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HomeUsing the “F” Word
Posted by Larry Doyle on April 24th, 2010 9:28 AM |
Fraud, that is. During an interview on Bill Moyers Journal last night, former bank regulator William K. Black had no trouble using the word fraud to describe the root cause of our current economic crisis. Many thanks to Sense on Cents reader Lizzy for bringing attention to this interview.
The Financial Crisis Inquiry Commission Should Investigate…
Posted by Larry Doyle on January 11th, 2010 9:28 AM |
Will America ever truly learn what happened on Wall Street that brought our markets, our economy, and our country to its knees?
We should not expect the incestuous Wall Street-Washington partners to implicate themselves and thoroughly expose their shortcomings. A full 16 months since the failure of Lehman Bros. and how much have we truly learned? What change has really occurred? Who has been fired in Washington? Who has been indicted on Wall Street? Will the Financial Crisis Inquiry Commission, charged with investigating the factors which facilitated our economic disaster, truly be effective?
The truth may hurt but if the hard questions are not asked, the failings are not exposed, and those responsible are not held to account, then the lessons will not be learned, and the experience will likely repeat itself.
Will the commission pretend to investigate, but ultimately wilt under the pressure of the incestuous pillars of power? Will the commission rise above the fray, hold people and institutions to account, and make our country proud? Will the commission use its power to subpoena, if need be?
Whom should the commission pursue? What agencies and institutions should the commission target? If I were on the commission, I would recommend pursuing the following targets: (more…)
Why Do We Need a Multi-Agency Financial Fraud Task Force?
Posted by Larry Doyle on November 18th, 2009 12:45 PM |
Should we take heart that the Obama administration is creating a multi-agency Financial Fraud Task Force? While there is no doubt there are massive frauds in the system, the mere creation of a task force does not necessarily mean the frauds will be rooted out. Why? If the agencies involved in the task force are themselves fundamentally and structurally flawed, then frauds will continue. If the agencies merely failed to execute or perform then perhaps this task force will expose those deficiencies and lessen fraudulent activities.
Which agencies will be involved in this task force? The Securities Industry News reports, U.S. Launches Multi-Agency Task Force to Prosecute Financial Fraud:
The task force will be led by the Department of Justice and chaired by Attorney General Eric Holder Jr., but will also include senior officials from the Department of Treasury, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve System and other major federal agencies.
Thus, this task force would seem to consist of all government agencies while being led by AG Eric Holder and the Department of Justice. What does Mr. holder have to say? (more…)
More Wall Street and Washington Incest
Posted by Larry Doyle on September 17th, 2009 1:15 PM |
The other day I saluted Judge Jed Rakoff for exposing the embedded hypocrisy and contrivance in the $33 million settlement paid by Bank of America to the SEC. Why don’t we have more judges with the courage and integrity to expose the incestuous nature of the Wall Street-Washington relationship? Great question. As an example of this incest, Bloomberg’s Jonathan Weil exposes the pathetic performance of Judge Robert Chatigny, from the U.S. District Court in Hartford, in his adjudication of a fraudulent accounting case brought by the SEC against General Electric. Weil writes, GE’s Fraud Case Could Use the Judge Gone Wild:
Finally a judge has dared say no to the once-venerable Securities and Exchange Commission and one of its cozy corporate settlements.
If that wasn’t novel enough, this fellow first had the nerve to ask the SEC a bunch of questions about the way it does its business. Turns out, he got a lot of embarrassing answers about the government’s investigation of Bank of America Corp that the SEC hadn’t planned to tell the rest of us about.
This jurist gone wild, now a folk hero of sorts, is U.S. District Judge Jed Rakoff. But before we go further, let me tell you a quick story about another judge, this one at the U.S. District Court in Hartford, Connecticut.
His name is Robert Chatigny. On Aug. 4, he was assigned a settled complaint the SEC filed that day against General Electric Co. Under the deal, GE agreed to pay $50 million of its shareholders’ money to resolve the agency’s claims that it had committed accounting fraud. The SEC didn’t name any actual people as defendants. We don’t know if it ever will. Chatigny approved the agreement six days later, with no hearing and no questions asked. GE neither admitted nor denied the allegations.
That’s how SEC cases usually go. And just think how much more we the public — and certainly GE shareholders — deserve to know about this supposed fraud. Who at the company committed it? Why hasn’t the SEC sued them? Doesn’t the SEC know who they are? Why aren’t they paying fines out of their own pockets? And why wasn’t Chatigny asking these kinds of questions?
I tried calling Chatigny yesterday to ask him. His law clerk said he couldn’t be reached for comment.
Why do firms such as GE or BofA commit these frauds or promote shoddy business practices? Because it is worth it. How so? The returns generated far exceed the potential fines or penalties imposed, so the practices continue.
The fact that Judge Chatigny or those of his ilk do not truly hold companies and individuals to account gives a quasi-green light for firms to continue to push the envelope. Who pays? Shareholders and the public at large. What are the real costs? The erosion of integrity and principle in the pursuit of profit. Who benefits? Individuals within these corporations and those in Washington who conveniently look the other way as these frauds play out.
I commend Jonathan Weil for once again shedding light into another dark, dank, dismal corner of American finance. We need more judges like Jed Rakoff and we need more journalists like Jonathan Weil.
LD
