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Senator Richard Durbin (D-IL): “Frankly, the Banks Own Congress” and You’re Getting Screwed Again

Posted by Larry Doyle on March 24, 2010 12:22 PM |

I wrote extensively in 2009 as to How Wall Street Bought Washington. Well, it would appear that the purchase and sales agreement between these two entities remains in place.

A recent press release highlights developments on Senator Chris Dodd’s proposed Financial Regulatory Reform along with a recent assessment by Washington insider and Illinois Senator Richard Durbin.


Senator Durbin Says:  “Frankly, the banks own Congress,” as Investigation of Lehman Brothers Found Its’ Accountants and Lawyers Helped “Cook the Books”

March 24, 2010:   The Senate Banking Committee financial reform bill was voted out of committee on Monday afternoon.  On the previous Friday Senator Jeff Merkley (D-OR) offered an amendment to include the restoration of the legal rights of investors to hold accountable those who knowingly aid and abet fraud, a critical component of financial reform. The first draft of Senator Dodd’s bill, which was on the Committee Web site for months, contained this provision.

Chairman Dodd apparently dropped that important investor protection measure in a failed attempt to gain Republican and Wall Street support and the Democratic bill exited his Committee without it. As a result, Senator Merkley’s amendment was never even considered.  Therefore as it now stands the legislation heading to the floor of the Senate does not restore the lost right of investors to hold knowing aiders and abettors accountable to the investors they help rob.

As Senator Dick Durbin (D-IL) said (prior to Chairman Dodd’s mark-up): “Hard to believe in a time when we are facing a banking crisis, that many of the banks created, that the banks are still the most powerful lobby on Capitol Hill. They frankly own the place.”  Senator Durbin said this in a radio interview on Monday, March 15 (WJJG-AM: “Mornings with Ray Hanania,” a big Chicago area political call in show).

Separately, also on March 15, in a Senate speech, Senator Ted Kaufman (D-Del) said:  “Lehman Brothers was cooking the books.  Fraud and potential criminal conduct were at the heart of the financial crisis.”

Senator Kaufman was referring to the 2,200 page report issued last week on the investigation into Lehman Brother’s spectacular failure.  It documents in-detail how Lehman’s banking counterparties, lawyers and accountants knowingly structured faux asset repurchase agreements to enable that Wall Street firm to falsify its financial statements.  These knowing fraud aiders and abettors, however, will likely escape accountability to investors under current law because the two radical Supreme Court decisions (Central Bank and Stoneridge) together eliminated private liability for knowingly aiding and abetting fraud and otherwise engaging in fraud schemes.

Restoring investor accountability for aiding and abettors is supported by a significant number of senators including Sens. Merkley, Spector (D-PA), Reed (D-RI), Whitehouse (D-RI), Kaufman, Widen (D-OR), Schumer (D-NY), Menendez (D-NJ) and Durbin. It is also supported by state securities regulatory organizations (as represented by the North American Securities Administrators Association), many leading law professors, consumer and investor groups. Moreover, a recent Opinion Research Corporation survey found that well over 90 percent of Americans support restoring legal rights to investors so that they can recover their losses from all knowing participants in fraud schemes.

It is hoped that when the full Senate commences consideration of the reform bill after the Easter recess, an amendment will be offered and approved restoring the ability of investors to recover their losses from all knowing fraud participants.

The integrity of the U.S. markets depends on accurate information and our laws must send the message to corporate management, as well as their lawyers, accountants, investment bankers, and other so-called “secondary actors,” that they will be held accountable for aiding and abetting in deception and fraud.

I do not care which side of the aisle you find yourself; the amendment protecting investors falls into the category of a “no brainer.” Why aren’t FINRA and the SEC screaming at the top of their lungs for the inclusion of this amendment? Where is Mary Schapiro? Where is Richard Ketchum, head of FINRA? Their silence is deafening.

Why did this amendment fall out? The Wall Street lobby is hard at work because, as we know, Wall Street owns Washington.

If you think you’re getting screwed, you’re right. You are!!


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