Charles Ferguson’s Short Essay about Criminality in Multinational Banking Makes the Point about Government-Aided Systemic Rot — His Article Is Shorter and Has More Impact than Most

17 July 2012

Citation

Charles Ferguson, Banking Is a Criminal Industry Because Its Crimes Go Unpunished, Huffington Post (16 July 2012)

Charles Ferguson collected several examples of significant banking criminality, from only one month of news — Their cumulative impact is motivating

We are no longer surprised by individual announcements of corporate wrong-doing. Nor are we by revelations that government has been complicit in aiding, or ignoring, these pocket-pickings.

Charles Ferguson, however, shows us that even 30-days’ worth of financial sector news makes an impressive case for systemic rot in governance.

Ferguson’s illustrative month of examples

He wrote that:

(1) Barclay Bank and other banks manipulated the LIBOR — a world-wide fraud that I have discussed, here.

(2) JP Morgan Chase is the subject of federal subpoenas about price-fixing in American electricity markets. It has also been accused of exaggerating the financial performance of its investment funds, as well as concealing up to $5 billion in losses.

(3) HSBC, Lloyds, Credit Suisse, Barclays, and Wachovia/Wells Fargo have been exposed for money laundering on behalf of terrorist states, and organizations, dictators, and drug cartels. Some of these banks allegedly even created special sections and handbooks for the purpose.

(4) Morgan Stanley is defendant in a civil suit that cites papers, which appear to indicate that it pressured rating agencies to inflate the safety of its mortgage-backed securities, during the real estate boom.

(5) Visa and Mastercard settled a private antitrust action brought by merchants, who claimed that the credit card companies had illegally conspired to fix fees and service terms. The settlement amounted to a non-trivial $7 billion.

This is just the financial sector’s usual pattern and practice, thinks Ferguson

He reminds us that:

Just another month in financial services. Is it unusual? No, it's not.

If we go back just a little further, we have UBS, HSBC, Julius Baer, and other banks actively marketing tax evasion services to wealthy U.S. and European citizens.

We have senior executives of several banks (including JP Morgan Chase and UBS) strongly suspecting that Bernard Madoff was running a Ponzi scheme, but deciding to make money from him rather than turn him in.

And then, of course, we have the financial crisis and everything that led to it.

[W]e now possess overwhelming evidence of massive securities fraud, accounting fraud, perjury, and criminal Sarbanes-Oxley violations by mortgage lenders, investment banks, and credit insurers (including senior executives of Countrywide, Citigroup, Morgan Stanley, Goldman Sachs, Bear Stearns, AIG, and Lehman Brothers) during the housing bubble that caused the financial crisis.

If we go back to the late 1990s, we have the massively fraudulent hyping of Internet stocks, and several banks (including Merrill Lynch and Citigroup) actively aiding Enron in committing its frauds.

So, July 2012 really isn't abnormal at all.

Ferguson’s explanation for why banking gets away with robbing us — criminality-enablers are in charge

Ferguson draws attention to fact that not one criminal prosecution of a major firm or senior executive has taken place.

And he notes that neither President Obama, nor his rival for the presidency in the coming election, Governor Mitt Romney, “shows the slightest interest in changing” that.

In explanation of President Obama’s non-prosecutorial record, Ferguson invites readers to look at the qualifications of the people, whom the President appointed to critical positions:

(a) Attorney General Eric Holder came from Covington & Burling LLP, “a law firm that represents and lobbies for most of the major banks and their industry associations.”

Note

General Holder is perhaps the most pusillanimously mis-focused U.S. Attorney General that I have witnessed in my more than six decades. In his case, I imagine that lack of spine, combined with plutocratic-favoring blood, are primary explanations of his lackadaisical, even silly, performance.

(b) General Holder appointed Lanny Breuer head of the criminal division. Breuer also comes from Covington & Burling. And he “was co-head of its white collar criminal defense practice, and represented the Moody’s rating agency in the Enron case.”

(c) Mary Schapiro, Chairman of the Securities and Exchange Commission (SEC), formerly worked for Financial Industry Regulatory Authority (FINRA), the investment banking industry’s self-regulator. She got a $9million severance package from them. And she worked for the group, during the housing bubble deceptions.

Note

FINRA’s record during the lead-up to the recession is so ignominious that it should serve as successful indictment of financial self-regulation for the foreseeable future.

(d) Chairman Schapiro’s enforcement director is Robert Khuzami. Mr. Khuzami used to be general counsel for Deutsche Bank, where Wikipedia notes that he supervised lawyers doing the bank’s global litigation and regulatory investigations.

Ferguson concludes that government is corrupt

He asks what would have happened to one of us, if we had been caught supporting Iran’s nuclear program:

You probably haven't been to the White House a dozen times since President Obama took office, or attended White House state dinners, like Lloyd Blankfein has.

Nor have you probably overseen millions of dollars in lobbying and campaign donations, or hired senior administration officials, or sent your executives into the government in senior regulatory positions, or paid $135,000 for a speech by someone who later became chairman of the National Economic Council.

And, well, you get the law enforcement that you pay for.

“Pete, what do you think — as a former cop, corporate lawyer, and state assistant attorney general?”

I agree with Mr. Ferguson.

President Obama’s record on permitting the continuation of overwhelming criminality in the financial sector is what California lawyers call “unconscionable.” That means that his record is so bad that no one in their right mind would tolerate it.

The Administration’s excuses for avoiding prosecution (on the basis that the law does not support it) are transparently bogus. Especially so, because federal prosecutors so routinely run amuck, bringing cases that they have no business bringing. For example, think back to the expensive prosecutions for athletes’ steroid use and allegedly related perjuries. Or to the recently (deservedly) lost case against former Senator John Edwards’ for allegedly misusing campaign contributions.

Using the limits of the law as an excuse not to prosecute people who actually violated the law, or its intent, is absurd.

The moral? — Our financial and political systems are rotten

Charles Ferguson’s concise list of financial sector examples is worth a read.

PeteFree.com

Charles Ferguson’s Short Essay about Criminality in Multinational Banking Makes the Point about Government-Aided Systemic Rot — His Article Is Shorter and Has More Impact than Most