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You are here: Home / Politics / Domestic Politics / Keep Digging

Keep Digging

by John Cole|  September 22, 200911:52 am| 22 Comments

This post is in: Domestic Politics

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Good:

The Securities and Exchange Commission said Monday that it will broaden its investigation into alleged wrongdoing at Bank of America and may seek additional charges as it prepares for a trial against the bank.

The move was the latest effort by the agency to combat the impression that it took a soft approach in a high-profile investigation stemming from Bank of America’s acquisition last year of Merrill Lynch. The SEC suffered a serious setback last week when a federal judge ordered a trial after rejecting a $33 million settlement in the case.

“[W]e will vigorously pursue our charges against Bank of America and take steps to prove our case in court,” the SEC said in a statement. “We will use the additional discovery available in the litigation to further pursue the facts and determine whether to seek the court’s permission to bring additional charges in this case.”

And don’t stop with them.

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Reader Interactions

22Comments

  1. 1.

    Punchy

    September 22, 2009 at 11:58 am

    “[W]e will vigorously pursue our charges against Bank of America and take steps to prove our case in court,” the SEC said in a statement. “We will use the additional discovery available in the litigation to further pursue the facts and determine whether to seek the court’s permission to bring additional charges in this case.”

    Not. Gunna. Happen.

  2. 2.

    Zifnab

    September 22, 2009 at 12:04 pm

    I smell the Exxon Valdez of banking investigations. A boat load of malfeasance (pun!) discovered in a deep investigative drilling (double pun!) that results in a handful of low level schlubs getting chastised while the actual process of accessing fines and accountability is held up in court for 30 years.

    The problem with our modern regulation system is that it’s far far cheaper to just pay lawyers to appeal any decision down to the last semicolon than it is to actually pay these humongous fines.

    I mean, they did this math with the Al Franken / Norm Coleman Senate race. At the end of the day, spending tens of thousands of dollars a day to employ a team of lawyers to drag this thing through court was better than actually letting Coleman get seated.

  3. 3.

    Hunter Gathers

    September 22, 2009 at 12:09 pm

    OT – but McCrystal’s people are pushing the “he’ll quit if he doesn’t get what he wants” angle. Lovely.

  4. 4.

    MikeJ

    September 22, 2009 at 12:13 pm

    The problem with our modern regulation system is that it’s far far cheaper to just pay lawyers to appeal any decision down to the last semicolon than it is to actually pay these humongous fines.

    Humongous? The total fines in Exxon were minuscule. Less than one month’s profit. Fines aren’t nearly high enough. They are simply a cost of doing business now. The moronic rule that punitive damages can only be up to 10x compensatory makes a mockery of justice. Punitive damages are supposed to hurt. The supremes have tied the hands of juries who want to make stockholders think twice before investing in corrupt companies.

  5. 5.

    Brick Oven Bill

    September 22, 2009 at 12:18 pm

    I predict that if people were allowed to keep digging, that they would find out that the banks self-regulate, through a scheme called the Federal Reserve. They would then find corruption in this self-regulating group of bankers, who would appoint their own regulator, say, Tim Geithner, to oversee the New York Federal Reserve during the boom.

    Then they might find that this corruption continues to even higher levels, say, Tim Geithner as Treasury Secretary. But they might say to themselves ‘this Geithner guy stays bought, but he is not too sharp’, and install an operative, say a lobbyist from Goldman Sachs to be Geithner’s Chief of Staff to get things done. To keep it free from men of conscience, with loyalties to the Constitution, and minimize the number of potential future witnesses, they might intentionally not fill many other slots.

    And then, with this system firmly in place, Goldman Sachs stock might have tripled since Obama’s inauguration. But then keep digging and look for the Hedge Fund manager who bragged of having a very good economic meltdown. One who changes money and is allowed by SEC rules to take short positions without public disclosure. The one who funds many arms of modern politics.

    I have reviewed Ron Paul’s strong men and ACORN’s strong men, and put my stock in the Paul camp. Ron Paul should be granted Congressional authority to go into all the books and figure out the names of the people that we then get to put in a cage in the middle of a town square of a Midwestern industrial city, say Peoria.

  6. 6.

    The Grand Panjandrum

    September 22, 2009 at 12:19 pm

    You only get the justice you can afford to pay for in this country. Nothing too big will come of this. The states and the Feds have been chasing these guys around for years. A couple of guys will pay fines, the company will pay fine, then back to business as usual. How do you put a corporation in prison? That has always been the shortcoming of legal theory that a corporation is a “person”. Except for what amounts to the death penalty how do you punish a corporation?

    @Hunter Gathers: Publicly fire him like Truman did to MacArthur. He must be made an example of. If he authorized that leak he’s a fucking disgrace to his uniform. If things don’t go his way he should resign and the say why. You publicly question the CINC. Period.

  7. 7.

    Demo Woman

    September 22, 2009 at 12:20 pm

    @Hunter Gathers: Pat Lang has an interesting post on this at sic semper tyrannis

  8. 8.

    Hunter Gathers

    September 22, 2009 at 12:26 pm

    @Demo Woman: He makes a very convincing argument. But why base a POTUS 2012 run on a war that nobody wants to fight anymore? Then again, the GOP doesn’t make much sense these days. I hate to break it to Petraeus, but it’s not 1968 anymore.

  9. 9.

    TheFountainHead

    September 22, 2009 at 12:27 pm

    Matt Taibbi has this up on his blog this morning, rather interesting read and even more interesting implications:

    http://www.globalresearch.ca/index.php?context=va&aid=15324

  10. 10.

    Ash Can

    September 22, 2009 at 12:28 pm

    @Hunter Gathers: I fully expect Obama’s response to this will be “Here’s your hat, what’s your hurry?” And I’d be deeply disappointed if it isn’t.

    This asshole and his toadies must be so used to operating under W that he’s come to believe the USA really is a banana-republic military dictatorship.

  11. 11.

    Napoleon

    September 22, 2009 at 12:29 pm

    In the last issue or so of The Atlantic there was a story on the whole BoA takeover of ML that made the deal sound very shady.

    @Hunter Gathers:

    Did Obama pick him for Afghanistan? I think he did, and for the life of me I could not figure why he would. The guy was deeply implicated in the Pat Tillman fraud and in my book if I was a Democratic President I would not let anyone who would pull something like that in order to muffle criticism of a war within a million miles anything important. This almost amounts to a “fool me once, shame on you . . . ” type situation. What would anyone expect out of someone like him?

  12. 12.

    scav

    September 22, 2009 at 12:32 pm

    @Hunter Gathers: Ah, well, we’ve discovered the “stamping your feet and holding your breath until you turn blue” behavior. This is not helping my mental imagery. Ever since guys with lots of ribbons started intoning about “Catching the Bad Guys” into banks of microphones, I really have been imagining them as toddlers in footed pajamas.

  13. 13.

    ed

    September 22, 2009 at 12:34 pm

    Rule of Law, bitchez!

  14. 14.

    Cat Lady

    September 22, 2009 at 12:40 pm

    The good news: it appears that a small handful of judges may yet save the Republic. The bad news: it will be a Republic of indigents.

  15. 15.

    Ash Can

    September 22, 2009 at 12:52 pm

    @Hunter Gathers:
    @Demo Woman:

    That is an interesting article, and makes me see that I’m being too harsh on McChrystal (but not by much), and giving him too much credit for being a motivating force behind this show of insubordination. If in fact Petraeus is putting him up to this and setting him up to be the fall guy if Obama doesn’t blink, my fondest hope would be to see Petraeus himself hung out to dry in the end. And if Petraeus is doing it for political or other personal gain, then he should be busted down to potato peeler, or traded to Honduras for a papaya crate to be named later.

  16. 16.

    Brachiator

    September 22, 2009 at 1:08 pm

    @The Grand Panjandrum:

    You only get the justice you can afford to pay for in this country. Nothing too big will come of this. The states and the Feds have been chasing these guys around for years. A couple of guys will pay fines, the company will pay fine, then back to business as usual. How do you put a corporation in prison? That has always been the shortcoming of legal theory that a corporation is a “person”. Except for what amounts to the death penalty how do you punish a corporation?

    During the S&L crisis of the 80s, people went to jail, and S&Ls were shut down. Quietly, the Congress and presidents of both parties have elected not to punish the officers of the financial institutions as thoroughly as they could, on the theory that this would be bad for the economy and financial markets.

    Instead of allowing these institutions to continue to consolidate and get bigger, the government could also seek to break them up.

    There is nothing about the legal theory of corporations that prevents regulation or prosecution.

    What is lacking is willpower and brainpower in the SEC. These are the guys that missed Madoff even though they had them in their sights a number of times.

  17. 17.

    Zifnab

    September 22, 2009 at 1:38 pm

    @MikeJ: Compared to legal fees, they are nothing. How many lawyers can you employ for a billion dollars? Careers can begin and end with cash to spare on that one case alone.

    And once a GOP admin steps into office, or a GOP SCOTUS gets nominated, it’s easy to get the actual fine slashed or tossed on whatever bologna reasoning you prefer.

  18. 18.

    handy

    September 22, 2009 at 1:42 pm

    We need a hangin’!

  19. 19.

    Alien-Radio

    September 22, 2009 at 2:19 pm

    @handy:
    Does wall street have enough lamp-posts?

  20. 20.

    Brachiator

    September 22, 2009 at 2:52 pm

    By the way, the WAPO story doesn’t give the full flavor of federal judge Jed S. Rakoff’s fiery decision, in which he accused both the government and Bank of America of playing a game of “pretend,” with respect to their original attempt to settle the charges of financial irregularity (“Judge Rejects Settlement Over Merrill Bonuses”).

    Giving voice to the anger and frustration of many ordinary Americans, Judge Jed S. Rakoff issued a scathing ruling on one of the watershed moments of the financial crisis: the star-crossed takeover of Merrill Lynch by the now-struggling Bank of America.

    He accused the S.E.C. of failing in its role as Wall Street’s top cop by going too easy on one of the biggest banks it regulates. And he accused executives of the Bank of America of failing to take responsibility for actions that blindsided its shareholders and the taxpayers who bailed out the bank at the height of the crisis.

    “The S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger,” he wrote, and “the Bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators.”

    http://www.nytimes.com/2009/09/15/business/15bank.html?_r=1&scp=4&sq=Jed%20S.%20Rakoff&st=cse

    The timidity of the Obama Administration in pursuing financial malfeasance is both sad and astounding.

  21. 21.

    J. Michael Neal

    September 22, 2009 at 4:22 pm

    I love Rakoff’s decision. We’ve been talking about it in the SEC Regulations class I’m sitting in right now. I loved his comment that, if the reason you can’t prosecute the executives is because they were just following the advice of the lawyers, why aren’t you prosecuting the attorneys?

    HOWEVER

    This is a mess for the SEC. The reason they cut such easy deals with companies isn’t because they’re in cahoots; the folks there love busting people. That has to be why they’re there, because they could be making more elsewhere.

    They cut easy deals because they’re understaffed. They don’t have anything like the number, or quality, of accountants necessary to find all of problems. They sure as hell don’t have enough lawyers to prosecute more than a few cases. The threat to take a case to trial is toothless, because they just can’t do it. So, companies have the power to negotiate deals where the penalty is low and, even more important, without admitting any wrongdoing.

    The SEC is panicking over Rakoff’s decision. What he’s effectively telling them is that they all need to work 200 hour weeks. Unless the budget for the SEC is massively increased, this is going to be a train wreck,

  22. 22.

    Brachiator

    September 22, 2009 at 4:37 pm

    @J. Michael Neal:

    They cut easy deals because they’re understaffed. They don’t have anything like the number, or quality, of accountants necessary to find all of problems. They sure as hell don’t have enough lawyers to prosecute more than a few cases. The threat to take a case to trial is toothless, because they just can’t do it. So, companies have the power to negotiate deals where the penalty is low and, even more important, without admitting any wrongdoing.

    This is part of it, but I don’t think you can depend on ordinary accountants to be your regulatory enforcement arm. I would like to see the Obama Administration set up beefed up task forces to go after the financial institutions. The SEC may need to be staffed better, but there is a lack of focus here as well, and this was supposed to be one of Obama’s top priorities.

    A relative of mine was on the bank busting teams during the S&L crisis. They were selected and empowered to be more aggressive than the typical accountant.

    By the way, I enjoyed reading your comment about the reaction to Rakoff’s decision. I was curious to know how it was taken by people who work for and study about regulatory bodies.

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