It’s kind of amazing how broken every institution in this country is, with moral cretins, cowards, and sociopaths seemingly in charge of everything these days. So seeing one judge who still has his wits about him and who hasn’t been consumed by the machine is a refreshing change:
Goldman, in the Abacus case, got fined $550 million. In this worse case, the SEC was trying to settle with Citi for just $285 million. Judge Rakoff balked at the settlement and particularly balked at the SEC’s decision to allow Citi off without any admission of wrongdoing. He also mocked the SEC’s decision to describe the crime as “negligence” instead of intentional fraud, taking the entirely rational position that there’s no way a bank making $160 million ripping off its customers can conceivably be described as an accident.
“Why should the court impose a judgment in a case in which the SEC alleges a serious securities fraud but the defendant neither admits nor denies wrongdoing?” And this: “How can a securities fraud of this nature and magnitude be the result simply of negligence?”
Rakoff of course is right – the settlement is nuts. If you take Citi’s $160 million profit on the deal into consideration, what we’re talking about then is a $125 million fine for causing $700 million in damages. That, and no admission of wrongdoing.
Just imagine a mugger who steals $70 from some lady’s wallet being sentenced to walk free after paying back twelve bucks. Magritte himself could not devise a more surreal take on criminal justice.
Just how broken is the SEC? How broken is our legal system that the SEC and Citi would think this “deal” makes sense?
cathyx
A Bush appointee is still heading the SEC. Why doesn’t he get replaced?
Emma
I have always said that I’ll be willing to consider corporations as persons if we apply the same criminal rules to them that we apply to flesh-and-blood persons. Up to and including capital punishment.
Howlin Wolfe
What cathyx said. I would be willing to bet there are any number of Liberty U law grads staffing the SEC still.
KG
What probably happened was Citi hired one of the biggest baddest law firms in the country to defend them. Their attorneys came in, ignored facts, and engaged in a dick swinging contest. The SEC attorneys realized that they probably didn’t have the resources to fight Citi’s attorneys and made this deal.
burnspbesq
You’re kidding, right? It makes perfect sense from Citi’s perspective. It gets to “put this unfortunate incident behind us” for a payment that is barely a rounding error in its financial statements.
Judge Rakoff is, of course, correct in wondering how this resolution would serve the public interest. Personally, I’d love to see this go to trial. And televise the trial on C-SPAN.
catclub
@cathyx: Probably requires senate approval.
Zifnab
The SEC is run by ex-Wall Street lawyers and bankers. It’s comically corrupt.
Why is it so hard to put a firewall up between public and private sector? It seems like every department has gotten infested like this, and I can’t even just blame the Bush Admin. This shit goes back to Nixon.
MattF
Rakoff has done this sort of thing before, bless him:
http://en.wikipedia.org/wiki/Jed_S._Rakoff
It’s not an accident (as old-style leftists would say) that wingers think lifetime tenure for Federal judges is a bad thing.
srv
The SEC is just like everything else, spiffy computers to catch the obvious stuff, incurious regulators who party with their charges, and the inspection crew picking through the detritus after the burning train that crashed through twenty towns finally lands at the bottom of some cliff.
I think Micheal Lewis talked about how they and the ratings gurus were the grads from the low-tier schools.
Zifnab
@KG:
Why the fuck not? That’s the other side of the coin. This is one of the biggest cases in the country right now. Where are your resources if they aren’t aimed at Citi?
Mudge
Don’t use a robber as an example. Consider someone who makes $30,000 a year and embezzles $250,000. They’d get a few years in jail and be required to make full restitution, destroying, perhaps deservedly, their future lives. This sort of punishment doesn’t seem to scale upwards.
Quaker in a Basement
So broken that I’ll put 10 bucks on Citi to win on appeal.
BGinCHI
SEC is a feature, and the judge is a bug.
efroh
Another good thing, judge-wise: this crazy judge is going on trial for her abuses.
My thanks to all the great reporters and media outlets out there who are doing the so vital work of comforting the afflicted and afflicting the comfortable.
burnspbesq
@Zifnab:
No, what’s comical is your misuse of the word “corruption.” If you want to talk about regulatory capture, fine, we can have that conversation. Name a single current or former SEC staffer who has been credibly abused of taking bribes, extortion, or violating 18 USC Section 207 (if you can).
As a former federal government lawyer (IRS Office of Chief Counsel), I’m here to tell you, based on decades of first-hand experience, that what you seem to believe about the effects of the so-called revolving door does not reflect reality.
Villago Delenda Est
The mugger is not working on behalf of the top 1%…he’s just in it for himself.
I rest my case.
burnspbesq
@Zifnab:
Your faulty assumption is that the SEC has resources. You might want to take a look at what Republican Administrations and Republican-controlled Congresses have done to its budget.
deep cap
If I had to guess, it’s also just laziness. By making a quick settlement, the SEC attorneys don’t have to do due diligence.
burnspbesq
@Villago Delenda Est:
You call that a case?
cathyx
@burnspbesq: They don’t need to be bribed. They are helping out their friends and colleagues knowing they will get a lucrative position when they leave the public sector.
burnspbesq
@Zifnab:
Explain to someone who is about to graduate from law school with $150K in student loan debt, who would like to pursue a career in public service, how they can pay off their loans, pay rent, and buy food on a GS-13 salary.
It’s easy to say that their loans should be forgiven if they stay in public service for some specified period. Explain your strategy for getting that legislation through a Republican-controlled House.
burnspbesq
@cathyx:
See comment 15 above. I’ve been there and done that, and you’re wrong. The way the world actually works is not as you fantasize it to be.
Xinark
@burnspbesq: Granted, “corruption” as a charge has specific criteria, but the popular vernacular holds a more general meaning. That general meaning — a willful lack of integrity on behalf of self-interest, in this case with regards to neglecting the public interest — can still apply, even if there is no evidence for bribery or extortion.
I won’t argue that regulatory capture isn’t the better term, but c’mon. Splitting hairs over semantics is missing the bigger issue, isn’t it?
Villago Delenda Est
@burnspbesq:
Isn’t it pretty obvious what the implication is?
The analogy is a very good one. The mugger, if caught, would have a ton of bricks descend on him.
Criminals wearing suits, not so much.
Mayur
Man, give a brother a break. How do you think SEC personnel would be able to ever again look their banker colleagues in the eye over drinks at the Campbell Apartment?
I work in finance as an attorney. What is really strange is that in the small amount of litigation in which I’ve participated outside securities, parties on both sides (government or private counsel) are perfectly capable of being zealous advocates and then walking away with no hard feelings. Here, it seems like the SEC is just bought and paid for.
Villago Delenda Est
@Xinark:
That’s the entire point with burnsie.
Steve
@cathyx: Mary Schapiro is the head of the SEC. She is an Obama appointee. Not sure who you were thinking of.
burnspbesq
@Xinark:
Nope. I completely understand the “bigger issue.” I reject the Alice-in-Wonderland approach to language.
burnspbesq
@Villago Delenda Est:
I fart in your general direction, you ignorant bed-wetting type.
Villago Delenda Est
@burnspbesq:
Your mother was a hamster, and your father smelt of elderberries!
(I sure told him off!)
Bullsmith
@burnspbesq:
The corruption has been made legal. That’s the point. Lots of outrageously criminal things have been made legal by states, either explicitly or de facto, including but not limited to corruption.
Alice in Wonderland language is not the issue here, as the corruption is plain to see.
cathyx
@Steve: Cox
peach flavored shampoo
I wish that Judge good luck when applying for his next mortgage, car, or home equity loan with any major bank.
burnspbesq
@Bullsmith:
Wait. If a thing has been “made legal,” how can it … oh, never mind. Thank you for proving my point about abuse of language. No matter how much you, cathyx, and Villago might wish it to be the case, “outrageous” and “illegal” are not now and never have been synonyms.
AnnaN
Well, thank God they taught Martha Stewart a lesson. That shrew.
EconWatcher
I’m not commenting on this case specifically. But one of the challenges is, it’s very hard to prove fraud to a jury of mostly high-school grads in a case involving complex transactions.
You may think that the media description of the case makes the fraud sound simple and obvious–so what’s the problem? But that’s not what the jury will see. What they’ll see is a thick cloud of smoke and obfuscation, generated by some of the cleverest talkers you can get for $1,000 per hour. You would be amazed at what they can do to spin and gloss over even the ugliest set of facts.
It’s a little easier in a civil case when the government only has to prove its claims by a preponderance of the evidence (rather than proof beyond a reasonable doubt). But even there, if the defendant is someone with the means to defend aggressively, it’s very difficult, unless someone was stupid enough to leave an email behind that basically admits the scam in simple language.
Sometimes you get those. Most of the time you don’t. And it’s very bad to bring one of these cases and lose.
That may not explain every case. But that is sometimes the explanation for why the government seems not to hit where people would like.
It’s easy to say, why don’t they throw all these bums in jail? But it’s much harder to do in a country that honors due process and has the world’s most sophisticated defense bar.
Villago Delenda Est
@burnspbesq:
True.
The Holocaust was legal, scrupulously legal, under Reich law.
cathyx
@burnspbesq: I never said that not cracking down on wrongdoers because they’re your friends was criminal. And even with your vast experience with government officials, you didn’t say anything about working at the SEC. Many industry people get jobs working in the government sector for the purpose of aiding that industry legislatively.
Yutsano
@cathyx:
Wait, what? Do you have a specific example of this?
Holden Pattern
burnspbesq is totally on point here. If it’s legal, by definition, it can’t be corruption.
So the way to eliminate corruption is to eliminate laws and, of course by extension, remove the meddling regulators’ authority to prevent certain behaviors which are really, after all, just the market at work. Caveat emptor and all that.
On this model, by the way, you should not be dismayed at your legislators doing favors for big campaign contributors or people who just give them big sacks of cash — those laws were bought fair and square, and you can hardly fault your legislators for being ahead of the privatization curve.
Jay B.
I was told by many of your legal scholars that banks and wall st. did nothing “legally” wrong — that such systemic horrors were actually legal, which is of course why the DoJ has been so hamstrung to actually pursue many, if any, cases of wrongdoing.
I’m sure this judge is just as plainly ignorant of the law as I seem to be.
And I’m sure glad that there’s still a lone holdout on the “but there’s nothing to be done” front because the SEC is actually beyond reproach, what with halfwits who went to law school, but couldn’t get the job for big bucks, apparently running the joint.
Holden Pattern
@EconWatcher:
FTFY
Also “defense bar”… aren’t those… TRIAL LAWYERS!!???!!?! Oh, wait, they can’t be — they’re the good kind of lawyers. It’s all so confusing.
Snowball
SEC is way underfunded and understaffed. But that’s what the voters want. They have loudly declared that it was more important to attack Iraq than to fund our own infrastructure or entities like the SEC. We get the government we deserve.
EconWatcher
@Holden Pattern:
I was careful to say that I was speaking of “someone who has the means to defend aggressively….” Of course the system of justice is entirely different when a poor person is charged with misconduct.
A corporate executive defending a civil injunction case brought by the SEC will get a whole lot more due process than your average capital defendant in Texas before he gets the needle. I certainly did not mean to suggest otherwise.
Holden Pattern
@Snowball:
Yep, I never get tired of quoting Mencken here:
This is the government that we wanted, either actively or passively. The greater evil takes over for a while and breaks some shit really badly, and the lesser evil figures out which broken shit it’s not too hard or politically uncomfortable or unprofitable to try to fix, and which broken shit they should just keep broken. Lather, rinse, repeat.
Holden Pattern
@EconWatcher:
I didn’t intend to suggest you meant that we take those things seriously as matter of principle. My apologies.
As a nation, we plainly don’t give a shit about due process or the right to a vigorous defense, and I didn’t think you meant we did. But I thought the distinction worthy of repetition and emphasis.
Gex
@burnspbesq: Unethical and illegal are different things. That’s for darn sure.
Jesse
This strange idea that something must be illegal to be corrupt puzzles me. Is this a lawyer thing, burns?
It is perfectly possible to be “willing to act dishonestly in return for personal gain” while remaining scrupulously within the letter of the law. Dishonest actions can be found to be not criminal. And all this logic-chopping and deliberate ignorance of the plain meaning of English words is fucking stupid.
tkogrumpy
It’s the corruption stupid. In finance, politics, media and the judiciary. Nothing will change unless we admit these facts and work for change.
catclub
@Snowball: Re: a weak and underfunded SEC. “But that’s what the voters want.”
And some voters more than others. After all,some _are_ more equal than others.
Roy G.
Beyond regulatory capture and the revolving door, the SEC has, according to whistleblower SEC attorney Darcy Flynn, engaged in breaking Federal law regarding records retention, systematically engaging in destroying evidence gathered in preliminary investigations once they are closed, or prevented from moving forward. Taibbi exposed this story back in August, which, quote, ‘has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff.”
Is the SEC Covering Up Wall Street Crimes?
Matt Taibbi: A whistle blower says the agency has illegally destroyed thousands of documents, letting financial crooks off the hook.
http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817
Imo, the legality of many Wall Street practices bears more than a passing resemblance to how torture was legalized, with lots of financial John Yoos, Jay Bybees and Alberto Gonzalezes running around saying ‘it’s legal if Wall Street does it / if Wall Street does it, we’ll make it legal.’
El Cid
@burnspbesq: “Made” could easily imply a distinction between a prior time period when something was illegal, and a later or current time period when that illegality was removed.
In this sense — irrespective of whether or not a particular claim of prior illegality / later legality — it’s no more a confusing use of language than to say something was made obsolete.
If the possession or use of a particular narcotic were to be ‘made legal’, it would mean that at one time it was illegal, but later after some change in the law, it was not.
At one time, it wasn’t obsolete, and then it was.
Or something was made weaker by the removal of structural supports. At one time, there were certain structural supports in place, and later, there weren’t.
The reverse is just as simple — something which was formerly legal is then banned, it was ‘made illegal’, to the extent that someone uses the phrase “made ______”.
Steve
@Villago Delenda Est:
Was it really?
Snowball
@catclub:
Perhaps. But don’t forget that about 70% of the American people were in favor of the Iraq war back in March 2003. This, irregardless of the cost. One cannot give a free pass to all these people when we now are suffering a huge budget deficit, which in turn has led to underfunding of the SEC.
Holden Pattern
@Roy G.:
This is a very smart observation, but I think you have the models backward. the Yoo/Bybee/Gonzalez behavior aped the corporate law behavior, not the other way around.
The corporate law question is “We want to do X. Please provide us with a roadmap to argue that X was legal if we get caught doing X.” That’s not a standard government lawyer approach, certainly not to things like torture, but it’s the approach that Yoo and Bybee took.
Zifnab
@burnspbesq:
The revolving door is the corruption. It’s quid pro quo. You be nice to my company, and I get you a cushy job. You be a good little soldier in the firm, and I get you a cushy appointment at the SEC the next time I have a chit to cash with the administration.
El Cid
@Jesse: Often people demand that the use of terms like “ethical” or “unethical” be restricted to the formal sphere of some institution’s “ethics rules”, and that it’s incorrect to claim something “corrupt” or “unethical” by merely one’s moral or ethical standards rather than a formal code put in place. In reality, of course, that has never been the case given human’s use of language and self-determined and popular notions of morality and ethics.
It’s like the absurd notion that one can only use money as a ‘corrupting’ influence on politics in the most idiot and brute sense, i.e., you hand a politician money in order to change a particular policy or vote.
Anyone with half a fucking brain knows that no one with the money looking to influence politics would limit themselves to exerting influence in that manner, and people would not be wrong to view the indirect influence of money (i.e., hopes of post-Congressional board memberships, or simply increasing the probability that favored candidates win) as ‘corrupt’.
EconWatcher
@Zifnab:
Steve
This is my field, and I don’t think the SEC is corrupt as a general matter. I think the problems are built into the system and difficult to solve. The SEC often shies away from going after the big players because they have to invest a ton of resources to pursue those cases and they might lose. So instead they spend a lot of their time beating up on small fish, and the big guys get to cut a plea bargain and go about their business. It’s the same dynamic as your county prosecutor choosing to bring a hundred drug cases, making their numbers look good, instead of pursuing some complicated political corruption case against well-funded defendants. This sucks, but corruption isn’t the right word for it.
JasperL
Does this count, Econwatcher?
Villago Delenda Est
@Steve:
The biggest concern from the lawyers at the Wannsee Conference was not that they were talking about industrial murder of the Jews, but that the didn’t have a written authorization from Hitler to go forward and do it.
Roy G.
@Holden Pattern: Good point. I guess this is what passes for ‘business innovation’ in our time.
@EconWatcher: Read the Taibbi article, which refers to the SEC case against Deutsche Bank. Here’s a descriptive excerpt from the Forbes describing said case:
In early October 1998, Rolf Breuer began meeting with Bankers Trust CEO Frank Newman to discuss a possible merger. Later that same month, Breuer denied such discussions to Der Spiegel.
According to the document:
During the few days prior to Breuer’s denial of talks, the stock price of Bankers Trust had risen sharply as a result of a financial press report that Deutsche Bank and Bankers Trust were having preliminary takeover talks. Faced with the rising price of his acquisition target, Breuer then publicly denied the existence of takeover talks between the two companies. As a result of that denial, the stock price of Bankers Trust dropped back down. Four weeks after Breuer’s denial, the two companies announced that Deutsche Bank would acquire Bankers Trust.
But as SEC investigators attempted to move forward, then head of SEC enforcement Richard Walker recused himself from the investigation, which was then terminated. Within months, he joined Deutsche Bank as General Counsel. A few years later, Walker hired a man named Robert Khuzami to join him at Deutsche Bank. He later recommended Khuzami for his current job as head of enforcement at the SEC.
http://www.forbes.com/sites/paulthacker/2011/09/20/inside-the-secs-abandoned-deutsche-bank-investigation/
John X.
Looks like Burns, Esq. knows where his bread is buttered. It’s not illegal if it’s not against the law. From his comments here, the dude is so dirty that rats screw up their noses at his passing.
As someone else mentioned, “illegal” doesn’t mean shit when the laws and lawmakers are for sale. And, from what it sounds like, Burnsie agrees with this, as it is better to do evil and pay off those college loans in his world.
Steve
@Villago Delenda Est: That’s not really an answer, unless you take a Nixonian view of legality.
Roger Moore
@Zifnab:
Drowned in Grover Norquist’s bathtub. The Republicans can’t overturn all the regulations they dislike, but they can defund the regulatory agencies.
Ruckus
@EconWatcher:
I’m not commenting on this case specifically. But one of the challenges is, it’s very hard to prove fraud to a jury of mostly high-school grads in a case involving complex transactions.
Isn’t that part of the reason for the complexity of the transactions? Making them hard for, if not anyone, at least most people from understanding them so they can be sold to the marks?
Paul in KY
@burnspbesq: They can. A GS-13 is a big salary. It would take them awhile to pay off the loans, but they can certainly live a comfortable life on a GS-13 salary.
Paul in KY
@Holden Pattern: Mencken is like Molly Ivins on bad tequila.
Paul in KY
@Steve: All of Poland was under martial law. As a Nazi, you could get away with literally anything in a country under martial law.
Paul in KY
@Steve: The Nazis certainly took a ‘Nixonian’ view.
John M. Burt
@Emma: Capital punishment is especially important when dealing with the crimes of corporate “persons” because they are not subject to natural senescence.
Tony J
@Steve:
It’s the right answer, because in German law at the time it really was legal if Hitler said so. The fact that Hitler was too squeamish to give the order in writing was what led to the Wannsee Conference, where Party bigwigs sat down with lawyers to draft a legally correct policy that gave Hitler plausible deniability and David Irving a career.
Barry
@Yutsano: “Wait, what? Do you have a specific example of this?”
Go to the f*cking Rolling Stone magazine, and read Matt Taibbi’s articles. He’s covered this quite extensively.
The Moar You Know
The Internet Lawyer has showed up to crap all over this thread, I see.
Barry
@Jesse: “This strange idea that something must be illegal to be corrupt puzzles me. Is this a lawyer thing, burns?
It is perfectly possible to be “willing to act dishonestly in return for personal gain” while remaining scrupulously within the letter of the law. Dishonest actions can be found to be not criminal. And all this logic-chopping and deliberate ignorance of the plain meaning of English words is fucking stupid.”
Remember, there are a lot of Americans who see nothing wrong with a lawyer doing 5 years in the SEC, then 5 years defending financial criminals from the SEC, then 5 years back in the SEC…………
Now, if the lawyer worked as a public defender, then tried to get a job in the DoJ, they’d scream bloody murder.
Barry
@Steve: (re – the Holocaust being legal under German law) “Was it really?”
I’d bet on it being legal; the Reich had lots of ’emergency laws’, IIRC, allowing the government to do what it wanted, under the excuse of national security.
Villago Delenda Est
@Barry:
The Enabling Act of 1933, which basically gave Hitler the right to decree just about anything under the sun.
“Due to the great care that Hitler took to give his dictatorship an appearance of legality, the Enabling Act was renewed twice, in 1937 and 1941. In 1942, the Reichstag passed a law giving Hitler power of life and death over every citizen, effectively extending the provisions of the Enabling Act for the duration of the war.[9]”
From the wikipedia article.
The Holocaust was perfectly legal, under Reich law.
Murray Anderson
@Tony J:
The Wannsee conference was a planning meeting, chaired by Heydrich, to determine how the deportations and murders would be carried out, and to ensure cooperation of the various government departments represented. It was not a legal conference.
The theory was that Hitler’s word was the law, but no one would have been impressed by that excuse after the war, and anyway no explicit order from Hitler has emerged.
Villago Delenda Est
@Murray Anderson:
The decision to “evacuate” the Jews to the east had been made prior to the conference “at the highest levels of authority” in the Reich.
This means Hitler gave the order, even though it may not have been written down. Goering gave Heydrich a written order to hold the conference, which indicated to Heydrich that Hitler himself had directed it.
There was no mistaking what this was all about. Heydrich ordered Eichmann to clean up the minutes, but after the formal part of the conference the participants dropped the sham of “resettlement” and freely discussed the true meaning of “the Final Solution”. This much was apparent from the need for the conference itself to coordinate the various government offices to implement the policy already decided upon. The first part of the conference outlined what had already happened in the east, and the logistical problems encountered, when dealing with all those Jews that lived in the territories German armies had overrun in 1941.
Why, the cost of ammunition for firing squads was just too high.
SRW1
@Villago Delenda Est:
Actually, it wasn’t. Which is why the decision to implement it was spread to the higher echelons of the government and the SS at a conference that was kept secret. (Wannsee Conference)
Roy G.
“And so, by definition, if it was authorized by the president, it did not violate our obligations under the Conventions Against Torture.”
Villago Delenda Est
@SRW1:
Hitler knew what he was doing was monstrous, but he always made sure that a veneer of legality was present in everything he did. Even if he ignored the details (as he did with assuming the Presidency himself, after the death of Hindenburg).
The Wansee Conference was about working out the details of implementing policy that had already been decided upon by Hitler, in his full totally legal authority as Fuehrer and Chancellor. Even then, some of the ministers were a bit squeamish about the legal details of carrying out the evacuations, and making sure that everything was done “just so” in the eyes of the law of the Reich.
rob in dc
This happens almost every single time. No admittance of wrong doing and paltry fees. There is no incentive not to commit fraud anymore, not when the only consequence of getting caught is the cost of doing business.
SRW1
@Villago Delenda Est:
Sorry, the only thing that would have made it legal would have been a law to declare a crime punishable by death that Jews could be accused of. No such thing existed.
In addition, while it is overwhelmingly likely that the plan for the Endlösung came from Hitler directly, there is no documentary evidence that actually links him to the plan. Now, of course such documents could have been destroyed in the course of the war, but the more likely explanation is that the Nazi were delusional enough to believe they could implement the Holocaust and then deny it after a victorious end to WW II. So they just didn’t want any evidence to exist.
Btw, most of the participants of the Wannsee Conference were not aware beforehand of the plan laid out by Heydrich at the meeting. Not a very German way to work out details.
Wiki has some interesting points how Heydrich used the fact that the conference had to be delayed several times, among other reasons to declare war on the US, to turn it into something far more evil than originally planned
Villago Delenda Est
@SRW1:
You don’t get it.
Hitler said DO IT.
That made it legal. His word was law.
Which is why I always say “legal under Reich law” when I comment on this particular perversion of the concept of “rule of law”.
The participants actually discussed the minutia of just how Jewish you had to be to be fully “resettled” to the east, based on the Nuremberg Racial laws of 1935.
Doing what was done to the Jews was perfectly, meticulously made legal during the course of the Nazi regime.
How does this apply to our situation? People are making excuses for Wall Street corruption by saying that it can’t be corruption, because it’s “legal”. Well, killing six million Jews can’t be murder, because it’s “legal.”
So, you make the call on this one.
SRW1
@Villago Delenda Est:
Dearest Villago,
Calm down. I actually have no problem after your clarification of ‘legal under the Reichs law’. However, if you would excuse my being so bold and saying this, it’s kind of hard to ‘get it’, if doing so requires be intimate with the idiosyncracies of every blog commenter and these idiosyncracies are in opposition to general accepted standards (cf International Military Tribunal).
J. Michael Neal
@Barry: Put simply, Taibbi is a liar. I don’t know if the article your citing is the one I went through a few months ago, but if not, it was one on this same subject. He omitted critical facts, got others wrong and provided a thoroughly misleading and dishonest story.
He is not a good citation.
Roy G.
@J. Michael Neal:
Oh, puhleazze. Here’s what Felix Salmon had to say about Taibbi’s SEC article which I linked to above:
http://blogs.reuters.com/felix-salmon/2011/08/18/matt-taibbi-vs-the-sec/
So now are you going to call Salmon a liar?
J. Michael Neal
@Jay B.:
That’s not quite accurate. We said that most of it was legal and that it was difficult to prove the rest of it in court. What people, including Matt Taibbi, forget is that the DoJ *did* prosecute a couple of instances of securities fraud in the wake of the financial crisis. That had the emails in which the participants discussed the commission of the crime.
They LOST. The juries returned acquittals, despite what would appear to most of us as rock solid evidence of the crime.
Judge Rokoff is blowing a shitload of smoke. It’s really easy for him to sit on the bench and mock the SEC, but he’s not the one that would have to convince a jury. The reason that the SEC doesn’t demand an admission of wrongdoing is because the company wouldn’t agree to it. For reasons of civil liability, that’s a dealbreaker: without it, they’ll just tell the SEC to take it to trial. In most of these cases, there isn’t enough evidence to convict. The banks settle because it’s cheaper and easier than fighting all the way to a jury, not because they think they’ll lose.
The SEC is understaffed and its lawyers are underpaid. Of *course* they don’t get the best graduates of law schools, because they don’t pay anything close to what the private firms do. It isn’t really a question of whether they can survive on a GS-13 income, but rather whether they want to do so when they can make a hell of a lot more representing the banks.
If the SEC had more resources, then they would probably start taking more cases to trial. They could afford to drop a lot of time and money into a case even if they think that there is a strong chance that they would lose. (Which is itself a problem; prosecutorial ethics demand that they *not* bring cases they don’t think they can win. If you think about it, that’s a damned good thing. It does, however, reduce the chances that your sensibilities will be appeased by futile charges being brought.)
J. Michael Neal
@Roy G.: I haven’t read Salmon’s piece. What I have done is to go through one of Taibbi’s articles pointing out a number of serious problems, including cluelessness and outright lies. I posted it here and I’ve linked to it several times since. I have no intention of getting into a loop of doing it constantly, but you can go look for it yourself.
Short answer: I have no idea whether the article Salmon and I are talking about are the same, but there is enough evidence of Taibbi’s incompetence and dishonesty that I don’t really care. He is not a reliable source.
Roy G.
@ J. Michael Neal:
I posted a specific link to Taibbi’s story about the SEC illegally destroying the MUIs for investigations that were dropped. Your hand-waving about the SEC being underfunded and not attracting the best lawyers is a distraction from the real narrative, which is that evidence was destroyed that could have been used later on to buttress cases against the serial offenders on Wall Street.
Felix Salmon vouches for the article and its accuracy, as have many other non-Establishment Wall Street type, and yet you refuse to even engage with the case presented, because of some other article you read. Huh.
Since you didn’t read Salmon’s piece, i’ll quote it here:
As for the substance of the article, Taibbi makes a very strong case. Only Matt Levine has attempted a defense of the SEC, and he says that the agency’s policy of destroying files was “publicly announced”, when in fact it was a secret internal policy which the SEC wouldn’t even admit to when asked point-blank by the National Archives and Records Administration, the agency in charge of all federal document-disposal decisions. Levine says that “the trouble with Big Brother was too much all-pervading surveillance, not too little”; the financial crisis, I think, proves him clearly wrong on that front. The SEC in particular was toothless and ineffective for the entire Bush Administration, effectively giving banks and other fraudsters a green light to do anything they wanted. And its response to these latest allegations has been distressingly defensive and obfuscatory.
I hope this turns into a big scandal and causes significant changes at the SEC — although I’m not holding my breath. But if it does, Taibbi will deserve a huge amount of the credit. And judging by today’s coverage, he won’t get it from the mainstream financial press.
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It’s not about Taibbi, it’s about the revolving door at the SEC, and the destruction of evidence of financial fraud. I guess the old adage is true: When the facts are in your favor, argue the facts. When they aren’t, start dancing.
Uncle Clarence Thomas
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Fortunately, President Obama didn’t say one goddammed word about this during his election campaign, so don’t even think about starting in on this, firebagger trolls. This ain’t his department, capicha? Try the 3rd floor, near housewares.
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J. Michael Neal
@Roy G.:
Matt Taibbi has demonstrated himself to be a liar. If you would like to cite a different source, go ahead, but Taibbi has zero credibility. Once you have proven yourself to be a liar, as he has, then I won’t accept you as a source for *anything*. You can point to him all you want, but he is not trustworthy. End of story.
J. Michael Neal
If anyone cares, my analysis of the Taibbi article I’m referring to is here. Among other things, he commits what may be the most insidious sin for a writer: the omission of critical information pertaining to his arguments. Whenever you read him, keep in mind that he is not averse to withholding evidence that completely shreds his thesis.
Roy G.
@ J. Michael Neal: It’s obvious you have a personal obsession with Matt Taibbi which is causing you to ignore the point of this whole thread, which is in fact about wrongdoing within the SEC, which is a much bigger issue.
I might also point out that the ‘most insidious sin for a writer’ which you accuse Taibbi of, ‘the omission of critical information pertaining to his arguments’ is actually endemic in journalism. He’s building a narrative, not playing he said/she said. Are you not familiar with the tradition of muckraking journalism, do you really believe the sop about journalists being ‘fair and balanced, or are you just grinding your ax because you are on the receiving end of his argument?
Of course you want to focus on Taibbi, in order to try to discredit his arguments. However, what you yourself omitted was that I did, in fact, cite a different source, Felix Salmon, and quoted him at length in my last post. So, by ignoring critical information pertaining to your argument, according to your own argument against Taibbi, you yourself have zero credibility on this topic.
Thanks for playing!