Why the SEC Document Shredding? – Obama Cancels Deportations – London Riots: Pretext for Internet Crackdown – Cohabitation: Biggest Threat to Children – Homeland Gestapo Targets Whites
August 19, 2011
SEC Attorney Reveals that Agency Has Shredded Documents for Decades to Cover Up Wall Street Fraud
As many commentators have noted, the SEC did this to cover up fraud on Wall Street.
The Entire Government Strategy Is To Cover Up Fraud
William K. Black – professor of economics and law, and the senior regulator during the S & L crisis – says that that the government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are:
The entire strategy is to keep people from getting the facts.
Top Government Officials Created the Conditions In Which Fraud Would Flourish
I noted last year:
It is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud.
Here are just a few of many potential examples:
- The Treasury department allowed banks to “cook their books”
- Business Week wrote on May 23, 2006:
“President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.”
- Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks
- Tim Geithner was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth”
- The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted
- Freddie and Fannie helped to create the epidemic of mortgage fraud
- The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen
- Bernanke might have broken the law by letting unemployment rise in order to keep inflation low
- Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not
- Arguably, both the Bush and Obama administrations broke the law by refusing to close insolvent banks
- Congress may have covered up illegal tax breaks for the big banks
- Of course, deregulation by Larry Summers, Robert Rubin, Phil Gramm and many other high-level politicians and regulators also helped to grease the skids for fraud
Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith’s, definitive study of the Great Depression, The Great Crash, 1929:
The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy. In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting ….
This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor.
The government that permits this to happen is complicit in a vast crime.
In other words, the fraud started at the very top with Greenspan, Bush, Paulson, Negraponte, Bernanke, Geithner, Rubin, Summers and all of the rest of the boys.
As William Black told me today:
In criminology jargon: they created an intensely criminogenic environment. I have no knowledge whether the national security aspects played any role, but the anti-regulatory dogma was devastating.
(Here’s the definition for criminogenic.)
I noted last month:
Fraud caused the Great Depression and it has caused the current financial crisis. But fraud is not not being prosecuted, and so it will occur again and again, and prevent a sustainable economic recovery.
Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Indeed, William Black notes that we’ve known of this dynamic for “hundreds of years”.
Now mainstream journalists are starting to catch on.
Market Watch senior columnist Brett Arends writes:
No one has been punished. Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide, along with many others, cashed out hundreds of millions of dollars before the ship crashed into the rocks. Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains. But they aren’t in jail. They aren’t even under criminal prosecution. They got away scot-free. As a general rule, the worse you behaved from 2000 to 2008, the better you’ve been treated. And so the next crowd will do it again. Guaranteed.
Gretchen Morgenson and Louise Story point out in the New York Times that:
As the financial storm brewed in the summer of 2008 … Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.
“If you do not punish crimes, there’s really no reason they won’t happen again,” said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. “I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space.”
(This appears to be true on both sides of the Atlantic.)
And Frank Rich reports in a much-discussed piece in the New Yorker:
What haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression. There has been no legal, moral, or financial reckoning for the most powerful wrongdoers. Nor have there been meaningful reforms that might prevent a repeat catastrophe. Time may heal most wounds, but not these. Chronic unemployment remains a constant, painful reminder of the havoc inflicted on the bust’s innocent victims. As the ghost of Hamlet’s father might have it, America will be stalked by its foul and unresolved crimes until they “are burnt and purged away.”
After the 1929 crash, and thanks in part to the legendary Ferdinand Pecora’s fierce thirties Senate hearings, America gained a Securities and Exchange Commission, the Public Utility Holding Company Act, and the Glass-Steagall Act to forestall a rerun. After the savings-and-loan debacle of the eighties, some 800 miscreants went to jail. But those who ran the central financial institutions of our fiasco escaped culpability (as did most of the institutions). As the indefatigable Matt Taibbi has tabulated, law enforcement on Obama’s watch rounded up 393,000 illegal immigrants last year and zero bankers. The Justice Department’s ballyhooed Operation Broken Trust has broken still more trust by chasing mainly low-echelon, one-off Madoff wannabes.
Those in executive suites at the top of that chain have long since fled the scene with the proceeds, while bleeding shareholders, investors, homeowners, and cashiered employees were left with the bills. The weak Dodd-Frank financial-reform law that rose from the ruins remains largely inoperative ….
I pointed out in January that fraud is Wall Street’s business model, which is being supported by the government:
Nobel prize-winning economist George Akerlof demonstrated that if big companies aren’t held responsible for their actions, the government ends up bailing them out. So failure to prosecute directly leads to a bailout.
Moreover, as I noted last month:
Fraud benefits the wealthy more than the poor, because the big banks and big companies have the inside knowledge and the resources to leverage fraud into profits. Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading (representing up to 70% of all stock trades) and high proportions of other trades as well). This not only distorts the markets, but which also lets the program trading giants take a sneak peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, this and this.
Similarly, JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives. They use their dominance to manipulate the market.
Fraud disproportionally benefits the big players (and helps them to become big in the first place), increasing inequality and warping the market.
[And] Professor Black says that fraud is a large part of the mechanism through which bubbles are blown.
The government has not only turned the other cheek, but aided and abetted the fraud.
And this environment is ongoing today. See this, for example.
Even when the government has prosecuted financial crime (because public outrage became too big to ignore), the government has settled for pennies on the dollar [as a way to quietly bail out the big banks].
Economist Noted 150 Years Ago That Corruption At the Top Leads to Lawlessness By The People
I’ve repeatedly noted that corruption at the top leads to lawlessness by the people.
William K. Black – Associate Professor of Economics and Law at the University of Missouri at Kansas City, and the former head S&L regulator – notes that conservative French economist Frédéric Bastiat said the same thing more than 150 years ago.
Specifically, Bastiat said that corruption and “plunder” by government officials causes lawlessness among the people.
The Washington Times
Aug 19, 2011
Bowing to pressure from immigrant rights activists, the Obama administration said Thursday that it will halt deportation proceedings on a case-by-case basis against illegal immigrants who meet certain criteria, such as attending school, having family in the military or having primary responsible for other family members’ care.
The move marks a major step for President Obama, who for months has said he does not have broad categorical authority to halt deportations and said he must follow the laws as Congress has written them.
But in letters to Congress on Thursday, Homeland Security SecretaryJanet Napolitano said she does have discretion to focus on “priorities” and that her department and the Justice Department will review all ongoing cases to see who meets the new criteria.
“This case-by-case approach will enhance public safety,” she said. “Immigration judges will be able to more swiftly adjudicate high-priority cases, such as those involving convicted felons.”
August 18, 2011
Jordan Blackshaw and Perry Sutcliffe-Keenan were two of several demonstrators that were given harsh sentences for petty crimes in the recent UK riots. Another looter got six months for stealing a case of bottled water. Alex Jones, radio host of the Alex Jones Show, tells us why this is a severe overreaction on the UK’s part and how he is not surprised.
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|Written by Dave Bohon|
|Thursday, 18 August 2011 16:34|
|A new report from a pair of organizations dedicated to strengthening the institution of marriage shows that an alarming number of U.S. couples are deciding to have children without being married — a decision that places those children at risk for physical, emotional, financial, and other social problems.|
The study, released by the National Marriage Project and the Institute for American Values, found that while, toward the end of the 20th century, “divorce posed the biggest threat to marriage in the United States,” in today’s world “the rise of cohabiting households with children is the largest unrecognized threat to the quality and stability of children’s family lives.”
The report noted that “because of the growing prevalence of cohabitation, which has risen fourteen-fold since 1970, today’s children are much more likely to spend time in a cohabiting household than they are to see their parents divorce” In fact, according to the National Survey of Family Growth, compiled by the federal Centers for Disease Control, by the age of 12 a staggering 42 percent of children have lived with co-habiting parents, a number that dwarfs the 24 percent of children who have lived with divorced parents.
Statistics show that “more children are currently born to cohabiting couples than to single mothers,” the report noted. “Another 20 percent or so of children spend time in a cohabiting household with an unrelated adult at some point later in their childhood, often after their parents’ marriage breaks down. This means that more than four in ten children are exposed to a cohabiting relationship.”
Dr. W. Bradford Wilcox of the National Marriage Project and the study’s lead author observed that “the divorce rate for married couples with children has returned almost to the levels we saw before the divorce revolution kicked in during the 1970s. Nevertheless, family instability is on the rise for American children as a whole. This seems in part to be because more couples are having children in cohabiting unions, which are very unstable.”
Wilcox told National Public Radio that the marital conflict depicted in the classic 1979 film Kramer Vs. Kramer is no longer representative of relationship dysfunction in America. It’s now “Kramer vs. Kramer vs. Johnson and Nelson,” he quipped. “We’re moving into a pattern where we’re seeing more instability, more adults moving in and out of the household in this relationship carousel.”
According to Wilcox, Americans who grew up during the1970s and ’80s divorce epidemic were conditioned to hold marriage at arms’ length, postponing it even after having children. But research shows that cohabitating couples are twice as likely to split as married couples. “Ironically,” he told NPR, “they’re likely to experience even more instability than they would [have] if they had taken the time and effort to move forward slowly and get married before starting a family.”
NPR cited another study showing that a quarter of American women with more than one child had those children with multiple partners. Psychologist John Gottman, co-author of the National Marriage Project report, said that such instability has a major negative impact on kids of those relationships. “Both in externalizing disorders, more aggression, and internalizing disorders, more depression,” he said, “children of cohabiting couples are at greater risk than children of married couples.”
The study, which surveyed more than 250 peer-reviewed journal articles on marriage and family life in the U.S. and elsewhere, noted that children of cohabiting parents are more likely than those from traditional married families to face such emotional and social problems as drug abuse, depression, dropping out of high school, physical and sexual abuse, and poverty.
As reported by the Catholic News Agency, the study also found that “family stability is part of a class divide. Children from college-educated homes have seen their family lives stabilize, while children from less-educated homes have seen their lives become increasingly unstable.”
Observed Wilcox: “There’s a two-family model emerging in American life. The educated and affluent enjoy relatively strong, stable families. Everyone else is more likely to be consigned to unstable, unworkable ones.”
The report noted that a surge in couples cohabitating and having children began to dominate poor communities in the late 1960s, but the trend has now migrated into lower middle-class families in America. “Out-of-wedlock births among white women with a high school diploma rose more than sixfold in recent decades,” the New York Times cited the report, “jumping to 34 percent in the late 2000s, from 5 percent in 1982. In contrast, the rate for white college graduates stayed flat at about 2 percent.”
“While births to white women in cohabiting relationships rose by about two-thirds from the early 1990s to the mid-2000s, the proportion jumped by about half for black women and nearly doubled for Hispanic women, though that increase was affected by a large influx of immigrants,” continued the Times, quoting Sheela Kennedy, a research associate at the Minnesota Population Center. “There’s growing evidence that families that would be unstable anyway are just skipping marriage,” said Kennedy, suggesting that cohabitation may be as much a symptom of instability in the lives of children as it is a cause.
Nonetheless, the study’s authors insisted, an intact marriage between a child’s biological parents remains the “gold standard” for successful families. “Children are most likely to thrive economically, socially, and psychologically, in this family form,” declared the Institute for American Values in a statement about the study.
The study’s authors contended that the benefits of marriage are not reserved for just the wealthy and educated, but “extend to poor, working-class, and minority communities, despite the fact that marriage has weakened in these communities in the last four decades.”
The study concluded that whether society succeeds or fails “in building a healthy marriage culture is clearly a matter of legitimate public concern and an issue of paramount importance if we wish to reverse the marginalization of the most vulnerable members of our society: the working class, the poor, minorities, and children.”
New DHS video ignores previous controversy over deliberate racial overtones
Paul Joseph Watson
August 17, 2011
Despite causing controversy last month with a video that portrayed white middle class Americans as the most likely terrorists, the Department of Homeland Security has released yet another PSA that depicts an attempt to bomb a subway station not by Al-Qaeda Muslims, but well-dressed white people.
A new Public Service Announcement entitled ‘The Drop Off – If You See Something, Say Something’ was unveiled by none other than Big Sis herself, Janet Napolitano, on the Homeland Security website today.
The PSA, which will be played on television and radio stations, shows a well dressed attractive white woman exiting a taxi before walking into a subway station. The taxi driver – a white man – then makes a phone call and sets a timer on a device in the trunk of the car. The woman then leaves her bag in the station.
“If you see something, say something – report suspicious activity to local authorities,” states the voiceover as the clip ends with other commuters reporting the incident to a black security guard and a black police officer.
In her accompanying statement to the video, DHS chief Napolitano also hints that gun stores could be a prime breeding ground for terrorists, making reference to a recent case where, “the owner of a gun store near Ft. Hood called authorities when an individual in his store was behaving in a suspicious manner.”
As we highlighted last month, a longer PSA recently produced by the DHS overwhelmingly went to significant lengths to portray white Americans as the most likely terrorists, despite the fact that the 126 people who were indicted on terrorist-related charges in the United States over the last two years were all Muslim.
Bizarrely, the majority of the people shown reporting suspicious activity to authorities were portrayed as non-whites.