Meaningful and good leadership places deterrent (action) ahead of paper “reform.” When a nation has good deterrent, it does not need reforms.

Assurance in our current system is perfected, by laying down meaningful deterrent. Today or last year. Could not do it in 2008? Then do it at any time in 2009? Fail to self-regulate – you get milk white substance of failed leadership … wait for it … “reform.”

(Incidentally, I support self-regulation. But when self-regulation is used to cover up Breach of Duty ie: Constructive Fraud on massive scale, or high crime against a group of people such as abuse of our elderly, provoking unrest in country which threatens stability in a culture, I think this should be met with stiff criminal prosecution. I call on all financial executives who observe their fiscal responsibilities, and take pride in it, distinguish themselves. You should be the ones pounding fist for prosecution of substantial breach. This will do more to restore public trust than any “reform” ever will.)

Again I say, we need deterrent not reform. Republicans and democrats alike. Kick these the fraudsters in prison. Cut yourself loose from these behemoths. Let them fall on their own work product and be accountable. Restore trust in our system. Good leadership knows when too much abuse, is too much abuse. NOT heroism. Good leadership knows when our senior culture is being mistreated, called a second time to be in a place of liability for mis-management while wall street is rolling out lobbyist to say how marvelous and sacred is their executive compensation corporate bylaws in the east coast. Fluff. Make determined and sustained outcry. This is more about self-preservation and preserving a small step of integrity when others around you are abusing trust, engaging sedition or acting to destabilize the culture.

Side note: Self-regulation is not about letting others do their worst. You let that happen and it drags down the industry and threatens national stability. The result is a wave of ridiculous “reform.” You know this already. If the financial services industry and small community bank industry do not care for self-regulation, it will get “reform;” like second hand smoke … breath it in … “reform.”

You have to be able to PROVE your ability in leadership and KNOW when enough is enough or when too much is too much. Too much abuse is bad for the industry. You have to have a line in your mind. Community bankers who did NOT benefit from TARP or PPIP or TALF, need to do a better job of self-regulation, or they will loose the ability to self-regulate. You need to be the ones from inside, making demands for criminal prosecutions that deterrent rise up in magnitude to send out the message for the next generation, as to what is NOT tolerable. Otherwise you will forfeit all the ground you have made in the last 50 years. All of it.

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See those ‘AAA’ rated securities in the chart that accompanies this article? Well, they weren’t ‘AAA’ at all. GS knew it, the ratings agencies knew it … The first criminal charge should be for the creation and distribution of fraudulent securities.

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There are many prima facie offenses that can be prosecuted under RICO statutes or outside of RICO. Basically you have a group acting in a common purpose. Group is two or more persons, or entities. Purpose can be to commit a crime, dismantle important capitalist rules of law, loot homes and business entities during a once in 12 year flood, deceive a group of senior citizens in pre-meditated fashion (confuse/mislead them for financial gain). Common purpose can be distributing toxins or drug, under the nose of local authorities, anything that is disruptive of the peace or endangers the public in some way. Group acting in common purpose to deceive, can be as wide spread as a large corporate mentality; for example Enron was a large corporation engaged in furtive deception in the culture that was disruptive and could have provoked social discord. Common purpose to deceive, includes pattern omission or incident of concealing information officers of the corporation, had obligation to disclose.

Being a custodian of other people’s money qualifies an obligation to disclose, a lot of information. Custodians of other peoples money cannot deceive or act in pattern omission, without triggering breach of duty clauses.

Breach of Duty falls under Constructive Fraud. A type of fraud that is prosecutable under criminal statute. Fraud is actual or constructive. Actual fraud consists of deceit, artifice, trick, design, some direct and active operation. Includes cases of successful deployment of any cunning or deceptive act to circumvent law or cheat another (cheat a group of people like senior citizens, trick them into a position of liability for mis-management at banks, they did not manage).

Constructive fraud consists of BREACH OF DUTY, which in a pattern of behavior can be shown to produce gain or advantage to the dishonest broker or executives at fault. Again, being a custodian of other people’s money qualifies an obligation to disclose. Custodians of other peoples money cannot deceive or act in pattern omission, without triggering injustice @ breach of duty.

Using RICO statutes are about prosecuting a group of two or more, acting to perpetrate criminal acts. It is not theory. It is a provable fact: There is evidence of a small group being organized, acting in operations, (daily work product, ongoing pattern) brokering mortgaged backed securities, they would call AAA to broker at the premium rate, but later turned out to B-rated or lower; and no refund was given. Provoking social unrest: no regulative authority trying to hold offending executives accountable or liable for having fiduciary duty to make disclosure.

This is an unacknowledged problem of large banks which operate under the honor principle of self-regulation. They do not acknowledge when they have a fiduciary duty. This is a stain of failure for many self-regulatory agencies in the United States. We recently hear lobbyist behind each President, talk through our President, to Afghans, about controlling corruption, when here at home our Presidents are on sabbatical, taking extended vacations – foundering. With lobbying groups behind them, both Presidents, are like absentee landlords. They travel the world without proper clothing. In other words, all talk and not a step in the right direction in support of deterrent (active prosecution with criminal sentences). …This results in flawed leadership example or non-leadership moonwalk “going forward” … places “reform” ahead of deterrent.

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Research into ABX.HE and other Mark-It indices reveals that “market makers” were not just providing liquidity when they owned and controlled CDOs through conflicted ratings, servicing fraud and CDS. Mark Pittman’s [R.I.P.] Dec. 2007 piece which details Goldman traders’ involvement with creation of the ABX is a fine place to start.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA6YC1xKUoek

It’s clear that Goldman was taking the lead in building this model to bet against housing in 2005. There is also much evidence that these “market makers” were warned of rating downgrades by NRSRO’s in advance, making this a fraudulent hedging operation from the get go. Hopefully the DOJ will get its backfield in motion soon because Lloyd Blankfein’s limp apology isn’t cutting it with the pitchfork crowd.

http://www.dailykos.com/story/2009/11/17/805462/-CEO-of-Goldman-Sachs-Apologizes-for-Financial-MeltdownWell-Screw-You-Blankfein

Thanks for the links and info. I have the greatest respect for Janet Tavakoli, but it doesn’t take a rocket scientist to see the outright fraud committed by Goldman Sachs.

The mystery is why there is no investigation and prosecution of this fraud. Any ideas?

Personally, I believe that for whatever reason(s), Obama will not move against Wall Street. In a moment of spontaneous repartee between Jay Leno and Barack Obama, when Obama appeared on Leno’s show many months back, Jay brought up Wall Street. Obama was quick to acknowledge how terrible the crisis was, but also quipped that no crimes were committed. This was only a few months after he had taken office, and then and still had not undertaken an inquiry into fraudulent activity. It is a small example, but how could he say that? And why?

BR,

Indubitably, there is, afterall, BRIPTV to launch, among other things..

http://www.thefreedictionary.com/Indubitably

Maybe if their lives become even more unbearable. Maybe.

However, if they do wise up – There Will Be Hell To Pay.

(Thanks to Mr. Ritholtz for the WSJ link, thanks to ‘Wes Schott’ for the Vanity Fair link and thanks to everyone for their interesting and informative posts.)

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BR: I had prior commitments — if they really wanted me, they wouldn’t have called 2 days before.

My answer: Brad Sherman. (or Alan Grayson) They’re the ones that would be willing and able to do it.