The role of the criminal justice system with regard to financial fraud by elite bankers in 2011 is likely to reprise its role last decade — de facto decriminalization. The Galleon investigation of insider trading at hedge funds will take much of the FBI’s and the Department of Justice’s (DOJ) focus.
The state attorneys general investigations of foreclosure fraud do focus on the major players such as the Bank of America (BoA), but they are unlikely to lead to criminal liability for any senior bank officials. It is most likely that they will lead to financial settlements that include new funding for loan modifications.
The FBI and the DOJ remain unlikely to prosecute the elite bank officers that ran the enormous “accounting control frauds” that drove the financial crisis. While over 1000 elites were convicted of felonies arising from the savings and loan (S&L) debacle, there are no convictions of controlling officers of the large nonprime lenders. The only indictment of controlling officers of a far smaller nonprime lender arose not from an investigation of the nonprime loans but rather from the lender’s alleged efforts to defraud the federal government’s TARP bailout program.What has gone so catastrophically wrong with DOJ, and why has it continued so long? The fundamental flaw is that DOJ’s senior leadership cannot conceive of elite bankers as criminals.
Thursday, December 30, 2010
Only when people like William Black are placed in positions of authority to begin cleaning up the U.S. financial system, will the load of usury, speculation, and economic rent be lifted to provide enough room for the real economy and working people to begin recovering. Until then, wages will continue to stagnate, income disparity will continue to grow, physical infrastructure will continue to deteriorate because of underfunding, social infrastructure will be slashed, and the U.S. continue on its present path of decline. It really comes down to a fight between America and Wall Street.
Posted by Tony Wikrent at 8:23 AM