The SEC does not have prosecutorial power. Neither do the FDIC, the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC) or the New York Stock Exchange. They do, however, have investigative authority, and are responsible for being on the alert for fraud and criminal activity in the financial sector. Supposedly, they do an investigation, gather evidence, and then present the case to the Justice Dept. The Justice Dept. then brings the criminal case to court and presumably justice rules the land and the bad guys go to jail. Oddly, no-one has been indicted, much less gone to jail, for the fraud, forgery, insider trading, perjury, bribery, and other assorted crimes committed by the banking sector since 2007, leading to the financial meltdown. The practices continue, the bankers make huge bonuses and profits, cities get ripped off and homeowners lose their houses to companies that cannot show they own the mortgages. There is no doubt that crimes have been and continue to be committed. Why is no-one going to jail?
Obama’s Mortgage Fraud Task Force is supposed to be handling investigations and bringing charges, but it is apparently being stripped of funds and staff – if indeed it ever actually had any of either other than on paper – by the same Justice Dept. that is supposed to be running it. Obama said in January, “This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.” Well, okay, lay it on me, babe. You let the banks get off with a measly $25 bb fine, most of which will come from taxpayer funds rather than the banks themselves, and wrote in the settlement that the individual states could use the money for whatever they choose, rather than actually helping homeowners, but the Task Force is going to investigate and bring criminal charges on some of the perps, right? Some of the assholes are gonna pay, right?
Here are excerpts from a couple of articles. I have faith that you can connect the dots for yourself.
7/10/12, Richard Eskow
More and more Washington insiders are asking a question that was considered off-limits in the nation’s capital just a few months ago: Who, exactly, is Attorney General Eric Holder representing? As scandal after scandal erupts on Wall Street, involving everything from global lending manipulation to cocaine and prostitution, more and more people are worrying about Holder’s seeming inaction — or worse — in the face of mounting evidence.
Confidential sources say that the President’s much-touted Mortgage Fraud Task Force is being starved for vital resources by the Holder Justice Department. Political insiders are fearful that this obstruction will threaten Democrats’ chances at the polls. Investigators and prosecutors from other agencies are expressing their frustration as the ever-rowing list of documented crimes by individual Wall Street bankers continues to be ignored.
Meanwhile the scandals and revelations go on. The new LIBOR rate-fixing scandal led the bank-friendly and conservative magazine The Economist to run a cover about “Banksters” and to publish a piece entitled “The rotten heart of finance.” People like Robert Reich are saying this could be the story that finally brings down the banks.
But there have already been stories — lots of stories, terrible ones — about corruption, bribery, perjury, forgery and a dozen different kinds of fraud. There have been stories about laundering money for the Mexican drug cartels, including a new lead that surfaced this week. There’s already ample evidence that Wall Street bankers have defrauded cities, deceived investors and cheated their own clients.[…]
The problem isn’t a shortage of scandalous stories. We’ve seen a lot of those. What we haven’t seen, at least here in the United States, is a single indictment of a senior Wall Street banker from the United States Department of Justice. And that’s what has these political insiders concerned.
A growing number of people are privately expressing concern at the Justice Department’s long-standing pattern of inactivity, obfuscation and obstruction. Mr. Holder’s past as a highly-paid lawyer for a top Wall Street firm, Covington and Burling, is being discussed more openly among insiders. Covington & Burling was the law firm which devised the MERS shell corporation that has since been implicated in many cases of mortgage and foreclosure fraud.[…]
The Mortgage Fraud Task Force stands at the heart of the latest controversy.[…] One source familiar with the task force said that other federal agencies were actively participating in the process, but that the Justice Department was preventing the group from getting even the relatively meager resources promised to it by the Justice Department.
While nobody provided precise numbers, several sources said the Task Force could show concrete results with twenty or thirty more staff members. Yet Holder’s Justice Department won’t make them available, said one source. By contrast, Republican officials allocated more than one thousand people to investigate the savings and loan scandal.[…]
Several of the people we spoke with expressed concern that senior Administration officials like Holder may be protecting their relationships on Wall Street because they hope to resume their careers there after leaving public service.[…]
It’s not as if there’s a shortage of suspects for the Justice Department to pursue. We examined the role of accounting firm PricewaterhouseCoopers in the AIG scandal. Now it’s been implicated in the LIBOR scandal. As American Banker points out, PwC had at least two opportunities to catch the LIBOR deceptions. We would add that auditors have a legal obligation, at least in this country, to report any irregularities before signing off on the bank’s financials.
And while a British official wants false reporting of lending rates (the heart of the LIBOR story) to be made illegal, fraud and misrepresentation already are illegal. Then there are the numerous violations of law admitted to by JPMorgan Chase. In the case of GE Capital, investigators were stunned by the lack of prosecutions after the SEC identified individuals inside that bank who prepared fraudulent documents.[…]
Meanwhile in the absence of punishment the bankers’s behavior is getting more and more extreme, like pyromaniac children begging to be caught. Some examples:
Wells Fargo has already been implicated in the laundering of money for the Mexican drug cartels that have murdered as many as sixty thousand people, as well as having been found to have engaged in some of the most egregious borrower fraud. Now, as attorney Field notes, it’s even illegally closing the bank accounts of unfriendly bloggers to extract revenge.
Despite its massive rap sheet, which includes investor fraud and the bribing of Alabama officials, and despite the SEC investigation of its “London whale” debacle, JPMorgan Chase is is defying a subpoena in California and refusing to turn its emails over to a judge. It’s charged with the same kind of criminal activity that was behind the Enron scandal: manipulating energy markets.
And despite Jamie Dimon’s suggestion that the head of the “London whale’s” group would be forced to return her ill-gotten millions, she was allowed to resign and keep the money. There’s no sign that a criminal investigation of this affair is underway, despite Dimon’s own admission that laws may have been broken.
Field also points out that Barclays has been caught red-handed at similar kinds of fraud before, but they didn’t stop. Without indictments, why would they? Those settlements are just the cost of doing business — a cost someone else pays, while the criminals themselves get rich.
The SEC and state law enforcement officials have been moving, issuing “Wells notices” (an SEC document sent to banks under investigation) and searching for information. That much is a matter of public record. Where’s Mr. Holder?
But there’s no evidence that Mr. Holder’s Justice Department has mounted a serious effort to investigate bank crime. Its first, much-touted “coordinated effort” to crack down on mortgage fraud turned out to be a PR trick, not a law enforcement effort, which the Columbia Journalism Review described with the headline, “The Obama Administration’s Financial-Fraud Stunt Backfires.” That’s not the kind of press a President wants to see repeated in an election year.[…]
While nobody we spoke with was willing to raise the subject of a Holder resignation, they did insist that time was running out for the Attorney General to show concrete results.
Without criminal investigations and indictments, bankers will continue to commit crimes. The LIBOR scandal, which implicates a number of leading banks, proves that. The Justice Department’s inaction is putting the world economy at risk by allowing bankers to continue their reckless and illegal behavior.[…]
The US Securities and Exchange Commission is quickly running out of time to file charges against financial firms and high-level executives involved in fraud and other crimes leading up to the 2008 financial crisis.
Federal laws require the SEC to file official charges within five years of the alleged crimes due to a statute of limitations. Officials at SEC, according to the Wall Street Journal, are now scrambling to file lawsuits before the five-year time limit runs out.
In one example, experts believe that the SEC should file a civil lawsuit against bankers involved in the high profile ‘Delphinus deal’ no later than next Thursday. Delphinus, a $1.6 billion deal, was a subprime mortgage scam which collapsed within months during 2007 and was a major player in the widespread financial collapse.
A criminal investigation into that deal began months ago; however, prosecutors have yet to file charges.
The failure of the SEC to file charges and allow these crimes to go unchallenged “feeds the public sense of cynicism,” Arthur Wilmarth, a law professor at George Washington University and consultant to the Financial Crisis Inquiry Commission, told the Journal.
4/9/12, David Dayen
CREDO, the online progressive organizing group, alleges in a new email to supporters that the Justice Department has not delivered the promised (and paltry) number of 55 staff members to the RMBS working group, the task force co-chaired by New York Attorney General Eric Schneiderman to investigate the mortgage securitization practices of the leading banks.
We have heard very little from that task force since it was inaugurated in January, and CREDO has become the first progressive group to come forward with their concerns. But more is coming. This is the kickoff of a pressure campaign among several groups, querying the Administration in public about what was described to me last week as “the case of the missing task force.”
CREDO starts by asserting that 55 staffers from the Justice Department are not nearly enough to tackle a multi-trillion dollar fraud. Comparable investigations of much smaller financial crises, like the savings and loan scandal or the Enron collapse, have featured investigation staffs that were several orders of magnitude larger.
But the really damning charge is here:
“And now we’re hearing from insiders in Washington DC, that the full complement of 55 promised investigators — which is already not nearly enough — haven’t even been deployed to the task force […]
“The 55 investigators promised to the financial crimes task force is not nearly enough. And to find out that President Obama hasn’t delivered on those investigators, let alone resourced the effort at the levels appropriate to the biggest financial fraud in U.S. history, is shocking.”
In addition, CREDO alleges that none of the other co-chairs of the task force, including three Administration officials who were already on previous financial fraud task forces that amounted to little, “has done literally anything that achieves our goal of holding banks accountable or prosecuting bankers for criminal activity.”
This matters not just because of broken promises, but because the foot-dragging has serious consequences. Many of the various types of fraud that this task force is supposed to be investigating have statutes of limitations, some of which will run out on the very last securitization deals completed before the housing bubble collapsed. There are several 10-year statutes of limitations, particularly through the federal law FIRREA. But other statutes have a 5-year limit, and the last deals were made in 2007. So this looks suspiciously like running out the clock.