Criminals On Wall Street? Who Could Have Guessed? And What About Capitol Hill?

Today in So. Lancaster; tomorrow Palmdale

I hope you read the Muppets post and watched the 60 Minutes segment with Goldman Sachs whistleblower Gregg Smith that we embedded Wednesday morning. In the pathology of the 1 percent, criminal behavior from the elites of High Finance are, to put it mildly, predictable. Enabling it for a cut of the action-- which is, after all, the Republican Party agenda for Wall Street "reform"-- is just as pathological. That same day, we saw Goldman Sachs board member Rajat Gupta sentenced to two years in prison and ordered to pay a $5 million fine for gaming the system to benefit himself.

Gupta was convicted in June of spilling boardroom secrets to his friend Raj Rajaratnam, the former Galleon hedge fund tycoon who was sentenced last year to 11 years in prison for his role at the center of an insider trading ring.

In addition to his spot on the Goldman Sachs board, Gupta had been head of the renowned consultancy McKinsey & Co, and a director of Procter & Gamble, making him one of the most successful Indian immigrants in the United States.

With his conviction after a three-week trial, he became the biggest scalp for fellow Indian immigrant Preet Bharara, the chief Manhattan federal prosecutor who has made a name for himself with a crackdown on Rajaratnam’s insider network.

Another teensy weensie tip of the iceberg. Far more interesting Wednesday was the suit announced by federal prosecutors against Countrywide parent Bank of America. All that's missing is an indictment of the last remaining Member of Congress who took bribes to greenlight the scheme that nearly drove the entire world into depression-- Buck McKeon. McKeon was as brazen as the rest of the crooks-- and he was on the government payroll while he was undermining the entire financial system for a few thousand grubby bucks for himself and his sleazy family.

Five years after the housing market crumbled, government officials are still trying to assign blame for the problems that fueled the mortgage boom and bust.

On Wednesday, federal prosecutors in New York took aim at Bank of America. They accused it of carrying out a scheme, started by its Countrywide Financial unit, that defrauded government-backed mortgage agencies by churning out loans at a rapid pace without proper controls. In a civil suit, prosecutors seek to collect at least $1 billion in penalties from the bank as compensation for the behavior that they say forced taxpayers to guarantee billions in bad loans.

...[T]he public has been frustrated with the limited number of criminal actions that have been filed since the financial crisis. Few cases have taken aim at top executives. Even in the latest case against Bank of America, no company officials were sued as part of the complaint. Angelo R. Mozilo, the former chief executive of Countrywide Financial, never faced criminal charges but did agree in 2010 to pay $67.5 million to settle a civil fraud case brought by the Securities and Exchange Commission.

Mr. Hurson said that the government had yet to overcome the notion that federal authorities were reluctant to pursue the top rungs of Wall Street. The criminal actions to come from the crisis, he noted, have focused on “small-time operators.”

The government, however, has contended that it has aggressively pursued mortgage fraud. As the legal deadline approaches for filing crisis-related cases, President Obama formed a mortgage task force to investigate wrongdoing. The unit recently announced its first case, taking action against JPMorgan Chase over mortgage deals created by Bear Stearns, the firm that JPMorgan bought during the crisis.

The legal problems for Bank of America, however, have taken a deeper financial toll, costing the bank billions in write-downs and settlements. Much of its problems stem from its takeover of Countrywide Financial, once the nation’s largest mortgage lender. The bank also struck a $2.4 billion deal in September to settle a class-action lawsuit over shareholder claims that it misled investors about the 2009 purchase of Merrill Lynch.

In the lawsuit on Wednesday, the Justice Department attacked a home loan program known as the “hustle,” which the bank inherited from Countrywide in 2008 and kept alive through 2009.

But what about the politicians who enabled this kind of behavior? Obviously it's up to the voters to defeat the Republicans and conservative Democrats (New Dems and Blue Dogs) who voted to "unchain" the banksters to rob their customers blind-- while taking legalistic bribes for their efforts. But one Member of Congress is still in office, Buck McKeon, took actual personal bribes from Countrywide to help push their agenda. Through a network of cronyism and back-scratching, McKeon has his district's media firmly in control and protecting him from exposure. Darrell Issa's House Oversight Committee issued a report (on July 4th, a day the media was not paying attention at all) that clearly indicated that McKeon was taking bribes... and then Issa dutifully buried the report, refusing even to forward it on to the pathetic and toothless House Ethics Committee. Now it's up to an honest federal prosecutor to take up the McKeon case and get this guy behind bars where he belongs.