Article 43


Friday, December 14, 2012

Double Standard


Too Big to Indict

NY Times
December 11, 2012

It is a dark day for the rule of law. Federal and state authorities have CHOSEN NOT TO INDICT HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system. They also HAVE NOT CHARGED any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

Clearly, the government has bought into the notion that too big to fail is too big to jail. When prosecutors choose not to prosecute to the full extent of the law in a case as egregious as this, the law itself is diminished. The deterrence that comes from the threat of criminal prosecution is weakened, if not lost.

In the HSBC case, prosecutors may want the public to focus on the $1.92 billion settlement, which includes forfeiture of $1.26 billion and other penalties, as well as requirements to improve its internal controls and submit to the oversight of an outside monitor for the next five years. But even large financial settlements are small compared with the size of international major banks. More important, once criminal sanctions are considered off limits, penalties and forfeitures become just another cost of doing business, a risk factor to consider on the road to profits.

There is no doubt that the wrongdoing at HSBC was serious and pervasive. Several foreign banks have been fined in recent years for flouting United States sanctions against transferring money through American subsidiaries on behalf of clients in countries like Iran, Sudan and Cuba. HSBCs actions were even more egregious. According to several law enforcement officials with knowledge of the inquiry, prosecutors found that, for years, HSBC had also moved tainted money from Mexican drug cartels and Saudi banks with ties to terrorist groups.

Those findings echo those of a CONGRESSIONAL REPORT, issued in July, which said that between 2001 and 2010, HSBC exposed the American “financial system to money laundering and terrorist financing risks.” Prosecutors and Congressional investigators were also alarmed by indications that senior HSBC officials might have been complicit in the illegal activity and that the bank did not tighten its lax controls against money laundering even after repeated urgings from federal officials.

Yet government officials will argue that it is counterproductive to levy punishment so severe that a bank could be destroyed in the process. That may be true as far as it goes. But if banks operating at the CENTER OF THE GLOBAL ECONOMY cannot be held fully accountable, the solution is to reduce their size by breaking them up and restricting their activities - not shield them and their leaders from prosecution for illegal activities.



Outrageous HSBC Settlement Proves the Drug War is a Joke

By Matt Taibbi
Rolling Stone
December 13, 2012

If you’ve ever been arrested on a drug charge, if you’ve ever spent even a day in jail for having a stem of marijuana in your pocket or “drug paraphernalia” in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a SETTLEMENT DEAL with the British banking giant HSBC that is the ultimate insult to every ordinary person who’s ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a RECORD FINANCIAL SETTLEMENT of $1.9 billion, which as one analyst noted is about FIVE WEEKS OF INCOME for the bank.

The banks’ laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC’s Mexican branches and “deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows.”

This bears repeating: in order to more efficiently move as much illegal money as possible into the “legitimate” banking institution HSBC, drug dealers specifically designed boxes to fit through the bank’s teller windows. Tony Montana’s henchmen marching dufflebags of cash into the fictional “American City Bank” in Miami was actually more subtle than what the cartels were doing when they washed their cash through one of Britain’s most storied financial institutions.

Though this was not stated explicitly, the government’s rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a “systemically important institution” in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:

Federal and state authorities have CHOSEN NOT TO INDICT HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

It doesn’t take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC’s Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn’t protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most “reputable” banks may in fact be captured institutions whose senior executives are in the employ of (this can’t be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department’s response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap. You’ll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it’s a joke. Some of the penalties involved will literally make you laugh out loud. This is from Breuer’s ANNOUNCEMENT:

As a result of the government’s investigation, HSBC has . . . “clawed back” deferred compensation bonuses given to some of its most senior U.S. anti-money laundering and compliance officers, and agreed to partially defer bonus compensation for its most senior officials during the five-year period of the deferred prosecution agreement.

Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you fucking kidding me? That’s the punishment? The government’s negotiators couldn’t hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them “partially” wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department’s opening offer - asking executives to restrict their Caribbean vacation time to nine weeks a year?

So you might ask, what’s the appropriate financial penalty for a bank in HSBC’s position? Exactly how much money should one extract from a firm that has been shamelessly profiting from business with criminals for years and years? Remember, we’re talking about a company that has admitted to a smorgasbord of serious banking crimes. If you’re the prosecutor, you’ve got this bank by the balls. So how much money should you take?

How about all of it? How about every last dollar the bank has made since it started its illegal activity? How about you dive into every bank account of every single executive involved in this mess and take every last bonus dollar they’ve ever earned? Then take their houses, their cars, the paintings they bought at Sotheby’s auctions, the clothes in their closets, the loose change in the jars on their kitchen counters, every last freaking thing. Take it all and don’t think twice. And then throw them in jail.

Sound harsh? It does, doesn’t it? The only problem is, that’s exactly what the government does just about every day to ordinary people involved in ordinary drug cases.

It’d be interesting, for instance, to ask the residents of Tenaha, Texas what they think about the HSBC settlement. That’s the town where local police routinely pulled over (mostly black) motorists and, whenever they found cash, offered motorists a choice: They could either allow police to seize the money, or face drug and money laundering charges.

Or we could ask Anthony Smelley, the Indiana resident who won $50,000 in a car accident settlement and was carrying about $17K of that in cash in his car when he got pulled over. Cops searched his car and had drug dogs sniff around: The dogs alerted twice. No drugs were found, but police took the money anyway. Even after Smelley produced documentation proving where he got the money from, Putnam County officials tried to keep the money on the grounds that he could have used the cash to buy drugs in the future.

Seriously, that happened. It happens all the time, and even Lanny Breuer’s own Justice Deparment gets into the act. In 2010 alone, U.S. Attorneys’ offices deposited nearly $1.8 billion into government accounts as a result of forfeiture cases, most of them drug cases. You can see the Justice Department’s own statistics right here:


If you get pulled over in America with cash and the government even thinks it’s drug money, that cash is going to be buying your local sheriff or police chief a new Ford Expedition tomorrow afternoon.

And that’s just the icing on the cake. The real prize you get for interacting with a law enforcement officer, if you happen to be connected in any way with drugs, is a preposterous, outsized criminal penalty. Right here in New York, one out of every seven cases that ends up in court is a marijuana case.

Just the other day, while Breuer was announcing his slap on the wrist for the world’s most prolific drug-launderers, I was in arraignment court in Brooklyn watching how they deal with actual people. A public defender explained the absurdity of drug arrests in this city. New York actually has fairly liberal laws about pot police aren’t supposed to bust you if you possess the drug in private. So how do police work around that to make 50,377 pot-related arrests in a single year, just in this city? Tthat was 2010; the 2009 number was 46,492.)

“What they do is, they stop you on the street and tell you to empty your pockets,” the public defender explained. “Then the instant a pipe or a seed is out of the pocket - boom, it’s ‘public use.’ And you get arrested.”

People spend nights in jail, or worse. In New York, even if they let you off with a misdemeanor and time served, you have to pay $200 and have your DNA extracted a process that you have to pay for (it costs 50 bucks). But even beyond that, you won’t have search very far for stories of draconian, idiotic sentences for nonviolent drug crimes.

Just ask Cameron Douglas, the son of Michael Douglas, who got five years in jail for simple possession. His jailers kept him in solitary for 23 hours a day for 11 months and denied him visits with family and friends. Although your typical non-violent drug inmate isn’t the white child of a celebrity, he’s usually a minority user who gets far stiffer sentences than rich white kids would for committing the same crimes ֖ we all remember the crack-versus-coke controversy in which federal and state sentencing guidelines left (predominantly minority) crack users serving sentences up to 100 times harsher than those meted out to the predominantly white users of powdered coke.

The institutional bias in the crack sentencing guidelines was a racist outrage, but this HSBC settlement blows even that away. By eschewing criminal prosecutions of major drug launderers on the grounds (the patently absurd grounds, incidentally) that their prosecution might imperil the world financial system, the government has now formalized the double standard.

They’re now saying that if you’re not an important cog in the global financial system, you can’t get away with anything, not even simple possession. You will be jailed and whatever cash they find on you they’ll seize on the spot, and convert into new cruisers or toys for your local SWAT team, which will be deployed to kick in the doors of houses where more such inessential economic cogs as you live. If you don’t have a systemically important job, in other words, the government’s position is that your assets may be used to finance your own political disenfranchisement.

On the other hand, if you are an important person, and you work for a big international bank, you won’t be prosecuted even if you launder nine billion dollars. Even if you actively collude with the people at the very top of the international narcotics trade, your punishment will be far smaller than that of the person at the very bottom of the world drug pyramid. You will be treated with more deference and sympathy than a junkie passing out on a subway car in Manhattan (using two seats of a subway car is a common prosecutable offense in this city). An international drug trafficker is a criminal and usually a murderer; the drug addict walking the street is one of his victims. But thanks to Breuer, we’re now in the business, officially, of jailing the victims and enabling the criminals.

This is the disgrace to end all disgraces. It doesn’t even make any sense. There is no reason why the Justice Department couldn’t have snatched up everybody at HSBC involved with the trafficking, prosecuted them criminally, and worked with banking regulators to make sure that the bank survived the transition to new management. As it is, HSBC has had to replace virtually all of its senior management. The guilty parties were apparently not so important to the stability of the world economy that they all had to be left at their desks.

So there is absolutely no reason they couldn’t all face criminal penalties. That they are not being prosecuted is cowardice and pure corruption, nothing else. And by approving this settlement, Breuer removed the government’s moral authority to prosecute anyone for any other drug offense. Not that most people didn’t already know that the drug war is a joke, but this makes it official.



Is The Federal Reserve Using Money-Laundering Techniques To Cleanse Banks’ Balance Sheets?

By Lawrence Hunter
October 29, 2012

Drug lords, terrorists and shadow-government operators (but I repeat myself) use third party intermediaries to cool off and sanitize hot, dirty, and therefore useless money into pristine-clean and productive money that can be used in legitimate commerce.  Its called money laundering.

Characters operating in the shadows also use a form of reverse money laundering to defile clean money or redirect dirty money while masquerading its source so it can be siphoned away, re-channeled and put to use financing illicit activities such as terrorism and off-the-books, shadow-government operations (but I repeat myself, again) that Congress won’t authorize or fund.  Think of it as repatriating dirty money and expatriating clean money.

Private equity companies (hedge funds) are favorite vehicles for laundering dirty money. They are weakly regulated and thus are able to handle huge financial sums for parties who want to remain anonymous, moving money in and out of secret foreign-bank accounts and then on and off the books of legitimate companies in open commerce. If the origin of the newly cleansed money is ever questioned, the criminal has all the paperwork he needs to demonstrate that he has simply received large returns from a legitimate hedge-fund investment.

In both its public and private variants, money laundering depends on the participation of legitimate actors and, therefore, is usually a dont-ask-don’t-tell operation. Not surprisingly, the government itself is frequently complicit in the willful ignorance that dont-ask-donҒt-tell money laundering requires, turning a blind eye to consistently huge investment returns, sometimes in excess of 150 percent annuallyputting even Bernie Madoff’s Ponzi scheme to shamea certain red flag that a money laundry is in operation.

A RESEARCH PAPER on hedge funds and money laundering by Oracle Financial Services explains:

דThe [dirty] money is channeled [into the hedge fund] through an intermediary and supposedly comes from [say] a wealthy Asian business executive who wants a higher rate of return than he believes he can get with traditional investments. The hedge fund is eager to recruit new investors and does not want to turn any money away. They take the Asian business executive story at face value and do not dig too deep to verify that the business really exists. The layering step is complete; the money has been distanced from its criminal origins.

The Federal Reserve also operates its own financial Laundromat for troubled, in some cases criminal banks. The Fed’s loan laundry and downscale resale consignment shop first takes in the wash by purchasing non-performing, and therefore largely worthless financial assets (loans and loan-backed securities) to remove them from the books of private banks. (Another variant is for the Fed to swap the banks bad paper at face value for federal debt instruments, which replaces the banks’ non-performing assets having little, if any, resale value, with safe, interest-paying and highly marketable assets.).  The Fed then launders the loans by reselling them back to the same group of banks at a fraction (10 percent or less) of the face-value price it paid the banks for them. Once the banks repurchase the spiffed up dirty loan laundry, it not only has turned a nifty 90-percent-or-more profit on the turn around, it also has a new asset it can put back into the stream of financial commerce at a price reflective of its true value.

Like hedge funds, the Fed is a perfect vehicle to transform bad assets into good.  It is weakly overseen without an independent audit and thus is able to intermediate the transformation of bad, illiquid assets into money (and near money) and then back again into valuable financial assets, all done secretly and anonymously.  Unlike the polite, dont-ask-don’t-tell fiction of private hedge-fund money laundering, however, the Fed says outright, Don’t ask, because we arent telling, even when ASKED AGAIN and AGAIN.

Immediately after the 2008 financial meltdown, the Fed laundered more than $2 trillion in worthless assets held on the balance sheets of private banks. According to a watered-down 2011 AUDIT of the Fed by the Government Accountability Office (GAO), there have been $16 trillion in Fed bailouts to banks and corporations around the world since the financial meltdown in 2008. Since that report, Bloomberg has reported on an additional $9 trillion in secret, off-balance-sheet Fed transactions that the central bank REFUSES TO DISCUSS. Now, BEN BERNANKE is ginning up assembly-line washing machines at the Fed with QE to spin an opened-ended, $40-billion-monthly cleansing campaign to purchase worthless mortgage backed securities from banks at face value, WHICH COULD RUN to an additional $1.3 trillion loan laundering accompanied by downscale resales.

QE is no mere financial Laundromat; it is a full-service loan laundry and downscale resale facility that not only cleans the banks balance sheets but also sterilizes the entire operation to prevent it from producing immediate price inflation.  It illustrates the way the Fed’s loan laundry and downscale resale facility works:

After the Fed buys (at face value) and resells (at pennies on the dollar) the bad mortgage-backed securities with newly minted electronic digits that it places into the banks Federal Reserve accounts, it then sterilizes the entire operation to prevent the new money from transmitting the dread inflation virus.  The Fed does so by, in effect, quarantining inside the banking system the new toxic money used to launder the dirty loans.  To affect this quarantine, the Fed wields both a carrot and a stick to keep this newly minted digital money from seeping out into the economy through new loans and igniting inflation: It pays the bank interest on its Fed reserves as long as the bank keeps the funds on deposit at the Fed (the carrot); and it tightens reserve requirements by raising the amount of money the bank must keep on deposit at the Federal Reserve (the stick).

Former Bank of England president Sir Josiah Stamp observed:  “Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back.” This observation was never better illustrated than in the Federal Reserve’s loan laundry and downscale resale facility.

Individual homeowners remain upside down in their mortgages and under water in their houses while the Fed detoxifies and reanimates zombie banks; banks are awash in cash yet lending for productive new business starts and expansions is moribund; banks post record profits while unemployment properly measured remains in double digits; despite the Feds new-money quarantine and a dodgy measure of inflation, consumer prices continue to rise, real GDP grew barely more than 1.5 percent during the first half of the year and personal income is not growing at all.  People remain sick while banks get well. And the financial spin cycle goes on.



A Case to Indict Barack Obama

Washington’s Blog
December 19, 2012

preface: background HERE.

Guest post by investigative historian Eric Zuesse, author - most recently of - Theyre Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRISTҒS VENTRILOQUISTS: The Event that Created Christianity.

I am a proud Democrat, and part of the commitment that makes me such is my belief that any President who blatantly violates his Oath of Office would be committing an extremely grave crime, which deserves to be prosecuted as such. In other words: I believe in equality before the Law.

The Presidential Oath of Office, as given in the U.S. Constitution, is: “I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will, to the best of my ability, preserve, protect and defend the Constitution of the United States.” I shall here charge that President Obama violates his Oath of Office by systematically appointing, and supporting, appointees who carry out a rabidly discriminatory “system of justice,” which holds some people to be above the Law; that is, above the U.S. Constitution, and free from its legal requirements. This is an incredibly ironic accusation to bring against the first black President, but here it is (after all, Obama’s being black doesn’t free him of any guilt for a crime that he is committing), my charge against Obama: I charge him with systematically violating the Equal Protection Clause of the U.S. Constitution.

The Equal Protection Clause of the U.S. Constitution is in the 14th Amendment, and it says that no state shall deny to any person within its jurisdiction the equal protection of the laws. Though the Equal Protection Clause applies only to state governments, it extends into the Federal Government, by means of the 5th Amendment’s Due Process Clause, which says that throughout the nation, No person shall be held to answer for a capital, or otherwise infamous crime, nor be deprived of life, liberty, or property, without due process of law. The Supreme Court has generally interpreted these provisions together, so as to prohibit granting different rights under the law to one class of citizen than to another - and, thus, so as to embody collectively the extension of the 1776 Declaration of Independence’s fundamental promise, that “all Men [capital “M” indicating of both genders, not only males] are created equal. When Thomas Jefferson wrote that, he also wrote into his initial draft of the Declaration of Independence an impassioned indictment of King George III for suppressing every legislative attempt to prohibit or to restrain this execrable commerce in slaves, and he charged there that the King was determined to keep open a market where Men [again, capital “M” meaning of both genders] shall be bought & sold. (See it on page 377 of Gary Wills’s 1979 classic Inventing America.) However, the Carolinas had those crucial (and what would have been fateful) passages removed before final passage of the Declaration of Independence as it was published, and so our nations legislated inequality into two classes of Men, slaves and free, lasted until the Civil War. But that has, of course, long ended. This is now supposed to be fully a country in which ԓall Men are created equal.

The remainder of the case is presented by former federal regulator, and federal prosecutor, William K. Black - a Democrat like myself headlining on December 17th, “The Second Great Betrayal: Obama and Cameron Decide that Banks Are Above the Law.” That case will now be summarized here.

Black notes that: “It was DOJ [Department of Justice, under Obama’s appointed head Eric Holder, who appointed its prosecutor Lanny Breuer] that described Bank of America’s (B of A [including its Countrywide Financial subsidiary under Angelo Mozilo, whom Obama likewise refuses to charge criminally]) control fraud as brazen.” It was DOJ that filed a complaint alleging that senior officers were warned in advance that the incentive system for loan officers compensation would lead to widespread fraud, warned once the program began operating that it was causing widespread fraudulent loans [that produced the 2008 crash], responded to these warnings by covering up the evidence of fraud and increasing the perversity of the incentives for the loan officers, made false representations to Fannie and Freddie about loan quality, and then stonewalled them on the obligation to repurchase the fraudulent loans. The actions described in the complaint were criminal frauds. The case could and should have been brought as a criminal prosecution rather than a civil case. But B of A is a SDI [ґSystemically Dangerous Institution, or too-big-to-fail in the view of Obama’s appointed Treasury Secretary Timothy Geithner, who was also the chief regulator of all of the mega-banks during the lead-up to the 2008 crash, and who was thus responsible for overseeing and allowing these very crimes that’s the man Obama selected as his Treasury Secretary].

Most of Black’s article is devoted to exposing the fraudulence of the argument made by Obama’s Justice Department saying that because the mega-banks are “too big to fail,” no criminal prosecutions should be brought against any of the top executives who oversaw mega-bank crimes and who walked off with hundreds of millions of dollars or even billions in executive bonuses and other emoluments from them. Basically, Black documents that Obama’s Justice Departments reasons are bull - but you should see Blacks case there for yourself. Here will be discussed instead the gravity of the crimes that Obama essentially blocks from prosecution.

Regarding Obama’s Justice Departments settlement with the biggest of all Europe’s banks, HSBC, here is Blacks summary:

Multiple U.S. government investigations concluded that HSBC:

1. Laundered billions of dollars for some of the most murderous drug gangs in the world. These gangs have murdered many thousands of Mexicans and devastated much of the nation.

2. Aided Iranian entities to evade U.S. financial sanctions on Iran. If Iran is actually developing a nuclear weapon [as the Obama Administration charges], and if it uses such a weapon to attack, it will kill tens of thousands of people, and HSBC and Standard Chartered will likely have proven useful to Iran in developing the weapon.

3. Aided Hamas, Hezbollah, and Al Qaeda.

HSBC was a profoundly and pervasively criminal enterprise for at least 15 years. Many of its fraudsters doubtless moved to other banks, often with promotions. DOJ and the regulators have not indicated any intention to prosecute them or remove them from office.

Why would HSBC - a criminal enterprise for at least 15 years that has been involved in three scandals that are the subject of the settlement and at least five other scandals in which it defrauded customers and its regulators, and an institution that covered up its frauds to deceive the regulators - be permitted to pay any bonuses to senior executives? Their prior salaries, promotions, and bonuses should have been largely clawed back, their future bonuses cancelled, and the entire HSBC compensation system fixed so that it no longer creates perverse incentives.

Black also condemns the mainstream press for hiding from the public the enormity of the criminality at the top in the United States:

For example, Contrast that [record with] the NYT article about the HSBC with the title of the article: HSBC Became Bank to Drug Cartels, Pays Big for Lapses. Lapses? seriously? HSBC violates the law for 15 years to make money by illegally aiding the worst and most dangerous entities in the world escape vital financial safeguards and it gets trivialized as “lapses.” Of course, Fox News is less subtle, more blatant in its protection of banksters, much like Republicans in Congress are, as compared to Democrats in Congress.

What would happen if congressional Democrats brought charges against this President for his protection of mega-bank executives in violation of his Oath of Office and of his most basic obligations as this nations Chief Executive? Would congressional Republicans go along with it? Probably not, because the Republican Party is even more rigidly controlled by elite criminals than is the Democratic Party. So, the matter might simply die in the House. But at least doing that would make clear to the public what the true agenda is and has long been for the Republican Party apparatus as a whole: ItҒs a gangland organization, and thats why they block essential reforms of campaign finance.

Furthermore, Barack Obama, by his rabid violation of his Oath of Office, and his enormous violation of basic Democratic Party principles of justice, and of absolute equality before the Law, is a historic embarrassment to the Democratic Party.

Obama is the worst U.S. President in history as regards equal application of the Law. He is worse even than the previous worst, which was George W. Bush. On 15 November 2011, Syracuse University’s famous TRAC Reports headlined Criminal Prosecutions for Financial Institution Fraud Continue to Fall, and reported that the plunge that had begun under Bush was continuing under Obama. As one commentator said on 7 July 2012, headlining Financial Fraud Enforcement Task Force Fakery, and as is still the case, “There is not a single case related to fraud in the creation, sale or operation of real estate mortgage-backed securities, the frauds that led to the Great Crash. Not a one.”

When the mainstream media cover this at all, they accuse Timothy Geithner or other Obama appointees, not the President who appointed them and whose polices they carry out. For example, on 14 April 2011, Gretchen Morgenson and Louise Story headlined in The New York Times, In Financial Crisis, “No Prosecutions of Top Figures,” and they made clear that top officials in the George W. Bush Administration had squelched efforts by FBI Director Robert Mueller and other subordinates who had wished to investigate top executives at financial firms for possible prosecutions. (Evidently, Obama continued that Bush policy.) For example, Bushs Attorney General Michael Mukasey joined with Scott G. Alvarez of the Federal Reserve to block all efforts at investigations and prosecutions. In addition, the successor to Eliot Spitzer as N.Y. Attorney General was Spitzer’s fellow Democrat Andrew Cuomo, who joined with Timothy Geithner of the New York Fed, to block any serious efforts at prosecution of higher-ups. This article, in the NYT, focused especially upon the active efforts by the GWB Administration to block such prosecutions, but virtually ignored the continuing complicity by the Obama Administration (about which Yves Smith at her NAKED CAPITALISM headlined the same day, Regulators Issue Weak Consent Orders to Whitewash Mortgage Abuses). Yet even George W. Bush was not a subject in this news report it’s as if he hadn’t been the head of his own Administration. The basic conservative principle, that blame goes only downward, while praise goes only upward, was thus being adhered to, even in this otherwise worthy news report. 

If our nation’s honor is to be restored on this crucial matter, the initiative will have to come from leading Democrats, because the Republicans and the major media are TOO HEAVILY IMPLICATED THEMSELVES in, basically, covering up for Americas aristocracy.

It’s not the kind of country that our Founders intended; this has not been progress, it has been regress, back to what our Founders, and their Revolution, overthrew.



Book: The Betrayal of the American Dream

By Donald L. Barlett and James B. Steele
December 30, 2012


Twenty years ago, we wrote a book that explained to millions of Americans caught up in a painful economic upheaval of the time why they were losing ground and why it wasn’t their fault. We were accused of gross exaggerations, but the book’s major conclusionsthat the middle class was shrinking, that guaranteed pensions would soon be a thing of the past, and that millions would have to go without health insuranceחare now widely accepted and don’t seem all that rash today when viewed against the current backdrop that is relegating millions of hard working Americans to the economic scrap heap.

In the 1990s economists tried to reassure Americans that the downturn was only temporary, but we felt it reflected a more disturbing pattern: a shift by Washington away from policies that had built the American middle class and enabled successive generations to do better than their parents, in favor of policies that catered to corporate chieftains and America’s wealthiest citizens.

We erred on only one issue. We grossly underestimated how fast the economic ruling class would pull the rug out from under everyone else. Once almost anyone could move up the economic ladder; now the movement is mostly down. Barring a fundamental change in policies in Washington, that trend will continue until all that’s left is the upper end of what once was a thriving, broad-based middle class.

The talking heads on television don’t speak of this, but people do, as we are finding in our talks with Americans across the land. This is why we have returned to this subject, to trace these trends since our initial investigation and to tell the story in the larger context of the nation’s betrayal of its greatest assetour middle class. Because without a middle class, there really isn’t an America.

America’s unique prosperity is based on its creation of a MIDDLE CLASS. In the twentieth century, that middle class provided the workforce, the educated skills, and the demand that gave life to the world’s greatest consumer economy. It was innovative and dynamic; it eclipsed old imperial systems and colonial archetypes. It gave rise to a dream: that if you worked hard and followed the rules you would prosper in America, and your children would enjoy a better life than yours.

The American dream was the lure to gifted immigrants and the birthright opportunity for every American citizen. It is as important a part of the history of the country as the passing of the Bill of Rights, the outcome of the battle of Gettysburg, or the space program. Incredibly, however, for more than thirty years, government and big business in America have conspired to ROLL BACK the American dream. What was once accessible to a wide swath of the population is increasingly open only to a privileged few.

The story of how the American MIDDLE CLASS has been SYSTEMATICALLY impoverished and its prospects THWARTED in FAVOR OF a new ruling elite is at the heart of this extraordinarily timely and revealing book, whose devastating findings from two of the finest investigative reporters in the country will leave you astonished and angry.

Donald L. Barlett and James B.Steele are the nation’s most honored investigative reporting team, and authors of the New York Times bestseller America: What Went Wrong. They have worked together for more than thirty-eight years, first at The Philadelphia Inquirer (1971-1997), then at Time magazine (19972006) and now at Vanity Fair since 2006. They have also written seven books. They are the only reporting team ever to have received two Pulitzer Prizes for newspaper reporting and two National Magazine Awards for magazine work. They live in Philadelphia.



Daily Kos Review:

Before beginning Donald Barlett and James Steele’s The Betrayal of the American Dream, put away any implements with which you might be tempted to harm yourself. This is grim, grim stuff. Some of the grimmest stuff possible: an unvarnished picture of the place of middle- and working-class people in our economy, with a glimpse of the political and economic forces putting the squeeze on that place.

Much of the material in the book will be familiar if you follow progressive mediaif you’re a regular reader of Daily Kos or Paul Krugman or a watcher of Chris Hayes or any number of othersזbut having so much of that information compiled in one relentless, compulsively readable volume is ... a lot. Imagine reading a year’s worth of class war-themed blog posts or magazine articles or newspaper columnsthe big-picture ones filled with numbers and facts and the history of tax and regulatory policy, mostly, seeded with a few affecting individual stories bringing home how brutally the numbers and facts and policies hit actual people. Only whereas you get a break between the short pieces, time to catch your breath and decide when to go back for more, The Betrayal of the American Dream just keeps gathering steam.

Really, there’s nothing for the book to do but keep gathering steam, though, since while the problems come through loud and clear, the solutions are not nearly as well developed. That’s a common problem for a book like this, and with good reason: if it was obvious how to fix things, we’d probably be making more progress toward doing so. But The Betrayal of the American Dream suffers from the lack of solutions more than most, because it actively undermines the hope that solutions are possible. Barlett and Steele are correct to EMPHASIZE THE DEGREE to which the rich and powerful (corporations and people) operate by a different set of rules than the rest of us, writing, for instance, that:

Because THE CONDUCT BUSINESS AROUND THE WORLD and move money in and out of tax havens and other countries to secure the lowest possible rate, many [U.S. multinational corporations] stash their cash offshore rather than bring it home, where they would be obliged to pay taxes on it.

They will bring it back only if Washington will agree to a tax holiday. [...] If you want to understand the differences between you and the ruling class, try that ploy with the IRS someday. Just tell them if they don’t lower your tax rate you are going to move your money to another country.

It’s important to be clear that the existence of two sets of rules is part of the problem. And it’s important to be clear, as Barlett and Steele are, that Republicans are not the only problem, that Democratic politicians are complicit in many of the policies that perpetuate and solidify this system. (Even if at times it feels a bit unfair that they emphasize the participation of Democrats while taking for granted that Republicans are acting to the detriment of the working and middle classes.) But the grim tone, the lack of proposed solutions, the lack of any indication that there are forces fighting the expansion of this system, make you feel as hopeless as you feel angry after reading it. The Betrayal of the American Dream would benefit from providing even a little more perspective on ways to fight, on people and movements that are fighting, on leverage points. The final chapter offers some policy ideas, but it would be helpful to hear more about those throughout.

Nonetheless, the book is packed with IMPORTANT INFORMATION and examples of the damage wrought by policies that allow companies to, for instance, avoid taxes, profit from sending jobs overseas, and strip workers of their PENSIONS. And it does the important work of making clear just how badly the deck is stacked against the 99 percent. In the final analysis, if you’re the sort of person who responds to an overwhelming dose of that knowledge by becoming too depressed to fight, avoid The Betrayal of the American Dream. But if getting mad primes you to fight, by all means, read this.




FRONTLINE Presents The Untouchables
January 22, 2013

More than four years since the financial crisis, not one senior Wall Street executive has faced criminal prosecution for fraud. Are Wall Street executives “too big to jail?”

In The Untouchables, premiering Jan. 22, 2013, at 10 P.M. on PBS, FRONTLINE producer and correspondent Martin Smith investigates why the U.S. Department of Justice (DOJ) has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse.

Through interviews with top prosecutors, government officials and industry whistleblowers, FRONTLINE reports allegations that Wall Street bankers ignored pervasive fraud when buying pools of mortgage loans. Tom Leonard, a supervisor who examined the quality of loans for major investment banks like Bear Stearns, said bankers instructed him to disregard clear evidence of fraud. “Fraud was the F-word, or the F-bomb. You didn’t use that word,” says Leonard. “By your terms and my terms, yes, it was fraud. By the [industry’s] terms, it was something else.”

Former Sen. Ted Kaufman (D-Del.), who was appointed to fill Joe Bidens long-held Senate seat when he was sworn in as vice president in January 2009, was determined to see bankers in handcuffs. “I was really upset about what went on on Wall Street that brought about the financial crisis,” Kaufman recalls. “That doesn’t happen if there isn’t something bad going on.”

Yet Kaufman left office in late 2010 frustrated by the lack of criminal prosecutions. Jeff Connaughton, Kaufman’s chief of staff, remains convinced that the DOJ failed to make prosecuting Wall Street a top priority. “You’re telling me that not one banker, not one executive on Wall Street, not one player in this entire financial crisis committed provable fraud?” asks Connaughton. “I mean, I just don’t believe that.”

Smith asks Lanny Breuer, assistant attorney general for the DOJs Criminal Division, about his failure to criminally indict Wall Street executives. “I think there was a level of greed, a level of excessive risk taking in this situation that I find abominable and very upsetting,” says Breuer. “But that is not what makes a criminal case.”

Critics, including two high-level sources within Breuer’s own division and former New York Attorney General Eliot Spitzer, disagree. “They have not done what needed to be done,” Spitzer says. The greater risk is that corrupt behavior that is damaging to our economy, that leads to something as enormously painful as the cataclysm of ‘08, goes unaddressed.

New York Attorney General Eric Schneiderman finally filed a major lawsuit against JPMorgan Chase and Bear Stearns in 2012. It closely mirrors claims first made by private plaintiffs almost two years earlier. Despite strong evidence of fraud, the government again decided not to pursue criminal charges. Meanwhile, banking scandals continue to surface almost weekly.

The Untouchables is written and produced by Martin Smith. Co-producers are Linda Hirsch and Ben Gold. The deputy executive producer of FRONTLINE is Raney Aronson-Rath. The executive producer of FRONTLINE is David Fanning.

FRONTLINE is produced by WGBH Boston and is broadcast nationwide on PBS. Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation. Additional funding is provided by the Park Foundation and the FRONTLINE Journalism Fund. FRONTLINE is closed-captioned for deaf and hard-of-hearing viewers by the Media Access Group at WGBH. FRONTLINE is a registered trademark of WGBH Educational Foundation.



BP Proves Corporations Can Get Away with Almost Anything with No Risk of Prison

By Dennis S.
Politicus USA
February 1, 2013

I was motivated to writethis piece by the recent headlines that a judge had allowed BP to buy its way out of any prison time for 11 manslaughter charges emanating from the Deepwater Horizons oil rig explosion and subsequent oil spill.

I don’t know the exact date when legislators, judges and corporations became a troika of greed and corruption enablers but our “anything goes” for connected corporations society relegates most citizens of this “democracy” to helpless bystanders.

The ALLIANCE FOR JUSTICE (AFJ) website has compiled some recent Bush (both of them)-era decisions of the highest court in the land that could have been (and probably were) written by corporate attorneys. Without going into details, the Supreme Court ruled in 2008 that if a defective medical device seriously injures a consumer, the manufacturer couldnԒt be sued if government regulators approved it even if the company knew it was a dangerous device.

In two different decisions, 2001 and 2006 the court forgave many waterways from honoring provisions of the Clean Water Act, even though resulting pollution could dirty up the water for over a third of Americans. The ruling stopped 1,500 pollution investigations in their tracks and reduced by 50% actions brought by the EPA against water polluters.

And in yet another AFJ revelation of the big boy-friendly Supremes, conservative justices obliterated a century of anti-trust laws and legal precedent in allowing a leather apparel manufacturer to set a minimum price that retailers who sold their products must charge. In his dissenting opinion, Justice Breyer referenced studies that estimated consumers would pay an additional $300 billion dollars PER YEAR for goods because of the far-reaching ruling.

And we discovered in January of 2010, that, like Pinocchio, inanimate objects are really real live people. Corporations are people, right Mr. Geppetto? Sure they are. That definition was inscribed on corporations once and for all with the Supreme Courts ridiculously right-wing Citizens United v. Federal Election Commission decision trashing campaign reform legislation going back to 1907. Thus 5 rabid ideologues constitutionally afforded brick and mortar the unfettered right to dump multiple millions into each election cycle.

In his minority dissent, Justice John Paul Stevens wrote that allowing corporations the unfettered power to pour money into political campaigns “will undoubtedly cripple the ability of ordinary citizens, Congress, and the States to adopt even limited measures to protect against corporate domination of the electoral process.” To make sure that “unfettered” power remained unfettered, last June the Supremes struck down (5-4 of course) a century-old Montana law attempting to keep giant corporate money out of state and local political races.

So, “Top of the Mornin” to you, Eddie Exxon. And how might the family be, Mrs. Fed Ex? You’re looking lovely today, Miss Koch Industries. Supposedly each corporation is a collection of people, and what a lucky collection they are. Beyond Citizens United they can screw the public out of Madoff-like dollars and not face a day in the slammer. A money laundering multinational English bank, HSBC, with subsidiaries in the U.S. and damn near everywhere else in the world is a prime example. The bank camouflaged around $800 billion in Mexican drug cartel and al-Qaeda connected money. A $1.9 billion fine was levied; chicken feed for an institution with $2.6 trillion in assets. No big bank officials went to jail. The pathetic excuse? A loss of trust would close the operation down.

Speaking of Eddie, another 2008 decision saw the court lop off 90% of the punitive damages a jury awarded in the Exxon-Valdez oil spill. May it please the court; the world’s largest company thanks you for getting it off the hook for honest compensation for the 30,000 people whose lives and communities were essentially destroyed.

But let’s examine the granddaddy of accidental spills where we discovered that big corporations can also manslaughter with impunity (the numbers dont matter) and walk away with little more than having to pay for their sins with shareholder money. Again, a single minute in the joint is not in the cards.

I refer of course to the April 20, 2010 explosion of a BP-contracted rig that claimed 11 lives, by cremation as the father of one victim put it, and tore a healthy hunk out of Mother Nature’s hide, not to mention oil-boarding nearly 200 million gallons of crude into the Gulf of Mexico and along the shorelines of 5 states. But not to worry, the shareholders will again take care of that little vexation.

The rig was owned by Transocean, the Leviathan of offshore drillers. No offshore driller is bigger than this sea monster. Transocean is a Swiss-based company (wink, wink, nudge, nudge) that had its erector set rig built by Koreans. Since Switzerland is landlocked I’m confused. Why would a giant offshore global drilling company headquarter in Switzerland where there is no shore to drill off of?

I’ll ask Mitt. Hell know.

According to numerous experts, Transocean did a piss-poor job in the areas of safety and maintenance and yet escaped with a wrist-slapping penalty totaling $1.4 billion, including an insulting $400 million in criminal penalties. Did I mention this company of collective humans also had to plead guilty to misdemeanor charges of violating the Clean Water Act? Poor baby!

Transocean’s corporate sugar daddy, BP (headquartered in London), contracted for the rig and its subsequent operation. BP was hit with $4 billion in penalties. The estimated total cost to BP of the Gulf oil mess is $42 billion. Last time I checked, BP’s total assets (including cash, stocks, bonds or anything of value owned by the oil giant) were over $300 billion, an improvement of nearly $50 billion in a two-year period. That covers the 42 billion, not counting insurance. BP had a great third quarter in 2012 and just missed a full-year profit record. They (the collective corporate people) also raised their dividend 9%.

If you watch any TV at all, you’ve been treated to that putrid propaganda commercial funded by BP to make it look like the massive oil spill was a blessing for the affected areas. Grinning (and likely well compensated) BP sycophants effusively crow about how great things are at a restaurant in New Orleans, a marine park in Florida, a place called “The Hangout” in Alabama, and business in general in Biloxi.

Be advised that the government estimated 200 million gallons of oil, give or take 20 million, were spilled as a result of the explosion. The consequences were devastating. BP, of course disagrees. I think the National Resources Defense Council said it best on their Website. Whether we look to habitat and wildlife, employment and pay, or basic health and family welfare, the BP oil blowout has devastated the region. The people of the Gulf Coast still live with the disaster every day.

The total damage assessment could be years away by which time BP will have long taken leave of any further responsibility. That’s the way it works in our “corporations as people” society. As long as they’ve got decent insurance, a few bucks in the till, political contributions to the right people and a witless Supreme Court majority, corporations will always receive preferential treatment.



Elizabeth Warren Takes On Eric Holder’s ‘Too Big To Jail’ Statement

By Mollie Reilly
Huffington Post

Sen. Elizabeth Warren (D-Mass.) took on Attorney General Eric Holder’s admission that some banks are too big for the Justice Department to prosecute, asserting that Holder’s statement illustrates why the financial institutions should be held accountable.

“It has been almost five years since the financial crisis, but the big banks are still too big to fail,” Warren said in a Wednesday statement. “That means they are subsidized by about $83 BILLION a year by American taxpayers and are still not being held fully accountable for breaking the law. Attorney General Holder’s testimony that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail.”

Earlier Wednesday, Holder testified before the Senate Judiciary Committee during a hearing on Justice Department oversight. During the hearing, Sen. Chuck Grassley (R-Iowa) ASKED Holder about the “slippery slope” of the “too big to jail” mentality in cases of bank prosecution.

“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute - if we do bring a criminal charge - it will have a negative impact on the national economy, perhaps even the world economy,” Holder said. “I think that is a function of the fact that some of these institutions have become too large.”

The Huffington Post’s Mark Gongloff REPORTED:

Holder’s comments don’t come as a total surprise. His underlings had already made similar confessions to The New York Times last year, after they declined to prosecute HSBC for flagrant, years-long violations of money-laundering laws, out of fear that doing so would hurt the global economy. Lanny Breuer, formerly in charge of doling out the Justice Department’s wrist slaps to banks, told Frontline as much in the documentary “The Untouchables,” which aired in January.

Some observers have defended the Justice Department, suggesting that prosecuting law-breaking banks would amount to a death penalty that could upset the financial system and trigger another recession—although nobody really knows if it would do any such thing. But by not prosecuting law-breaking banks, and confessing to its terror of prosecuting those banks, the Justice Department has waved a big checkered flag to the biggest banks to go ahead and break all of the laws they want.

Since entering office in January, Warren has made a splash on Capitol Hill as a member of the Senate Banking, Housing and Urban Affairs Committee. Last week, the freshman senator PRESSED Federal Reserve Chairman Ben Bernanke on whether the government would get tough on the “too big to fail” institutions.

“Big banks are getting a terrific break, and little banks are just getting smashed,” Warren said.

Earlier in February, Warren took BANK REGULATORS to task over the lack of trials for Wall Street banks.

“There are district attorneys and United States attorneys out there every day squeezing ordinary citizens on sometimes very thin grounds and taking them to trial in order to make an example, as they put it,” she said. “I’m really concerned that ‘too big to fail’ has become ‘too big for trial.’”


Posted by Elvis on 12/14/12 •
Section General Reading
View (0) comment(s) or add a new one
Printable viewLink to this article
Page 1 of 1 pages


Total page hits 9702165
Page rendered in 1.4960 seconds
41 queries executed
Debug mode is off
Total Entries: 3222
Total Comments: 337
Most Recent Entry: 05/04/2020 08:41 am
Most Recent Comment on: 01/02/2016 09:13 pm
Total Logged in members: 0
Total guests: 5
Total anonymous users: 0
The most visitors ever was 172 on 12/25/2019 07:40 am

Email Us


Login | Register
Resumes | Members

In memory of the layed off workers of AT&T

Today's Diversion

Liberty can not be preserved without general knowledge among people. - John Adams 1765


Advanced Search



May 2020
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30

Must Read

Most recent entries

RSS Feeds

Today's News

ARS Technica

External Links

Elvis Picks

BLS Pages


All Posts



Creative Commons License

Support Bloggers' Rights