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Taibbi writes: "Let's make a new rule: The Department of Justice doesn't get to call itself 'tough' until a) it puts someone from one of these companies in jail for at least 24 hours, or b) it extracts fines from either companies or individuals that represent at least slightly more than laughable fractions of their ill-gotten gains."

Lanny A. Breuer, the head of the Justice Department’s criminal division. (photo: Richard Drew/Associated Press)
Lanny A. Breuer, the head of the Justice Department’s criminal division. (photo: Richard Drew/Associated Press)



DOJ's Wall Street Crackdown Is Laughable

By Matt Taibbi, Rolling Stone

21 February 13

 

don't want to sound like a broken record, but . . . the latest ploy by the government to insist it is "getting tough" on Wall Street is beyond laughable.

The tough new-and-improved regime, as described by the curiously credulous Dealbook, is a policy of extracting criminal guilty pleas from foreign subsidiaries, as opposed to the "usual fines and reforms." This was the path chosen in the recent UBS deal (in which a Japanese subsidiary was charged while the parent company was given a complete walk, a non-prosecution settlement) and in the more recent deal with the Royal Bank of Scotland. Both of those banks were implicated in the LIBOR rate-fixing case, which is only maybe the most egregious and far-reaching financial scandal of our generation. Writes Dealbook:

Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks.
In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations.
Lawyers for several big banks, who spoke on the condition of anonymity, said they were already adjusting their defenses and urging banks to fire employees suspected of wrongdoing in the hope of appeasing authorities.

The story was accompanied by a preposterous photo of Lanny Breuer angrily wagging a finger, suggesting a new, "get-tough" criminal division of the Department of Justice.

The article worried desperately over the issue of whether or not the Japanese subsidiaries would keep their licenses after these guilty pleas. As is often the case - I've personally heard this excuse about a dozen times coming from DC types - regulators are terrified of repeating an Arthur Andersen situation, i.e. punishing a company and seeing massive job losses as a result:

Critics point to the UBS case. Before UBS signed the deal, Japanese authorities assured the bank that a guilty plea would not cost the subsidiary its license, a person involved in the case said. While the case has weighed on the stock price, the subsidiary is operating normally and clients have stayed put, according to people with direct knowledge of the case.
Prosecutors defend their effort, saying it was born from painful experiences over the last decade.
After Arthur Andersen was convicted in 2002, the accounting firm went out of business, taking 28,000 jobs with it. The Supreme Court later overturned the case, prompting the government to alter its approach.

The Arthur Andersen case has become like Wall Street's magic mantra - you hear the name whispered anytime any company gets in trouble. This is a tactic straight out of Blazing Saddles, with banks essentially taking themselves hostage, putting guns to their own heads as they creep sideways out the door: "Back off! Prosecute us and all these jobs will die!"

And prosecutors, just like the idiot town leaders of Mel Brooks's Rockridge, are screaming, "They're just crazy enough to do it!"

This isn't brain surgery. You know what an effective deterrent to crime is? Jail! And do you know what kind of criminal penalty actually makes people think twice about committing crimes the next time? The kind that actually comes out of some individual's pocket, not fines that come out of the corporate kitty.

I get that regulators are worried about job losses. They should be. But the long-term job losses are going to be much greater when investors around the world lose confidence in the U.S. financial system because they recognize that individuals do not face punishment for criminal activity. The individual incentive not to commit crime on Wall Street now is almost zero. Even the worst of the worst - like, say, a certain unindicted co-conspirator in an evolving insider trading case - is only threatened with individual prosecution after years of monstrous and obvious market manipulation, resulting in massive profits that he'll almost certainly get to keep most of, by the way, if previous settlements are any guide.

It continually amazes, the way all of these law-and-order types are so willing to pontificate about the importance of taking individual responsibility for one's actions, until the guy in their crosshairs is someone he/she went to college with, or a former client of his or her law firm. Then, suddenly, their idea of drastic justice becomes maybe yanking the license of a foreign subsidiary.

Let's make a new rule: The Department of Justice doesn't get to call itself "tough" until a) it puts someone from one of these companies in jail for at least 24 hours, or b) it extracts fines from either companies or individuals that represent at least slightly more than laughable fractions of their ill-gotten gains. That's setting the bar pretty low, but you have to start somewhere, right?

 

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+65 # Trueblue Democrat 2013-02-21 08:02
Matt, you and Glenn Greenwald have worked tirelessly to bring to light the total lack of justice in this country.

To what avail? There's no outrage. No one marching on the DOJ. No tearing up the paving stones and building barracades. No nothing.

Isn't it time to acknowledge a central fact of life -- people get the kind of government they deserve.
 
 
+46 # Buddha 2013-02-21 10:39
Actually, there was. It was us who got off our couches and Occupied. The problem was too many sheeple stayed on their couches, and that lack of even larger public dissent and outrage gave the government, the tools of Wall St, all it needed to crush the Occupy encampments without taking a huge hit politically.
 
 
+28 # Trueblue Democrat 2013-02-21 13:02
Buddha, you are abolutely correct. We attended the Occupy gathering in my hometown from the first day. What I was trying to say, which you more or less confirm, Occupy had nothing like the tens of thousands turning out everywhere like we did back in the late 60s and early 70s. Yes, the sheeple stayed home in droves.
 
 
+27 # HowardMH 2013-02-21 10:43
Trueblue exactly what I have been saying for months.

All that talk about being tough -- they are just blowing smoke. If it wasn't for Elizabeth Warren who has more back bone than all of her fellow senators put together on this subject they wouldn't even be blowing smoke from DOJ thanks to Obama the Wimp and Holder the puppet of the Wimp!

Elizabeth Warren for president! Read this article if you want to see some backbone and leadership in congress.

http://www.wallstreetandtech.com/regulatory-compliance/regrets-some-senators-have-a-few/240148650?cid=nl_wallstreettech_daily&elq=d9f1193f44234c36900fb056295496d0

Until there are two hundred thousand really, really pissed off people on Capital Hill (all at the same time – with base ball bats, or 2 x 2s) raising some serious hell against the Lunatics, absolutely nothing is ever, ever going to happen to these totally bought and paid for by the richest 50 people in the world that are becoming more and more powerful with each passing rigged election thanks to the stupid people.

How much success have you had with the TOTALLY NON VIOLENT protests over the last few years?

I’m no fan of Sarah’s but this comment is just so appropriate. So how is that Hopei, Changie working out for you now?
 
 
+8 # wantrealdemocracy 2013-02-21 11:28
Oh, for humanity's sake, "true blue Democrat is at the base of our problems. You 'true blue Democrats' and there are many of you maybe get the government you deserve, but you are causing the voters who do not vote corporate terrible pain and suffering. we know the Dims and the Repukes are one and the same. The problem with the banks getting off and us getting screwed is far from 'laughable'. It is evil and corrupt and morally reprehensible. We need the outrage and marching on the DOJ but instead we have true blue Democrats asking their dear President to take a stand on the side of the people and our environment. Might as well write a letter to the tooth fairy or the Easter bunny. Your true blue Democratic President has been bought and paid for, along with your 'Representative ' and Senators, to work in the interests of the top 1% in terms of wealth in this nation. Only when 'True Blue Democrats' realize this fact can we begin to get a government that may allow our nation to be a democracy. It is now a plutocracy bordering on fascism. Please wise up before we all die along with our mother the earth.
 
 
+4 # Trueblue Democrat 2013-02-21 13:14
I believe you must have read my letter to Obama posted on another RSN article. Sorry you misconstrued what I was saying and why?

That was venom encased in ridicule, in case you didn't understand it.

And Trueblue Democrats are NOT the problem. The problem is "Democrats" who are GOPers or even worse parading as the party of the people. Bush was a disaster. Obama is worse because he stands for the same things Bush did but talks the progressive talk. A swindle that too many people buy into.
 
 
+3 # robcarter.vn 2013-02-21 18:59
but Matt did no one explain to you some wisdom of supreme Court Justices when they gave Corp citizenship it was superior to human Citizenship in tat we humans can also be sent to jail, Corp Citizens can only be fined, as such better to settle a fine between State and Corp or they may keep appealing and wasting court time. Agreeing leaves a goodly fine to consolidated revenue, and a profit for the 1% owners, so they can do it again knowing the fine still leaves a sure return and tax free, since cant tax a crime or court settlement penalty still that can become a tax deduction.
 
 
+4 # RLF 2013-02-22 05:36
An individual will not only go to jail...their ill gotten gains are taken by the government and auctioned off. Seems like a good way to punish. Make the shareholders responsible by seizing the company and relisting it.
 
 
+56 # DPM 2013-02-21 08:28
The U.S. "government" is just a subsidiary of Wall Street. The Department of "Justice" is only a shill, unless of course, it is prosecuting someone unable to defend themselves. Then the full force of the government is brought to bear. You know, to make an "example" of them.
 
 
+12 # Walter J Smith 2013-02-21 09:19
That would be "a wholly owned and governed subsidary of Wall Street." The clowns do not even pretend otherwise anymore. And Obama is the absolute worst of the lot. It is becoming increasingly difficult to imagine that/how Romney would have been worse.
 
 
+3 # indian weaver 2013-02-21 13:10
Romney would have given us a lot of laughs. Obama is boring while being a coward. Most any of us would have been better presidents than either of these 2 losers. Me anyhow!
 
 
-26 # Martintfre 2013-02-21 08:58
This adminstration is the biggest fascist pro corporate adminstration ever bought by the tax payers dollars... Of course they wont prosecute their bread and butter.

But their idiot minions will continue to damn the republicans for what they the democrats are doing.
 
 
+21 # jon 2013-02-21 09:46
Quoting Martintfre:
This adminstration is the biggest fascist pro corporate adminstration ever bought by the tax payers dollars... Of course they wont prosecute their bread and butter.

But their idiot minions will continue to damn the republicans for what they the democrats are doing.

MaQuoting Martintfre:
This adminstration is the biggest fascist pro corporate adminstration ever bought by the tax payers dollars... Of course they wont prosecute their bread and butter.

But their idiot minions will continue to damn the republicans for what they the democrats are doing.


Martin,

Just once I would like to see you mention the initial causative factor, Bush, et alia, in your rants about corporatocracy and who is culpable.

I am not, however, going to hold my breath.
 
 
+6 # RLF 2013-02-22 05:38
Jon...while your at it, why not mention Clinton and his constant pro-corporate deregulation.
 
 
+4 # Billsy 2013-02-21 11:45
Not while the GW Bush administration is in recent memory. Make no mistake the Republicans are FAR worse if that's possible. Independent parties are the sole agents of positive change but sheepish intellectually lazy Americans are too fearful to support them. It will have to happen at local levels and percolate up. That my friends will take years. Patience.
 
 
+2 # indian weaver 2013-02-21 13:12
Whoops! Time's up. Act now or die. A slow death is more painful than a quick death.
 
 
+3 # rockieball 2013-02-22 07:15
But the people who support the Republican will back and applaud the parties continual blocking of ANY law, ANY increased funding for the agency, or ANY actions what so ever because of their belligerence in corporation with the Dems or the President. REMEMBER the continual response "I OBJECT." and even McConnell filibustered his own proposal because the Dems. supported it.
 
 
+23 # jon 2013-02-21 09:05
Prosecutors who do not pursue these criminals - to the full extent of the law, like say, maybe Bradley Manning - should be prosecuted as co-conspirators .
 
 
+23 # elbows 2013-02-21 09:11
As a prominent Republican recently said, "Corporations are made of people." Corporations don't make decisions, people make decisions. Corporations can't go to jail, people can go to jail. Corporations, if they're big enough, don't fear penalties; people do, if the penalty appears likely to be swift and sure.
 
 
+7 # Vern Radul 2013-02-21 09:29
Laughable?

Yes, and Obama is doing most of the laughing, at his supporters, while Wall Street chuckles in the background.
 
 
+14 # fredmac 2013-02-21 09:51
All of these shenanigans have been laughable because their leader, Lanny Breuer is a joke himself. What a wuss! He might as well be an unindicted co-conspirator!
 
 
+8 # Virginia 2013-02-21 10:42
Along with a and b - these fines should be NON-DEDUCTABLE and NON-DISCHARGEAB LE.
 
 
+4 # Old Uncle Dave 2013-02-21 10:51
Employees don't get to discipline their bosses.
 
 
+4 # Walter J Smith 2013-02-21 12:03
DoJ equals Department of (Bad) Jokes.
 
 
+4 # indian weaver 2013-02-21 13:13
Dept. of Jokers.
 
 
+16 # angelfish 2013-02-21 13:27
WE HAVE no Department Of Justice, Matt. In fact, there is NO justice to be had ANYWHERE in America these days. It's ALL smoke and mirrors. This Government is run ENTIRELY Of, By and FOR the ones with the MOST MONEY! It makes me glad to be old and almost ready to check out. Who wants to live in a World where you have NO advocates? I'm old enough to remember when we had some. Sadly, there are too few in Washington today, and their voices are being crushed by the onslaught of Lobbyists and Miscellaneous Cash that has corrupted what USED to be a fairly decent political system. Then again, maybe I'm already in my dotage and just dreaming of what I WISH we had been...? You, however, are one of our Champions, Matt. Never, ever, ever, EVER, give up or stop doing what you do. God Bless you and keep you safe.
 
 
+9 # tbcrawford 2013-02-21 13:55
There are some good people in Congress and we must support them with all we've got, because they're all we've got: Elizabeth Warren, Jan Shakowsky, Bernie Sanders, Barbara Lee...indeed the Progressive Caucus. Name calling traitors like Holder and Napolitano won't even get their attention.
 
 
+7 # angelfish 2013-02-21 16:00
Quoting tbcrawford:
There are some good people in Congress and we must support them with all we've got, because they're all we've got: Elizabeth Warren, Jan Shakowsky, Bernie Sanders, Barbara Lee...indeed the Progressive Caucus. Name calling traitors like Holder and Napolitano won't even get their attention.

I agree, however, WE must rally around them and NEVER let the Dark Side squelch their voices!
 
 
+5 # cordleycoit 2013-02-21 17:26
Why do bother with these criminals the Obama adminisration is busy hiring the worst offenders to high public office.
 
 
+9 # reiverpacific 2013-02-21 18:02
I love the paragraph ending with "Back off! Prosecute us and all these jobs will die!"
Shitsky, hardly a day passes without an announcement that some bank, financial giant or trading house is laying of thousands of employees nations and worldwide.
But not a penny in cuts for the CEO's and slaps on-the-wrist from the government.
Socialism is upon us -Corporate that is! Love it or swallow the bitter pill.
For those bellicose and non-point making slingers about of the title, a truly Fascist government would actually have these pigs taken out and shot for defying and injuring the "Homeland", "Patria", "Reich" or whatever language suits the time and place.
But this crowd od so-called regulators are just a self-aggrandizi ng group of patsies from the spawn-beds as the criminals.
 

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