Tuesday, November 29, 2011

A REAL American Hero

Judge Jed S. Rakoff is the hero of the day, folks!

WASHINGTON — Taking a broad swipe at the Securities and Exchange Commission’s practice of allowing companies to settle cases without admitting that they had done anything wrong, a federal judge on Monday rejected a $285 million settlement between Citigroup and the agency.

The judge, Jed S. Rakoff of United States District Court in Manhattan, said that he could not determine whether the agency’s settlement with Citigroup was “fair, reasonable, adequate and in the public interest,” as required by law, because the agency had claimed, but had not proved, that Citigroup committed fraud.


The agency in particular, Judge Rakoff argued, “has a duty, inherent in its statutory mission, to see that the truth emerges.” But it is difficult to tell what the agency is getting from this settlement “other than a quick headline.” Even a $285 million settlement, he said, “is pocket change to any entity as large as Citigroup,” and often viewed by Wall Street firms “as a cost of doing business.”

According to the Securities and Exchange Commission, Citigroup stuffed a $1 billion mortgage fund that it sold to investors in 2007 with securities that it believed would fail so that it could bet against its customers and profit when values declined. The fraud, the agency said, was in Citigroup’s falsely telling investors that an independent party was choosing the portfolio’s investments. Citigroup made $160 million from the deal and investors lost $700 million. 

This stinks to high heaven. The SEC's practice of settling with "too big to fail" banks like Citi is an absolute disgrace, an abandonment of their responsibility to regulate the markets, and what looks like, from this perspective, collusion with the banks in their fraudulent practices.  And when I look at things like this:

Think Progress:

Banks May Have Illegally Foreclosed On 5,000 Members Of The Military

In the latest episode of this mess, the Office of the Comptroller of the Currency has found that banks — including Bank of America, Wells Fargo, and Citigroup — may have improperly foreclosed on up to 5,000 active members of the military:
Ten leading US lenders may have unlawfully foreclosed on the mortgages of nearly 5,000 active-duty members of the US military in recent years, according to data released by a federal regulator. [...]
The data released by the OCC are based on estimates prepared by lenders and their consultants. BofA said it is reviewing 2,400 foreclosures involving active-duty military families to see if they were conducted properly. Wells Fargo is reviewing 870 foreclosures and Citigroup is looking at 700 cases.
Also under review are 575 foreclosures at OneWest, formerly known as IndyMac; 87 at HSBC; 80 at US Bancorp; 56 at Aurora, formerly known as Lehman Brothers Bank; 25 at MetLife; six at Sovereign; and three at EverBank.
Back in April, JPMorgan Chase, which was not one of the 10 banks that the OCC examined, agreed to a $56 million settlement over allegations that it had overcharged members of the military on their mortgages. Chase Bank has even auctioned off the home of a military member the very day that he returned from Iraq. Two other mortgage servicers agreed in May to settle charges of improperly foreclosing on servicemembers.

...it makes me shout, "WTF?!" This has to stop. The entire concept of "too big to fail" is bogus; nothing is "too big to fail," and if we as a nation were stupid enough to allow these banks to grow to gargantuan size, then believe their lies when they dubbed themselves TBTF, then the joke's on us. If the megabanks were behaving as responsible corporate citizens, then things like those military foreclosures wouldn't happen; things like the $13 billion-with-a-b secret loans from the Fed to the banks wouldn't happen; movements like OccupyWallStreet wouldn't have to form, the lion would lay down with the lamb.....(OK, I'm getting carried away.) But even if one accounts for the normal amount of human arrogance, stupidity, and greed, these "too-large-to-fail" banks have far exceeded their quota.

That the SEC would settle for what's essentially chump change to a bank like Citi is absurd. It's offensive, it's an abandonment of their responsibilities to the citizenry, and heads should roll! As stated in the Times, the banks are free to resume their predatory practices as soon as court is adjourned. How is this fair? How is this justice?

Citizens United established into law the ridiculous assertion that "corporations are people." If so, then let's try and execute these criminals, just like people. (Hell, let's try and execute them just like African-American people, that'll make SURE that the banks would fry!) Everyone knows they're guilty; now it looks like they might finally be brought to justice. Kudos to you, Judge Rakoff!

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