The More You Look for Terrorists, the Fewer Banksters You Have to Prosecute

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This report–or rather the HuffPo piece on it–has gotten a lot of attention. It shows the government as a whole has prosecuted 57.7% fewer financial fraud crimes than they did 10 years ago, when 9/11 changed everything.

The report on our government’s growing disinterest in prosecuting banksters should be paired with this FBI report which I reported on some weeks ago (since that time, FBI has removed the link to the report). The FBI report makes it clear that the FBI, at least, has shifted its approach over the last decade from a “case driven” focus to a “threat driven” focus–meaning that it decides what it’s going to look for and then goes to find criminals committing that crime rather than finds crimes and responds to them. Depending on whether you believe this report or Director Mueller’s June reconfirmation hearing, financial fraud is either the 7th or 5th highest priority for the FBI, behind terrorism, counterintelligence, and cyberattacks.

Those priorities show. As part of its focus on terrorism, the FBI has increased surveillance capacity by 48%. And over that time, the report boasts, the FBI has written 85,500 raw intelligence reports. It has set up 10,200 SCI workstations.

All of which costs money. The FBI reports that its budget authority–which it notes is driven by the strategy–has more than doubled over the period in which it has found half as many banksters.

Most telling, though, is a stat you get by putting the two reports together. TRAC notes that FBI referred 37.6% of the fraud cases for prosecution so far this year–working out to be roughly 470 cases. But if you work out how many financial cases they say they were tracking last year (they say “more than 2,800” equates to 57% of the cases), you see they were tracking roughly 4,912 financial fraud cases. If these numbers are correct, it means fewer than 10% of the banksters and other fraudsters they’re tracking ever get charged.

In other words, it’s not that they’re not seeing the crime. They’re just not referring it for prosecution, choosing instead to look for young Muslim men to entrap.

Two MI Counties File Class Action Suit against MERS and Banks for Being Tax Cheats

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Two MI County Registers of Deeds–Curtis Hertel of Ingham (Lansing’s county) and Nancy Hutchins of Branch–have filed a class action suit against MERS, seeking the taxes the banks should have been paying to counties and the state every time they transfer property, plus penalties.

Plaintiffs are seeking money and punitive damages, tax penalties, costs, and attorney fees in the return of unpaid taxes, interest and penalties to Plaintiffs as class representatives of the 83 counties of the State of Michigan.

In addition to MERS, BoA, Chase, Wells Fargo, and Citi, the suit cites parts of the state’s biggest foreclosure mills, eTITLE, 1st Choice Title, and Attorney’s Title and Fannie Mae. The suit argues that the defendants had a duty to record the real value of property transferred in the state, and by failing to do so, they cheated counties out of the taxes on those property transfers.

Defendants, as grantors, makers, executors, issuers and deliverers of deeds or instruments conveying an interest in real property under MCL 207.507, had a DUTY to declare the true value of the property and full consideration given/received on the face of each and every property transfer documents in Exhibit 2, as well as all those other similar filings made by Defendants; or in the alternative Defendants had a DUTY to attach an affidavit to the deeds and instruments stating the true value of the property. Defendants had these same DUTIES with regard to all those other deeds and instruments filed by them in all 83 counties of the State of Michigan over the last 15 years.

Defendants made, executed, issued and/or delivered for recording with the Registers of Deeds in all 83 counties in Michigan, assignments and other real property transfer documents transferring all or part of an interest in real property without stating the actual and true value of the property on the face of the instrument; and without alternatively attaching an affidavit stating the true value of the property interest being transferred. MCL 207.504/MCL207.525(2).

As a direct consequence of Defendants’ failure to properly make, execute, issue, and/or deliver real property transfer deeds, assignments, and other documents recorded in the 83 counties of the State of Michigan transferring property and security interests, neither County nor State Real Estate Transfer Taxes have been paid on thousands of real property transfers filed by/for Defendants across the counties of the State of Michigan as required by law.

When Hutchins filed a similar suit covering just Branch County–a rural county with a population of 45,000–in August, she estimated the county had lost $100,000 in the last 5-10 years. Even in Ingham County alone, with its population of over 250,000, that number is going to be much higher. Add in the state taxes, and the money will start to add up.

But the principle will be even more important: the banks have been cheating counties and states with this MERS scheme. It’s time they finally paid taxes like the rest of us.

As the Next Phase of the Crash Accelerates, Watch for More Looting

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[youtube]4RPt9czGADk[/youtube]

The earth avoided getting hit by an asteroid last night. Then today, FEMA tested its catastrophic communications system, only to discover some problems. In my own case, the warning signal started skipping, dadadadadadada, sounding like a machine gun, before it switched my jazz to a bad disco station. Outside, there are whistling high winds blowing through the dark afternoon and a threat of snow.

All of which feels appropriate as a set of clowns arrive in the state and prepare to debate over whether they were right to say MI’s major industry–and my state–should go bankrupt.

Jefferson County, AL just did go bankrupt. Finally.

Which sort of feels like the preview to the collapse of Europe. Here’s Brad DeLong:

Time to Spread Foam on the Runway: The Federal Reserve Needs to Act Now to Firewall Off the Eurocrisis

I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria–that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II. Well, right now guess what? The time is 1931, and we are Austria.

And he quotes Paul Krugman.

This is the way the euro ends.

Not with a bang but with bunga-bunga.

Seriously, with Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear — and European leaders seem like deer caught in the headlights.

[snip]

I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object — and watch the explosion.

The crash is starting to accelerate again.

With that in mind, it’s worth reading this Misha Glenny piece.

Capricious, unreliable and ideologically driven were some of the more printable epithets hurled at George Papandreou in his final week as Greek prime minister. We should look at the motives of his detractors before taking such critiques at face value. While engaged in titanic political struggles at home and abroad, he has been quietly trying to tackle one of the most intractable root causes of the Greek tragedy – crime and corruption.

As the new Greek government struggles to convince Europe of its resolve to cut the country’s bloated public sector, it also has to decide whether to face down the real domestic threat to Greece’s stability: the network of oligarch families who control large parts of the Greek business, the financial sector, the media and, indeed, politicians.

[snip]

The oligarchs have responded in two ways. First, they have accelerated their habitual practice of exporting cash. In the last year, the London property market alone has reported a surge of Greek money.

Second, they have mobilised hysterical media outlets which they own in order to denounce and undermine Mr Papandreou at every opportunity, aware he is the least pliable among Greece’s political elite.

Their aim is clear – they are waiting to pounce on the state assets which, under the various bail-out plans, the Greek government must privatise.

I’ve long suspected this crisis has been regarded by some–if not planned–as a means to accomplish in developed nations what their fellow Oligarchs in developing nations used to pull off via geography: the wholesale looting of their countries. And with it, dismantling the social contract on which modern democracy has depended.

Who needs democracy when you can force more austerity onto a country to shield the banks? Who needs democracy when you can add city after city to the ranks of those led by Emergency Financial Managers.

Yeah, the Occupiers have inspired some real fear among the looters. Small-d democracy won some battles last night in Maine and Ohio. But that’s not enough, without real vigilance, to stop the looters.

Richard Blumenthal Asks Eric Holder Where the Foreclosure Prosecutions Are

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It took until Richard Blumenthal’s turn in Eric Holder’s appearance before the Senate Judiciary Committee today before Holder got asked about foreclosure fraud. Blumenthal generously suggested that, “I know the foreclosure crisis is on your agenda,” and then asked if we’ll ever see a prosecution on robosigning and other fraud.

Holder responded, at first, by pointing to states Attorney Generals, claiming they are conducting investigations. I do hope he’s thinking of Eric Schneiderman, Beau Biden, and Catherine Cortez Masto, because the ones working on the settlement are pointedly avoiding any real investigation. Holder then further dodged, suggesting DOJ might find other ways–like civil suits–to hold these banks accountable.

Finally, and perhaps most interesting, Bluementhal asked why DOJ had not intervened in the Bibby, Donnelly v. Wells Fargo suit, a whistleblower suit against Wells Fargo, BoA, Chase, Ally, and others for the illegal legal fees the banks charged homeowners, including veterans.

Holder hedged in response to that question, promising he’d find out who had made the decision not to intervene and the basis for the decision.

Unfortunately, Blumenthal pointedly avoided asking for a 30 day response to that request. So an explanation for why DOJ isn’t helping to sue banks for the illegal fees they’ve charged will probably come long after DOJ settles for those illegal fees.

Jamie Dimon Owns Obama’s Testicles

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Jamie Dimon owns Barack Obama’s testicles. That’s the only explanation I can think of for why, rather than firing his JP Morgan Exec Chief of Staff for being incompetent, Obama simply shifted him over to serve as the public face of his Administration.

Ten months into his tenure as chief of staff, [Bill] Daley’s core responsibilities are shifting, following White House missteps in the debt-ceiling fight and in its relations with Republicans and Democrats in Congress.

On Monday, Mr. Daley turned over day-to-day management of the West Wing to Pete Rouse, a veteran aide to President Obama, according to several people familiar with the matter. It is unusual for a White House chief of staff to relinquish part of the job.

[snip]

The new set-up effectively makes Mr. Rouse the president’s inside manager and Mr. Daley his ambassador, roles that appear to better suit both men’s talents.

As you recall, Daley was hired as a sop to the banks, who thought endless bailouts weren’t enough bounty from this and the prior Administration and successfully demanded having one of their own in the White House gatekeeper position. And so, after fucking up the debt ceiling, and fucking up the introduction of Obama’s jobs push (and overseeing the passage of three trade agreements that will send jobs overseas), Daley has been moved into a figurehead role.

Here’s a snapshot of the kind of people whom Daley is sucking up to as “Ambassador”: the architect of the housing bubble-and-crash, the embodiment of corruption in the GSEs, and a guy who helped pass a law that will help his wife’s insurance company, only to leave to work for the Chamber of Commerce and a private equity firm.

Lately, Mr. Daley has been trying out his new role, deploying his back-slapping persona in Washington social circles. He recently held a private reception at his Ritz Carlton residence for a small group of D.C. elites, including former Fed Chairman Alan Greenspan, former Fanne Mae Chief Executive Jim Johnson and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S.

Former Sen. Evan Bayh (D., Ind.) said an invitation to lunch with Mr. Daley in his West Wing office was the first time he had heard from him.

So at a time when Obama’s campaign wants to pretend he’s taking a tough line with the 1%, he’s refusing to fire 1%er Bill Daley when he proves to be incompetent. Does this mean the banksters will effectively retain their own personal gate-keeper?

And FWIW, I believe Pete Rouse was and will be the best of the three Chiefs of Staff Obama has had, so I approve of that move. Though I question the wisdom of making the move just in time for another government shutdown, which is due up in the next few weeks.

Blind American Concern Troll Finds Nut

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You may not be able to say this every day, but hats off to the Washington Post’s Richard Cohen. In an op-ed for Tuesday’s print edition that first hit the online version late Monday, Cohen analogizes the Masters of the Universe on Wall Street to scummy used car salesmen:

As a mere youth, I bought a used car in New York to drive to California to be with the woman of my dreams. Inexplicably, she decided to rush back to New York, so I promptly took the car back to the dealer. He made a shockingly low offer. The car had been in an accident, he explained. The chassis was bent. I was flabbergasted. I had just bought the car from him. If the chassis was bent, it was bent when I bought it. The salesman offered me a take-it-or-leave-it shrug. He probably now works on Wall Street.

That the morality of the used car lot has been adopted by Wall Street is now abundantly clear. Citigroup recently settled a civil complaint in which it was accused of selling mortgage-related investments that it knew were dogs. It was so certain that the investments were the financial equivalent of my used car that it bet against them — heads I win, tails you lose — and even selected the investments themselves, choosing from a cupboard of depleted and exhausted financial instruments. An investment in the Brooklyn Bridge would have been safer.

Go read the whole piece. Seriously.

Cohen punches Wall Street, Goldman Sachs, outrageously crooked and belligerent New York cops, Citigroup, JP Morgan Chase and the SEC. It is a once in a lifetime thing of Cohen beauty.

Next thing you know America’s Concern Troll will be slinging hash down at Zuccotti Park with the #OWS denizens.

The FBI: Now, with 48% More Domestic Surveillance … but No Banksters

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The FBI produced a self-congratulatory report of the changes they’ve made since 9/11. It describes the FBI’s new intelligence focus. It boasts that it has a functional computer system (which for the FBI is an accomplishment) and 10,200 SCI work stations.

Oh, and it proclaims with joy that the FBI has had a 48% growth in surveillance
teams and capacity since 9/11. Let us rejoice in the proliferation of domestic spying!

But the most telling part of the report is the way it describes its threat-driven focus, then provides a list of prioritized threats. The report makes it clear that the FBI’s focus is driven not by what actual crimes are out there, but by what crimes it chooses to look for. And the list of its priorities puts terrorism, spying, cyber-attacks, public corruption, and civil rights ahead of white collar crime (you know–the banksters who crashed our economy?). This is similar to the priority list suggested by Robert Mueller at his reconfirmation hearing earlier this year…

  • Al Qaeda-launched attack like the Undie-bomber
  • Self-radicalized attacks like Mohamed Osman Mohamud
  • Spies like Anna Chapman
  • Cyber attacks allegedly launched by China
  • Massive corporate fraud committed by people like Lloyd Blankfein that weakens our financial system
  • Health care scams
  • Drug cartel violence
  • Public corruption

Though it appears that white collar crime has, since June, been demoted behind drug cartels and public corruption. And of course, the government has rolled out the new TCO designation, meaning that the FBI’s focus on Japan’s Yakuza technically now ranks higher than its focus on the gangsters dressed in banker’s suits who decimated our own country.

You see where this leads: to where the FBI doesn’t see–and therefore doesn’t investigate–the wholesale corruption of our economy, a crime affecting just about every American and doing far more financial damage than 9/11, because it is spending so much time finding or inventing enough terrorists to justify that being the top threat, the 18 model airplane plots it first invented, then stopped in 2010, rather than investigating banksters.

Mind you, the FBI report does boast of the big increase in penny-ante mortgage fraud arrests and convictions since 2007 (it notes that “mortgage fraud was not tracked separately in arrests and convictions until 2007”). But that’s still less than one mortgage fraud conviction for every 10,000 underwater homes and fewer fraud convictions than cybersecurity convictions. And in spite of the FBI claim that,

Since 2001, the FBI has focused on the most violent
criminals, the largest and most complex fraud schemes,
the most sophisticated and dangerous computer intrusions,
and the most corrupt public officials. [my emphasis]

It has netted precisely zero of those who propagated the complex fraud that brought down our country–not even Angelo Mozilo or anyone from Goldman Sachs, against whom they’ve got reams of evidence.

The FBI calls this emphasis on terrorism (and spies and hackers and corrupt politicians and Japanese gangsters) over white collar crime a “strategic” focus.

Sort of makes you wonder what objective this strategy is supposed to accomplish.

The Scandal Is that Jonathan Alter Doesn’t See the Scandal

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[Sorry for my unannounced absence. I’m on a road trip visiting Mr. EW’s family. Thanks to Jim White and bmaz for guarding the likker cabinet! I know they’ll keep it safe!]

I once got in trouble for mocking people who thought that blowjobs were a scandal worth legal investigation, but torture was not. Given that Jonathan Alter is the so-called liberal who, weeks after 9/11, affirmatively embraced torture, I’m not surprised he still falls in the former group. On Thursday, he wrote a Bloomberg piece sycophantically wondering how Obama managed to have such a scandal-free Administration. This, of the President whose Administration continues to invent all sorts of legal gimmicks to protect his predecessor’s torture. And this, of the guy who is looking high and low for new ways to bail out the banksters from the consequences of their crimes.

This Administration has smothered what was left of rule of law. And yet Alter can’t find a scandal?

Part of the problem stems from Alter’s terms. he equates scandal with some kind of honesty.

President Barack Obama goes into the 2012 with a weak economy that may doom his reelection. But he has one asset that hasn’t received much attention: He’s honest.

Obama certainly lies: about his commitment to the public option, his opposition to telecom immunity, and even his belief that no one is above the law. But what Obama does more is spin–spending months claiming that the deficit is the biggest threat to our country, claiming that a bank settlement is necessary to get the housing market back on track. That kind of spin requires real analysis to catch. Which, I guess, Alter isn’t up to.

And part of Alter’s problem is his adoption of Brendan Nyhan’s definition of scandal: the reference to something as a scandal by a WaPo reporter on that rag’s front page.

Nyhan says that political scientists generally see The Washington Post as a solid indicator of elite opinion — so for his study, a problem officially curdles into a scandal once the S-word is used in a reporter’s own voice in a story that runs on the front page of the Post.

Given that one of the WaPo editorial page’s most striking ideological commitments is to torture, it seems nearly impossible that torture–and the refusal to prosecute it–would ever be a scandal by Nyhan’s (and therefore Alter’s) terms. And Dana Milbank’s bankster epiphany notwithstanding, WaPo reporters are, almost by definition, isolated from the effects of the banksters’ crimes by class and distance.

Read more →

The “Good Faith” Dodge: Moving From Torture to Business?

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One short phrase in an article bmaz alerted me to yesterday set my blood to boiling.  I fumed about it off and on through the rest of the day and even found myself going back to thinking about it when I should have been drifting off to sleep.

The phrase?  “Good faith”

Here’s the phrase in the context of the article:

The U.S. Justice Department’s stepped up enforcement in the pharmaceutical industry has struck “the fear of God” in executives, a top lawyer at GlaxoSmithKline said today, addressing whether prosecutors have gone too far in building cases rooted in business conduct.

/snip/

The panel’s moderator, Jonathan Rosen, a white-collar defense partner in the Washington office of Shook, Hardy & Bacon, described what he called a “highly aggressive” enforcement environment.

Rosen posed questions to the panel members to explore the extent to which the government is criminalizing good-faith business decisions.

So, why would the longer phrase “criminalizing good-faith business decisions” set me off so? When I read that phrase, my mind flashed back to April, 2009 and the release of the torture memos.  Here is Eric Holder, as quoted by ABC News:

“Those intelligence community officials who acted reasonably and in good faith and in reliance on Department of Justice opinions are not going to be prosecuted,” he told members of a House Appropriations Subcommittee, reaffirming the White House sentiment. “It would not be fair, in my view, to bring such prosecutions.”

But Holder left open the door to some legal action, saying that though he “will not permit the criminalization of policy differences,” he is responsible as attorney general to enforce the law.

Uh-oh.  Now it’s even worse.  See the additional parallel?  Holder decried the “criminalization of policy differences” at the same time he said he wouldn’t prosecute those who acted in “good faith” on the torture memos.  The “good faith” in the business article above was smack in the middle of “criminalizing” “business decisions”. Read more →

How the Fed Helped Qaddafi Keep His $200B in Loot

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I suggested yesterday that the West will be playing dumb about the extent to which Qaddafi looted the Libyan people becomes known.

But what about how Qaddafi looted us–or, at least, the Fed?

As this article laid out, one of the means by which Qaddafi was looting was the Central Bank of Libya.

Moammar Kadafi secretly salted away more than $200 billion in bank accounts, real estate and corporate investments around the world before he was killed, about $30,000 for every Libyan citizen and double the amount that Western governments previously had suspected, according to senior Libyan officials.

The new estimates of the deposed dictator’s hidden cash, gold reserves and investments are “staggering,” one person who has studied detailed records of the asset search said Friday. “No one truly appreciated the scope of it.”

[snip]

Most of the money was under the name of government institutions such as the Central Bank of Libya, the Libyan Investment Authority, the Libyan Foreign Bank, the Libyan National Oil Corp. and the Libya African Investment Portfolio. But investigators said Kadafi and his family members could access any of the money if they chose to. [my emphasis]

Central Bank of Libya was a significant owner (and is now a 59% owner) in the Arab Banking Company, which got $35B of loans during the crisis.

Arab Banking Corp., the lender part- owned by the Central Bank of Libya, used a New York branch to get 73 loans from the U.S. Federal Reserve in the 18 months after Lehman Brothers Holdings Inc. collapsed.

The bank, then 29 percent-owned by the Libyan state, had aggregate borrowings in that period of $35 billion — while the largest single loan amount outstanding was $1.2 billion in July 2009, according to Fed data released yesterday. In October 2008, when lending to financial institutions by the central bank’s so- called discount window peaked at $111 billion, Arab Banking took repeated loans totaling more than $2 billion.

Yet all the time the ABC was borrowing $2B chunks of money, Qaddafi was sitting on $200B, which he could have used to provide the bank liquidity.

Mind you, this kind of looting was no doubt going on–and is no doubt going on today, as big banks refuse haircuts in Europe and housing fraud settlements–more generally. Qaddafi is just the very ugly face of how the Fed lending allowed people and corporations who had been looting for some time were able to keep that loot.