Obama’s Financial Guru Faces Congress

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Yet he reserved his harshest rebuke for the SEC:

An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated. If its deployment does not rest on facts–cold, hard, solid facts, established either by admissions or by trials–it serves no lawful or moral purpose and is simply an engine of oppression.

Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if [it] fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.

Contrivances may be an understatement. Calling Citigroup as a “recidivist” because it had settled previous cases with the SEC in exactly the same manner, Rakoff contended that the financial institution is more than willing to agree to such terms because the SEC hasn’t monitored settlement compliance or brought contempt charges against repeat offenders in at least 10 years. Citigroup is certainly aware of that fact. It agreed not to violate the same anti-fraud statute involved here “ever again” on four other occasions, in April 2000, March 2005, May 2006, and July 2010.

And Citigroup is hardly alone. Nineteen Wall Street companies have been repeat offenders over the past 15 years: American International Group, Ameriprise, Bank of America, Bear Stearns, Columbia Management, Deutsche Asset Management, Credit Suisse, Goldman Sachs, JP Morgan Chase, Merrill Lynch, Morgan Stanley, Putnam Investments, Raymond James, RBC Dain Rauscher, UBS and Wells Fargo/Wachovia.

Why hasn’t the SEC cracked down harder? The excuse is tiresomely familiar. Better to take the sure fine than risk losing in court to firms with legions of high-priced lawyers willing to defend them. Perhaps so. But maybe winning in court is more difficult due to the reality that at least 219 “major officials” have left the agency–only to return as a representative of a client with business before it. Senate Finance Committee member Sen. Charles Grassley (R-IA) illuminates the obvious. “The SEC’s revolving door seems more active than ever,” he noted, adding that such a system leaves the SEC unable to effectively regulate Wall Street. Roberta Karmel, a former SEC commissioner, was equally blunt. “Who do you want representing these clients before agencies such as the SEC with very, very complex rules?” she asked. “Lawyers who know nothing about the rules–or lawyers who do?”

In fairness, former SEC employees are barred for life from working on any matters they were working on while employed by the Commission. Furthermore, the SEC can only file civil litigation. The Justice Department must file any and all criminal charges against brokerage firms.

So where is the DOJ? Nowhere. “We have brought hundreds of criminal cases for mortgage fraud, investment fraud and other white-collar crimes. When we find evidence to prove beyond a reasonable doubt that a crime was committed, we will not hesitate to pursue criminal charges,” said a DOJ spokesman.

So how many criminal charges have been brought by the FBI against business executives? Zero. Ostensibly the burden of proof is too high. “There’s been a realization and a more deliberate targeting by the Department of Justice before we launch criminally on some of these cases,” said David Cardona, former deputy assistant director at the Federal Bureau of Investigation. The Justice Department has decided it is “better left to regulators” to take civil-enforcement action on those cases, he added.

That would be regulators who are willing to administer a financial wrist slap without an admission of guilt and tolerate multiple violations of the same statutes without pursuing contempt violations–for at least a decade. Ten days ago, Judge Rakoff made it clear that the SEC’s self-inflicted impotence will no longer be tolerated.

As for the DOJ, $1.2 billion of missing customer funds and a Sarbanes-Oxley Act that holds CEOs criminally accountable for company malfeasance would appear to make Jon Corzine the proverbial poster boy for prosecution, no matter how high the burden of proof. When the integrity of the entire financial system is at stake, DOJ’s reticence to prosecute is no longer acceptable.

Judge Jed S. Rakoff has essentially blazed a trail. It behooves the SEC, the DOJ and other judges to follow his lead.

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  • Amused

    UH ….why do you refer to the former N.J. Governor as " Obama's finacial guru " ?
    As for the "offenders " you listed ? Yes indeed they are guilty of precisely what you stated …..and those CRIMES were committed DURING the BUSH Administrations , as wedll as the bubble bursting , and Tarp .
    As for the SEC , it did absolutely NOTHING under Bush , so whatever it's doing under Obama …which is SOMETHING , is being done under the present Administration .
    And the DOJ ? What in the hell did it do under Bush ???
    Are you peddling the notion that DOJ under Bush didn't know of the abuses and fraud ? Ahert , your hypocrisy knows no bounds .

    • Steeloak

      "UH ….why do you refer to the former N.J. Governor as " Obama's finacial guru " ? "
      UH – Because he was. http://www.politickernj.com/governors-press-offic

      And from the Huffington Post
      http://www.huffingtonpost.com/charles-gasparino/o

    • myohmy

      you moron…. Obama and Biden have both said the first guy they called to ask for financial advice during the crisis was your boy Corzine. Duh. And stop trying to blame everything on Bush, this sorry economy now belongs to Obama. It's been 3 fricking years now and all this is on Obama/Biden's watch. You liberal pukes have no honor at all… just a bunch of idiots with an agenda…. a stupid agenda.

      • Amused

        Yea the sorry economy is what got dropped in Obama's lap , remember schmucks ? the sheet hit the fan in '06 and was in the making all throughout Bush 's TWO Administrations …lol…with his appointed "watch-dogs " in the SEC [ WHO DID ABSOLUTELY NOTHING ] so , get your heads out from up your assses and you might see clearly . Corzine is not Obama's or anyone elses financial Guru , the article is nothing but another childish juvenile strawman , made especially for sheetheads like you ….suck it up chumps .

  • Amused

    When will you nimrods finally ADMIT , that this mess was brought about by BOTH Democrats AND Republicans .8 years of Republican Administration did absolutely NOTHING to correct that which all of you NOW see as "Obama's debacle " .Man talk about spin and hypocrisy ! Clinton oversaw the repeal of Glass-Steagle , WITH the cooperation of Republicans .
    Well , Wall Street's been at it again , and WHERE is the Conservative outcry ? Oh a judge FINALLY exercises some sense of justice and indignation , and now ,and ONLY now do we hear peeps of a sort of agreement ,that yes Wall Street has in fact committed crimes ….oh this must be a Republican revelation ? OWS , while morphing into a circus of sorts , was in fact a reaction to this behavior between Wall Street and Politicians who did and continue to do nothing .In this respect , they are in fact representative of the 99% .

    • davarino

      Cant argue with that. We are being played a fool and the house needs to be cleaned, but the OWS has a whole list of other issues that I cannot agree with. The Glass-Steagle act needs to be reinstated and the SEC needs to be the SEC again. Actually the SEC needs to be investigated because it seems to me that there is a lot of quid pro quo going on there. I'm with ya on this one.

      • Amused

        the problem with the SEC is , that it cannot prosecute anyone , and most of the times the positions there are political plums. as for OWS going off the tracks , I agree , they should have focused on what the original agenda was -HOLD THE CROOKS ON WALL STREET ACCOUNTABLE , and break up the the relationship with the lobbyists and politicians , who are equally to blame in this present economic mess .

    • akbass

      Agreed. This hasn't been a Democrat vs. Republican issue in DECADES, but both parties and their respective media enablers have done a fabulous job at keeping us all at each others' throats and blaming the other side. This is about greed, professional politicians, and a ruling class system that keeps the game rigged in their favor. This is about professional politicians picking winners and losers, with themselves on the winning side every time, no matter the outcome. It's disgusting and the whole system needs reforming. I won't hold my breath, no matter which party is in power.

  • myohmy

    Corzine should share a cell with Madoff for the rest of his life. He stole over a billion dollars. What's the difference between Madoff and Corzine? None… They're both master criminals who stole over a billion dollars from people who trusted them.

  • mrbean

    Standard answer for stone walling. "I don't recall, I don't remember, I wan't there, and Mikey did it!

  • WilliamJamesWard

    Judge Jed S. Rakoff, may he live forever will be a judicial hero for all that desire
    justice in our rotting government. "Regulators give a financial wrist slap-tolerate
    multiple violations" this is a slight of hand where the government gets it's cut
    of the ill gotten gains. FBI head Mueller and Justice head Holder should be fired,
    impeached, prosecuted for collusion for starters and following the money no
    matter where it leads in time and space should go forward until every penny is
    accounted for. What does this story tell us, Our Government is and ongoing criminal
    enterprise, crossing party lines and the Democrats and Republicans continue to
    be the two hands of the beast that is choking the life out of America. I hope they
    look in Corzines sock draw or maybe a freezer at his home, popular place for
    cold stolen cash………How much destruction can we take from Washington, DC…
    (District of Criminals)……………………………William

  • Amused

    Corzine needs to get prosecuted , convicted and jailed for fraud and theft .One federal law he most certainly violated was falsely signing off [as CEO ] as to the financial status of hs company. And yes , Holder and Mueller need to be investigated , on their apparent lack of doing ANYTHING .

  • irisdolittle
    • mlcblog

      go away

  • LindaRivera

    An inferior health care plan that no one wants and CANNOT afford to pay. The threat to jail and/or fine those who don't purchase the government enforced plan.

    Massive spending as if there is no tomorrow. Fighting wars we have no money for. Massive borrowing.

    The Massive giving away of Billions of dollars every year to other countries, including the oil-wealthy Middle East, Hamas-controlled Gaza and the Palestinian Authority organization who fill their war chests, build mansions and laugh all the way to the bank with FREE infidel money. Whilst in America, homeless shelters are filled to capacity; tent cities have sprung up all over the U.S. filled with desperate, jobless, homeless, neglected Americans.

    Massive debt. The massive printing of paper money out of thin air to DELIBERATELY create out-of-control inflation. There is no question that the total DESTRUCTION of America's economy is planned. The results will be horrifying. In the once wealthy and great nation of America, millions of Americans will become destitute, hungry and homeless with no money or resources to help them.

  • LindaRivera

    Organic, non-GMO avocado, fruit and nut trees and berries must be planted in all of our nation’s cities’ and towns’ parks to help the many millions of Americans who will soon be in a desperate struggle to survive because of the frightening, highly destructive economic policies of our government.

    Watch it. And weep for our great nation and people:

    FALL Of The Republic – The Presidency Of Barack H Obama – The Full Movie HQ http://www.youtube.com/watch?v=F8LPNRI_6T8&fe

    • Amused

      BWWWWWAAAAAAAAAAA !!!! WE"RE ALL GONNA DIE !!!

      • Amused

        Kelly go get a room with Linda , because the both of you are totally BRAINWASHED .

    • Beth

      http://www.youtube.com/watch?v=F8LPNRI_6T8&fe

      Thank you for the post Linda

  • alexander

    So there is a best friend of Biden and FuBAR Ack, Corzine, then E. Holder, who does "NOT" know who authorized SPENDING OF MILLIONS OF TAXPAYERS' DOLLARS on guns given to Mexican ganglords.
    If that's not criminal, please tell me what is.
    Liberalism is a mental disorder.

  • bearone7777

    Hello,
    No wonder New Jersey got caught up with some of the nations highest taxes, and such while this fool was in power. Now this. He is a slime-ball, and he needs to do some jail time PERIOD!!!!!!!

  • mlcblog

    …and what do I hear on the inimitable Michael Savage show today? who made a fast buck on this deal? None other than George, of course. Mr. Soros himself.

    His goal is to bring the US dollar down. How do we stop him?

    • Beth

      "How do we stop him?"

      By exposing him with the same relentless determination that he has for destroying this nation. (the 'drive-by' media sure isn't going to do it)

  • John_Kelly

    Obama's Financial Guru Jon Corzine is on par with Obama's Spiritual Guru Jeremiah Wright.

    Wake up America!

  • Amused

    …and don't forget Al capone , he's from Chicago too .

  • Amused

    mlcblog , Savage is a babbling screaching idiot , who suffers from intermittent [far and few between ] bouts of rational thinking . Everyone needs a bogeyman and the conservatives got theirs , the evil "Moriarity " of their politiks and memes …..that evil SOROS ! The CAUSE OF ALL EVIL IN THE WORLD !!! Single-handedly the eviol genius will DESTROY THE WHOLE WORLD !!! Omigosh ! Wheres Kelly ?? Where's Linda ????

  • Rosebud

    Corzine was known to curse out people who work for his ALARM SYSTEM'S monitoring company who called him at his home to warn him that his alarm system has a low battery and other problems which could put him and his family in jepoardy.

    It was just a hard working and KINDLY OLD handicapped person who called him, doing the job as required by LAW…. was called SEVERAL horrible nasty names you cannot print in a family newspaper and told to go to______ . The poor worker had to take this abuse to keep the job and health insurance. The abusive words by Corzine made that OLD PERSON CRY!

    CORZINE NEEDS TO GO TO JAIL FOR HIS CRIMES. HE DESERVES NO PITY AND NO KINDNESS. In fact, HANGING is really too good for him.