Why Is Obama Covering Up Wall Street Fraud?

Get out of jail free

Our government, and the politicians who control it, want us all to be so afraid of terrorism that we’ll give up the Bill of Rights and habeas corpus. But most Americans are far more afraid of Wall Street. The middle class lost $7.7 trillion in household net worth since collapse of the financial sector three years ago. About 24% of homes with mortgages remain underwater, which means the so-called “homeowners” have negative equity. There are 13.3 million Americans officially unemployed, and another approximately 4.8 million who have dropped out of the labor market and aren’t counted anymore. A record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.

Meanwhile, the Wall Street financiers who caused all this are doing swell, paying themselves record salaries and bonuses. But wait a minute, didn’t the 2008 financial meltdown result from fraudulent mortgage securitization and other illegal activities? Why has the Obama Justice Department not prosecuted these crimes?

Jeff Connaughton, the former chief of staff to former Democratic Senator Ted Kaufman, who chaired Senate oversight hearings on financial fraud prosecutions (emphasis added):

The Obama Justice Department hasn’t tried a single Wall Street executive in a criminal court. Against a handful, it decided to let the S.E.C. bring civil charges of fraud, which are easier to prove. So if defendants’ wrists are merely being slapped by the S.E.C. instead of cuffed by the Justice Department, Obama has only his appointees to blame.

…But did the Justice Department’s senior leadership even make targeting high-level fraud a top priority? Did it plan, staff, fund, and direct a thorough, probing investigation of each of the primary potential defendants? While I was working in the Senate, conversations I had with Justice Department officials led me to believe that it didn’t.

President Obama recently told “60 Minutes” that “Some of the least ethical behavior on Wall Street wasn’t illegal.” But it was illegal, so that can’t be the real reason. Matt Taibbi:

What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud.

…Of course, this is exactly the wrong way to go about things. If Geithner and Obama really wanted to convince the world that America’s markets weren’t broken, they would effectively police fraud, and by extension prove to everybody that at the very least, our regulatory system is not broken.

But by taking a dive on fraud, and orchestrating mass cover-ups like the coming foreclosure settlement fiasco, what they’re doing instead is signaling to the world that not only are our financial markets corrupt, but our government is broken as well.

One complication has come about due to last June’s 5-4 Supreme Court decision in Janus Capital Group, Inc. v. First Derivative Traders. The corporate-friendly justices decided to issue securities firms a license to lie, making shareholder lawsuits almost impossible. The precedent may apply as well to fraudulent mortgage securitizations going back to five years ago. Thanks to this irresponsible Supreme Court ruling, there is no longer a good reason to believe anything that’s written in a prospectus.

The Obama administration has got to stop covering for Wall Street, for three very good reasons: (1) Americans now have no confidence in our financial sector, as the middle class has taken a beating while the Top 1 Percent takes an ever-greater share of the wealth; (2) Nobody believes President Obama’s obviously false claim that that no banking or insurance executive deserves criminal prosecution for causing the 2008 collapse; and (3) By failing to prosecute Wall Street, the Obama administration is failing to deter ongoing and future financial fraud.

OWS is right. We can’t accept the funneling of wealth to the top anymore. Especially when it is done in violation of federal law, while our top officials in the Department of Justice and Treasury engage in a cover-up.

UPDATE: SEC Enforcement Chief Whines that Trying Cases Takes a Lot of Effort

  1. #1 by brewski on December 22, 2011 - 12:42 pm

    This is some surprise to you? Haven’t you been paying attention?

    Obama was from the very beginning a corporate shill. He sucked up to ADM, his first pick was James Johnson, he picked Joe “MasterCard” Biden as his VP, and then took more contributions from Wall Street than anyone else.

    And you are surprised…now….after all that?

  2. #2 by cav on December 22, 2011 - 2:18 pm

    Musta been asleep through Obama’s changing Party’s.

  3. #3 by Richard Warnick on December 22, 2011 - 2:19 pm

    I’m surprised at how far Obama has gone in kowtowing to Wall Street (or is it cow-toweling?) Anyway, who knew that the Obama administration would set a 20-year low in financial fraud prosecutions during an epidemic of fraud? He’s more Republican than the last two Republican presidents, and the Tea-GOP thinks he’s a Socialist.

  4. #4 by cav on December 22, 2011 - 2:22 pm

    Cow-toweling – I chect with the judges.

  5. #5 by Richard Warnick on December 22, 2011 - 2:23 pm

    Just imagine Obama polishing the Wall Street bull with a big towel. Some of these Wall Street guys might be good tippers.

  6. #6 by cav on December 22, 2011 - 2:23 pm

    Break’s over…back on your heads.

  7. #7 by cav on December 22, 2011 - 2:24 pm


  8. #8 by brewski on December 22, 2011 - 3:10 pm

    Remember, Cliff told us that the sole reason anyone doesn’t support Obama is because they are racists. Be careful.

  9. #9 by Shane on December 22, 2011 - 5:04 pm

    Where as brewski has demonstrated it can also be due to abject stupidity.

    Back to the story, I am afraid the direction is not a shock to many of us, only the extent. In fact if memory serves there where several discussions about this fear right here at oneutah before he was elected. At this point you can only run for office if owned (at least in part) by wall street. Gosh I wonder what those OWS people are upset about.

  10. #10 by brewski on December 22, 2011 - 7:49 pm

    Based on the objective evidence it seems as though Cliff needs to throw you into the troll bucket since all you did was to make personal attacks and not provide any data, logic, sources or pretty much anything else to your post.

  11. #11 by cav on December 22, 2011 - 8:25 pm

    I’d love to be talking about Dick Cheney’s jail sentence.

  12. #12 by cav on December 23, 2011 - 7:34 am

    A Christmas Message From America’s Rich
    by Matt Taibbi


  13. #13 by Rico on December 23, 2011 - 7:47 am

    This probably doesn’t fit the thread perfectly, but it’s damn interesting nonetheless. I suspect our resident classical historians and economists have educated impressions. Me, I just believe what I read.

  14. #14 by cav on December 23, 2011 - 8:14 am

    From Rico’s link:

    This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, also communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.

  15. #15 by cav on December 23, 2011 - 8:21 am

    Debts that can’t be paid won’t.

  16. #16 by Frank Stearch on December 23, 2011 - 9:06 am

    Duh Richard, Obama is Wall Street fraud. I know you have to write what are supposed to be interesting and meaningful blog posts, but by now it is all so derivative..obama is what he is and can be summed up in one word. FRAUD!

  17. #17 by cav on December 23, 2011 - 9:15 am

    rank, you have to give him this: He’s been coached by the best.

  18. #18 by cav on December 23, 2011 - 9:15 am


  19. #19 by Richard Warnick on December 23, 2011 - 9:43 am

    Great quote from Taibbi: “[T]hese people don’t have shame. What they have, in the place where most of us have shame, are extra sets of balls.”

  20. #20 by brewski on December 23, 2011 - 10:20 am

    There is a simple way to avoid debt: don’t borrow.

    Richard once told us flatly that countries can’t go bankrupt. It seems that recent events (and historical events) has proven that statement false.

    The debts of the countries the author noted were the result of those governments promising more free stuff to their people than their government could afford. A good place to start is to stop doing so.

    I doubt that the shareholders of banks (teachers’ and firemen’s pension plans and the like) are all that anxious to have their equity completely wiped out. You might want to take that up with the teachers and firemen.

  21. #21 by Richard Warnick on December 23, 2011 - 11:15 am


    Did you read the Taibbi piece? The Jamie Dimons of the world are engaging in disaster capitalism. This means forced privatization and austerity at the expense of ordinary people, for the benefit of capital.

    What they do is not for the benefit of the public. In a just system, they would have to take a loss on the real estate bubble. Almost a quarter of home mortgages are underwater right now. I think people ought to stop paying on these mortgages until the banks agree to write down the principal.

  22. #22 by Rico on December 23, 2011 - 11:28 am

    More economic hitmen. From Taibbi:

    “Maybe we should ask the people of Jefferson County, Alabama, what they think.

    That particular locality is now in bankruptcy proceedings primarily because Dimon’s bank, Chase, used middlemen to bribe local officials – literally bribe, with cash and watches and new suits – to sign on to a series of onerous interest-rate swap deals that vastly expanded the county’s debt burden.

    Essentially, Jamie Dimon handed Birmingham, Alabama a Chase credit card and then bribed its local officials to run up a gigantic balance, leaving future residents and those residents’ children with the bill. As a result, the citizens of Jefferson County will now be making payments to Chase until the end of time.”

  23. #23 by brewski on December 23, 2011 - 4:38 pm

    Richard, there is simple arithmetic that countries can’t spend more than they have to spend. So blaming banks for the fact that countries still spend more than they take in is a bit childish. I’m sorry that there is a reality that everyone can’t retire at 51 and have free everything and hang out at Greek Cafes all the time. I wish it were so, but it isn’t. The fact that people voted for politicians who promised them the most free stuff without paying for it is unfortunate for those people who thought it could last forever. It can’t. The real victims here are the children of the generation that did all the spending and took all the free stuff. It’s called greed and selfishness.

  24. #24 by cav on December 23, 2011 - 5:04 pm

    Dean Baker sums it up:

    “The people who gave us the eurozone crisis are working around the clock to redefine it in order to profit politically. Their editorials – run as news stories in media outlets everywhere – claim that the euro crisis is a story of profligate governments being reined in by the bond market. This is what is known in economics as a “lie”.

    The eurozone crisis is most definitely not a story of countries with out of control spending getting their comeuppance in the bond market…It is a story of countries victimized by the mismanagement of the ECB….People should recognize this process for what it is: class war. The wealthy are using their control of the ECB to dismantle welfare state protections that enjoy enormous public support”.

  25. #25 by Dwight Sheldon Adams on December 24, 2011 - 12:44 am

    Isn’t it amazing how stuff can just come out of nowhere. Government spends more money than it takes in, and houses pop up out of the freshly popped-up grass. Toys materialize on store shelves. Food service people are given a break as the patties and fries cook themselves.

    But eventually the party’s over, and we have to return to the amount of labor and productivity that the existing money supply properly limits us to. And so, while labor was sufficient to make everything necessary for entitlement programs before, now all of that free labor has disappeared. Isn’t it weird how, when money disappears, laborers disappear along with it? What a shame.

  26. #26 by Richard Warnick on December 24, 2011 - 11:01 pm


    You’re repeating the right-wing myth that it’s the low income and middle class working people who are greedy. That’s the opposite of the truth. Reading this lie again on Christmas Eve makes it especially galling. But what the hell, Merry Christmas!

  27. #27 by brewski on December 25, 2011 - 7:23 pm

    Richard, it is arithmetic. It isn’t right wing or left wing. You can’t spend more than you earn. That is true for a household and it is true for a country. There is no blaming. It just is. You keep trying to wish away this like someone can wish away gravity. Happy Kwanzaa.

  28. #28 by cav on December 25, 2011 - 11:14 pm

    Only ‘simple arithmetic’ never comes into play when the President has an “R” after his name.

    Why do you suppose that is?

  29. #29 by Frank Stearch on December 25, 2011 - 11:23 pm

    Simple math never comes into play with any American government, whole system is based on fraud, from beginning, middle and end.

  30. #30 by brewski on December 26, 2011 - 8:35 am

    Cav, it does. Or are you suggesting that Dems should be just like Repubs and they can both drive the country into a ditch holding hands?

  31. #31 by cav on December 26, 2011 - 9:16 am

    Frank, that and religious pluralism – see, I still havent lost my sense of humor.

    brewski, I’m only suggesting that deficits don’t ALWAYS matter. Nor are all deficits to be equated with the mechanism pulling toward the cliff edge – though some certainly are. Nor am I in any kind of overwhelming sympathy with the democrats. Finally I’m dumbfounded by the republican ‘obstruction’, see it as hypocritical, and have been sold the fears offered by the other side – that republican offerings are a great deal closer to fascism than we’d better dare to tread. Why isn’t anyone out there doing anything at all to prove me wrong (present company excepted, of course – heh)? Further, I’ll even own up to a life long habit of thinking this way. And a certain ignorance of what republicans are really. But what they’ve (aside from Eisenhower) shown, has been pretty grim, to say the least.

    I would like to think, after we finally regroup, if we ever can or do, at the bottom of the proverbial cliff, that all sides seek a better understanding of the others, and only approach cliffs to delicately peak over – as a reminder of just what a stupid approach to governance such recklessness was.

    IOW: When a train goes over the cliff, the passengers, and those crewmen and women who strongly suggested taking another track, are, while just as dead, not in any way as culpable – for all the good THAT will do them.

  32. #32 by cav on December 26, 2011 - 9:29 am

    Almost Gone by Graham Nash and James Raymond

  33. #33 by Richard Warnick on December 26, 2011 - 9:29 pm

    My point is, the “greed” of the 99 Percent isn’t what’s causing economic chaos. It’s the mind-bending level of greed we have seen from the 1 Percent, robbing us of trillions in broad daylight and calling it “free market capitalism.”

  34. #34 by Frank Stearch on December 27, 2011 - 6:14 am

    C’mon if greed is defined by mass consumption then the 99% have everything to do with why things are all @#$%^& up. As for the 1%, the 99% are their enablers. This is never going to change unless people take responsibility.

  35. #35 by cav on December 27, 2011 - 8:52 am

    Frederick Douglass, the19th century civil rights leader, said,”Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them.”

    From today’s CommonDreams: Utah Doctors Join “Occupy” Movement
    by Brian Moench

    If the core tenet of the Occupy Movement is that corporations and the 1% manipulate every level of government to serve their profit driven agendas and simultaneously disregard, if not openly undermine, the interests of the 99%, then there is no better example than RTK’s operation of Utah’s Bingham Canyon mine.


  36. #36 by Frank Stearch on December 27, 2011 - 2:29 pm

    Ah, that’s bullshit Richard, it is the 99% and their feeble ways that have led to all this and it has been a long time in coming. If the 99% didn’t have their head up their asses and were involved none of this would be possible..in fact, as enablers the 99% bear the brunt of the blame, and even more so now with their pathetic OWS attempts to reign in what should have been brought to heel 40 years ago after Vietnam.

  37. #37 by cav on December 27, 2011 - 3:28 pm

    Not Richard. Stuck in derivatives much?

    They’re sneaky devils who somehow know when we’ve taken our eye off the ball.

  38. #38 by cav on December 27, 2011 - 3:34 pm

    China tests 500 kilometer per hour train:


  39. #39 by Frank Stearch on December 27, 2011 - 3:37 pm

    Krauts built it and sold it to the Chinks. They had no use for it, too congested not enough people in Germany to make it pay..the Hannover run set the record at 530 kph before it was shipped to China.

  40. #40 by cav on December 28, 2011 - 9:34 am

    Is ‘web-log commenting passe’?

    Did I miss the memo?


    I KILLED the thread!

    Newt wasn’t kidding: Massive Electro-Magnetic Shock-Wave spells keyboard FAIL in many sectors.

    Hello, is anybody out there?

    It’s not the ‘government’ I have such ‘bad’ feelings for, as much as the fact that the gov’t has been taken over by greedy corporations. And now threatens a World-Wide-Fascist=Oligarchy who’ll be passing out extremely prejudicial ‘pink-slips’ to the 99.999% until any survivors ‘come to heal’.

    Just what we always wanted.

    Coffee awaits.

  41. #41 by cav on December 28, 2011 - 10:21 am

    Or../Rachel Maddow last nite had an article about Samoa excising a single friday from their calendar for reasons political. Well, if a single day can go missingI, why not a whole year?

    In other words, IT’S AFTER THE END OF THE WORLD! Ask any Mayan calendar, and my protest of living in a dream, has become the only possible explanation.There can be NO alternative.

    A single cup: Insufficient.

  42. #42 by Richard Warnick on December 28, 2011 - 10:51 am

    At least Samoa didn’t cancel New Year’s Eve.

  43. #43 by Larry Bergan on December 28, 2011 - 2:05 pm


    Thanks for the article!

    I’ve lived here all my life and I love the mountains, but those temperature inversions are my least favorite thing.

    Good for those doctors!

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