium and declined comment.
Chase’s halt does, however, follow scattered defeats in state courts and a whistle-blower’s allegation that it falsely overstated the balances of thousands of delinquent accounts it sold to a third party. Former Chase employees and debt collection experts insist that the bank would not have abruptly retreated from its collections efforts in the absence of trouble. […]
Robo-signing, or the high-volume production of signed legal documents, has been a key element of the governmental and media foreclosure reviews. Chase’s current pullback raises at least the possibility that at least some banks may have documentation problems in other business lines…”If sloppy record keeping and problems with false affidavits is a problem with mortgages, it’s 100 times bigger in credit card accounts,” says Michelle Weinberg of the Legal Assistance Foundation of Metropolitan Chicago.
As one finance blogger put it, “When a bank leaves money on the table for no obvious reason, you know that something’s not quite right.” It seems that JP Morgan, and who knows how many other banks, were attempting to collect on debts without being certain that the amount they were asking for was accurate. One whistle blower looked at $200 million in JP Morgan customer accounts and claims to have found that “half the accounts lacked adequate documentation of judgment and one-sixth listed the wrong amounts owed.”
Banks have been robo-signing documents since as least 1998, as an Associated Press investigation found, and its not all that surprising that a practice that worked so well for so long (at least in the eyes of the banks) would have migrated to other areas.
By: Pat Garofalo, Think Progress, January 17, 2012
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