There is a Difference Between Zero Tolerance For Fraud & Zero Enforcement Of Fraud

Harry Markopolis, the whistle blower who Bush's anti-regulatory SEC ignored when he kept warning them that Bernie Madoff was in the process of stealing $50 billion for investors, told Congress yesterday that there was basically no regulation of the capital markets-- or at least of fraud in the capital markets for the eight years Bush was overseeing the functions of government. Watch Congressman Alan Grayson (D-FL) questioning Mr. Markopolis at a House Financial Services Committee hearing yesterday:



On his blog today former Secretary of Labor Robert Reich explained that Americans actually bought into Obama's campaign message of Change and that now they want it-- and they want the real thing, not the Tom Daschle version, which labors under the false premise that people won't mind corrupt Democrats because they're not nearly as corrupt as corrupt Republicans.

Official Washington underestimated the public's pique at what appeared to be the old ways of Washington. Hill staffers tell me that many offices have been inundated with telephone calls, emails, letters and faxes expressing concern (to put it mildly) about Daschle-- not only his failure to pay back taxes but his relationships with major players in the health care industry and rich consulting contracts with the private sector since leaving the Senate, and even the fact that he was given a car and driver by one of them.

What's going on here? Maybe official Washington, much like most of Wall Street, is still not quite getting it.

Typical Americans are hurting very badly right now. They resent people who appear to be living high off a system dominated by insiders with the right connections. They've become increasingly suspicious of the conflicts of interest, cozy relationships, and payoffs that seem to pervade not only official Washington but our biggest banks and corporations. In short, many Americans who have worked hard, saved as much as they can, bought a home, obeyed the law, and paid every cent of taxes that were due are beginning to feel like chumps. Their jobs are disappearing, their savings are disappearing, their homes are worth far less than they thought they were, their tax bills are as high as ever if not higher.

Meanwhile, people at the top seem to be living far different lives in a different universe. They're the executives and traders on Wall Street who have lived like kings for years off a bubble of their own making while ripping off small investors, the financial louts who are now taking hundreds of billions of taxpayer bailout money while awarding themselves huge bonuses and throwing lavish parties, the corporate CEOs who are earning seven figures while laying off thousands of workers, the billionaire hedge-fund and private-equity managers who are paying a marginal tax rate of 15 percent on what they say are capital gains while people who earn a fraction of that are paying a higher rate, and, not the least, the Washington insiders who have served on the Hill or in an administration and then gone on to pocket millions as lobbyists for the same companies they once regulated or subsidized. To the American who's outside the power centers-- the places of entitlement and I'll-scratch-your-back-while-you-scratch-mine deal making-- the entire system seems rotten.

Markopolis noticed about the SEC exactly what anyone who has given even the most cursory looks at the Bush Regime regulatory agencies-- all of them-- has noticed: "The SEC is... captive to the industry it regulates and is afraid" [to bring big cases against prominent individuals and] is busy protecting the big financial predators from investors."

He attributes it to incompetence rather than to the venality and purposeful mendacity with which the Bush Regime ruled, although he did testify that the securities industry's self-policing organization, the Financial Industry Regulatory Authority, is "very corrupt," which is very disturbing since the head of that outfit is Obama's new SEC chief. She and the holdovers from the Bush Regime are already acting in bad faith and impeding the congressional investigation. They claimed they were restricted in what they could tell Congress. Obama should have called Ms. Schapiro and told her to clean off her desk, but I have no doubt that she is another of Rahm "The Vetter" Emanuel's personal picks.

Mr. Kanjorski, the hearing chairman, condemned that argument as an expression of arrogance that was at the root of the agency’s regulatory failures.

Congress is in the midst of creating regulatory changes that could change the agency’s fate, the congressman warned the panel of official witnesses. Lawmakers want immediate candor about the handling of the Madoff matter, not an “oatmeal” of generalities, he said.

“We didn’t call you up here to hear a traveler’s guide of the S.E.C.,” Mr. Kanjorski added.

Linda Chatman Thomsen, the S.E.C. enforcement director, told lawmakers that the agency staff had demonstrated its willingness and ability to pursue major fraud cases, including 70 Ponzi schemes.

Ms. Thomsen said the agency, under its new chairwoman, Mary L. Schapiro, would work hard to improve its receptiveness and responsiveness to whistle-blowers like Mr. Markopolos.

Her responses did not satisfy any of the half-dozen lawmakers who stayed at the hearing after Mr. Markopolos left. Their attacks were fierce and strident, with Representative Gary L. Ackerman saying at one point: “We thought the enemy was Mr. Madoff. I think it is you.”

The hearing at times seemed to enter verbal territory more often explored at organized crime hearings.

And speaking of organized crime hearings, let's not take our eyes off the ball and look over here when there's something going on over there... and over there.

The first is a continuation of the Justice Department scandals, this particular one featuring retired Senator Pete "Sneaky Pete" Domenici and his role in persuading the Bush Regime to fire David Iglesias, the U.S. attorney for New Mexico. Reading between the lines, it looks like Bush-- or at minimum, Rove-- may have been guilty of obstructing justice.

The federal grand jury is investigating whether Domenici and other political figures attempted to improperly press Iglesias to bring a criminal prosecution against New Mexico Democrats just prior to the 2006 congressional midterm elections, according to legal sources close to the investigation and private attorneys representing officials who prosecutors want to question.  Investigators appear to be scrutinizing Iglesias' firing in the context of whether he was fired in retaliation because Domenici and others believed that he would not manipulate the timing of prosecutions to help Republicans.

The second is another Rahm Emanuel vetting screwup. Turns out the Republican loon Obama picked to be Commerce Secretary for God only knows why was in bed with Abramoff through Kevin Koonce, his legislative director.

[Koonce] was cited in a guilty plea last week by Todd Boulanger, a former deputy to disgraced lobbyist Jack Abramoff. In federal court, Boulanger admitted he plied the staffer with front-row tickets to a hockey game, meals and drinks and other tickets to a baseball game, and in exchange received favors in spending legislation. The total value of the gifts Staffer F took from Boulanger exceeded $10,000, court papers said.

All this corruption-- and they've destroyed the country and are now obstructing the new president from doing anything to clean up their mess!