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Suit against banks
December 1, 2011 11:10 AM   Subscribe

Massachusetts AG Sues 5 Biggest Banks The first suit by a state attorney general to address the robosigning allegations of last fall, the suit may signal the failure of the talks among the 50 state attorney's general, federal regulators, and the big banks. (Previously). The most interesting aspects of the suit may be its allegations about mortgage modifications, however, which are new. (Attorney General's full complaint here.)

Here's what the complaint says about the government sponsored loan mod programs:
The Bank Defendants frequently represent to borrowers and the public that they are actively assisting distressed borrowers...Instead, however, upon information and belief, each of the Bank. Defendants has deceived Massachusetts borrowers about loan modification requirements, by, without limitation., misrepresenting that:
---Borrowers must be over sixty days delinquent to get a loan modification, when in fact actual delinquency is not required. Borrowers may be eligible even if they are at simply at risk of imminent default. Such misrepresentations resat in increased and unnecessary defaults.
---If borrowers are over ninety days delinquent they will receive priority treatment, which is false; and which results in unnecessary additional defaults and extended delinquencies.
---Certain borrowers cannot be considered based oil the type or seasonal, nature of their income, when in fact such factors are not determinative of eligibility. This results in borrowers who otherwise may qualify for a loan modification being improperly denied or dissuaded from applying.

...In spite of the Bank Defendants' conduct above, certain borrowers have received loan modifications, often after waiting months, hiring counsel, and/or answering repeated requests to provide identical application information. Once approved, borrowers typically must execute and return written loan modifications to their servicer and then begin making the required modified monthly payments. On numerous occasions, however, and often after months of accepting the bo owers' payments pursuant to the very loan modifications the Bank Defendants approved, each of the Bank Defendants has informed these borrowers that their loan modifications were in fact rejected, were never accepted by investors, were never in place, and/or that foreclosure auctions were scheduled imminently...The Bank Defendants routinely make misrepresentations to borrowers and/or their counsel regarding pending foreclosure proceedings, including, among other misrepresentations, that while loan modification negotiations are occurring, foreclosure proceedings will not continue and/or that foreclosure auctions will be postponed. As negotiations progress, however, borrowers and/or their counsel often learn, whether through public notices or communications with other employees or agents of the relevant Bank Defendant, that the foreclosure auctions are continuing as scheduled.
There's othe interestng stuff in the full suit --- Coakley is also suing MERS, the electronic land registry in which about 2/3rd of American mortgages are registered, saying it's unlawful.
posted by Diablevert (94 comments total) 12 users marked this as a favorite

 
Paging Eric Holder and Obama - capitulating on bank fraud is not in the Attorney General job description.
posted by airing nerdy laundry at 11:20 AM on December 1, 2011 [10 favorites]


Good. I'd like to think that this kind of wholesale misbehavior should have some actual consequences. Yay Coakley. even if she can't run a senate campaign. *sigh*
posted by rmd1023 at 11:21 AM on December 1, 2011 [2 favorites]


I would be shocked if anyone other than some low-level patsy clerks take the fall for this.
posted by dr_dank at 11:28 AM on December 1, 2011 [1 favorite]


How about the part where foreclosing on active duty military personnel is illegal, and carries some pretty serious jail time. Will we be seeing banksters actually going to jail?
posted by sotonohito at 11:31 AM on December 1, 2011 [2 favorites]


I also note that they keep talking about a "settlement".

You don't settle with criminals. You take them to court and seize their assets and toss them in prison. The fact that they're even discussing "settlements" rather than trial by jury is evidence that the system is horribly broken.
posted by sotonohito at 11:32 AM on December 1, 2011 [19 favorites]


Meanwhile - While on Ratigan, Spitzer says In retrospect, I wish I'd put more people in handcuffs.
posted by symbioid at 11:41 AM on December 1, 2011 [1 favorite]


You don't settle with criminals. You take them to court and seize their assets and toss them in prison. The fact that they're even discussing "settlements" rather than trial by jury is evidence that the system is horribly broken.

Well, you're sort of right, in the sense that this is a civil suit, not a criminal action, to say "you don't settle with criminals" flies in the face of that fact that the overwhelming majority of criminal prosecutions end in plea bargains.
posted by Bulgaroktonos at 11:44 AM on December 1, 2011 [2 favorites]


I would be shocked if anyone other than some low-level patsy clerks take the fall for this.

On the other hand, I am wondering how many people the banking industry will have to execute in order to quash this.
posted by Hypnotic Chick at 11:49 AM on December 1, 2011 [4 favorites]


You don't settle with criminals. You take them to court and seize their assets and toss them in prison. The fact that they're even discussing "settlements" rather than trial by jury is evidence that the system is horribly broken.

More often than not, resources dictate legal strategy. As a state attorney, I can vouch that settlement generally comes at a much cheaper price than trial. By resources I mean time and money, both.
posted by Atreides at 11:51 AM on December 1, 2011


Meanwhile - While on Ratigan, Spitzer says In retrospect, I wish I'd put more people in handcuffs.

Elliott, dude, we already know too much about your private life.
posted by Holy Zarquon's Singing Fish at 11:51 AM on December 1, 2011 [13 favorites]


GMAC said it was unhappy that Massachusetts "elected not to continue a more constructive path that could help borrowers in the state, but rather has chosen to use the court process."

That's kind of rich given that the suit alleges that the banks have consistently brought people to court without allowing them to negotiate in a 'constructive path'. The banks (are alleged to) have been using the court process in an apparently fraudulent manner and now the banks are calling the state's response unreasonable?

Chutzpah.
posted by el io at 11:53 AM on December 1, 2011 [9 favorites]


Bless Coakley's heart, she's finally doing what the rest of the bums won't. And good on her for finally taking it to MERS, which is nothing but a scheme to defraud land registries out of transfer fees and prevent the public from determining who holds notes on what pieces of land.
posted by 1adam12 at 11:58 AM on December 1, 2011 [5 favorites]


Atreides I'm sure that you're correct.

Problem is that when elites get "settlements" that mostly works out to slap on the wrist fines that don't amount to even forcing them to pay back the amount they stole, much less anything punitive added on top.

OTOH, the State Attorneys seem to have endless resources for pointless crap like prosecuting prostitutes, drug users, etc. It'd be nice if some of those resources could be spent on prosecuting real criminals like the banksters rather than "settling" with them.

Or, conterwise, could we at least start applying bankster justice to everyone? Rob a bank, steal $100,000 and settle for a fine of $100? Be a prostitute, charge $100 a night, and settle for a $0.01 fine? Buy some dope, settle for a $1 fine? If that isn't acceptable for bank robbers, prostitutes, and druggies, why should it be acceptable for the elites?

From where I'm sitting, it looks like we have two systems of justice. The elites get a system where they never face a jury, never face real penalties, and basically get away with anything they want. While us peons get a system of justice that produces harsh, brutal, penalties for the smallest of crimes.

If, as you claim, the resources just plain aren't there to prosecute banksters then the state AG's need to put everyone into bankster type justice. Otherwise what you're basically saying is "they're too rich so we can't/won't apply the law to them".
posted by sotonohito at 12:04 PM on December 1, 2011 [15 favorites]


It's sad that these half-measures are what pass for bold moves.

The lenders' actions are, in plain terms, perjury and fraud.

Actual identifiable people signed perjured documents. Actual identifiable people knowingly filed these fraudulent documents with courts. Those people committed crimes. Their superiors conspired to commit felonies. The corporations themselves have knowingly engaged in a pattern of criminal acts that shows them to be, not to coin a phrase "Racketeer Influenced and Corrupt." If you or committed similar crimes we'd be in jail.

What's actually in the interest of the people is to reestablish the rule of law and begin straight up criminal prosecutions of those people. Anything less reveals the enforcers of the law to be complicit in the crimes.

I often think there isn't any law anymore -- just cant that the powerful recite to numb he minds of the powerless.
posted by tyllwin at 12:08 PM on December 1, 2011 [15 favorites]


From where I'm sitting, it looks like we have two systems of justice. The elites get a system where they never face a jury, never face real penalties, and basically get away with anything they want. While us peons get a system of justice that produces harsh, brutal, penalties for the smallest of crimes.

So you're absolutely not wrong about there being a two tiered justice system, but the "settlement/plea bargain" aspect of it is there at all tiers. Most drug users, prostitutes, etc. don't "face a jury," they plead guilty, "settle" and take punishment that is usually a lot less than they theoretically face. It's still too harsh, because sentences for crime in general are too harsh, but it's not like the prosecutor's offices of this country and going in guns-blazing against prostitutes and drug users; they mostly plead guilty in a low-cost, assembly-line kind of way.
posted by Bulgaroktonos at 12:11 PM on December 1, 2011 [1 favorite]


Whether done with juries or plea bargains, and frankly the whole plea bargain thing looks so corrupt I'm not sure if we should keep it for any level of crime, having a two tiered system of justice is pretty awful.
posted by sotonohito at 12:18 PM on December 1, 2011


I also note that they keep talking about a "settlement".

I'm just going to leave this here.
posted by EmpressCallipygos at 12:22 PM on December 1, 2011 [2 favorites]


I think the best outcome here is whatever leads to the most relief for homeowners. My guess is that Coakley is doing this mostly to try to force a better settlement out of the ongoing negotiation process rather than with the intent to follow this to the bitter end.
posted by yoink at 12:23 PM on December 1, 2011


EmpressCallipygos Yup, and good on him. Unfortunately there's a limit to how much he could force the SEC to do it's job, IIRC a while back a similar case happened and the judge could only force the SEC to add another $100 million or so. Goldman, for example, ultimately settled for $500 million, which is chump change to them.

yoink I'd argue two things.

The first is that what's best for homeowners, all homeowners, is for this sort of fraud to be smashed so hard that it stops happening. If the bankers learn they can defraud mortgage holders and make a profit, they'll keep doing it.

I'd also argue that it's in everyone's best interests to see justice done and elite criminals brought low by the law.

We, in theory, are a nation of laws, a nation where equality before the law is a paramount virtue, and the paramount obligation of the government. To give criminals, such as the banksters, an out on the basis that they'll send some tiny percentage of their stolen money back to their victims is a very bad idea.
posted by sotonohito at 12:35 PM on December 1, 2011 [2 favorites]


Speaking of Holder's softness on the banks check this out. It's illegal to foreclose on active duty military. And this isn't the kind of thing you walk away from with a fine, you're supposed to go to jail.

But surprise surprise, the banks foreclosed on a lot of active duty military. But rather then sending the people responsible to jail, he's working out a settlement with the offenders where they pay about $100k per instance and don't even have to admit guilt.
posted by delmoi at 12:40 PM on December 1, 2011 [2 favorites]


But surprise surprise, the banks foreclosed on a lot of active duty military. But rather then sending the people responsible to jail, he's working out a settlement with the offenders where they pay about $100k per instance and don't even have to admit guilt.

If I had my home foreclosed on improperly, I'd rather have the compenstation than see people I don't know go to jail. Especially, since I doubt any of the higher ups at Bank of America are actually guilty of that offense. How much knowledge do you think they have of any specific foreclosure? The answer is probably zero, and the crime clearly requires knowledge that the person is in the military.

You can argue that the fact that almost no one at Bank of America really knows who their foreclosing on or why is a serious problem, and I'd agree, but the only people SCRA would put in jail there would be random, negligent, low level functionaries.
posted by Bulgaroktonos at 12:48 PM on December 1, 2011 [2 favorites]


If I had my home foreclosed on improperly, I'd rather have the compensation than see people I don't know go to jail.
I'd rather see both.
posted by delmoi at 12:53 PM on December 1, 2011 [9 favorites]


You can argue that the fact that almost no one at Bank of America really knows who their foreclosing on or why is a serious problem, and I'd agree, but the only people SCRA would put in jail there would be random, negligent, low level functionaries.
So what? they're breaking the law. These banks can't operate without low level functionaries, so I don't really have a problem with putting them in jail. Enough with this "I was just following orders" bullshit.
posted by delmoi at 12:54 PM on December 1, 2011 [1 favorite]


So what? they're breaking the law. These banks can't operate without low level functionaries, so I don't really have a problem with putting them in jail. Enough with this "I was just following orders" bullshit.

Well, I'm just thankful that my actual government doesn't waste what little money it has chasing down anonymous people that will just be replaced, with no actual impact on whether or not this will happen again. I'd like to see the government push for stiffer fines (enough to affect Bank of America's future behavior), but they got compensation for the victim's which matters a whole lot more than the pound of flesh that people are always demanding.

Seriously, in death penalty threads, most of the liberals on this site can see the uselessness of vengeance as a reason for a criminal justice system, but you put a tie on the defendant and that all goes out the window.
posted by Bulgaroktonos at 1:03 PM on December 1, 2011 [4 favorites]


Seriously, in death penalty threads, most of the liberals on this site can see the uselessness of vengeance as a reason for a criminal justice system, but you put a tie on the defendant and that all goes out the window.

So it's OK to commit a crime if you can throw some cash at a few victims once you get caught. This new America has a lot of potential.
posted by Space Coyote at 1:05 PM on December 1, 2011 [2 favorites]


I'd rather see both.

On the link you provided, violation of that law appears to be a misdemeanor. I'm not a lawyer, but I bet the ones here like Bulgaroktonos would say that it's pretty rare for first-time nonviolent misdemeanants to receive substantial jail time (perhaps with the exception of people not making bail, but that's a separate problem).

This is what I see as the substantial downside to enormous sentences like 150 years for Bernie Madoff. It's not that I think Madoff should ever be free, but people seem to have become convinced that anything short of decades spent in a cage in constant fear of bodily harm is a meaningless slap on the wrist. America is by far the world's leader in incarceration (and no, it's not predominantly "nonviolent drug offenders")--should our answer to everything really be "put more people in jail"?
posted by dsfan at 1:07 PM on December 1, 2011 [2 favorites]


Seriously, in death penalty threads, most of the liberals on this site can see the uselessness of vengeance as a reason for a criminal justice system, but you put a tie on the defendant and that all goes out the window.

But right now, there's no deterrence at all: Steal $500K, negotiate some, and only keep $400K less expenses. Let's increase the volume on that, ASAP!

Besides, not all of us urge just putting low-level functionaries in jail. Get the button-men to roll on the capos, get the capos to roll on the don.
posted by tyllwin at 1:09 PM on December 1, 2011 [4 favorites]


should our answer to everything really be "put more people in jail"?

No. Nobody here is recommending decades of jail time for every single infraction. What we're doing, I think, is talking through the problem of imposing monetary fines that are not big enough, relative to the fraud alleged and the profit taken stolen thereby, to prove effective deterrent to future fraud.
posted by gauche at 1:12 PM on December 1, 2011 [1 favorite]


I want to know why a SEAL Team hasn't long since kicked in Brian Moynihan's front door, straight up shot him in the head, and dumped his body at sea. I mean that's the precdent for people who do this kind of damage to the United States, isn't it?
posted by Naberius at 1:13 PM on December 1, 2011 [1 favorite]


So it's OK to commit a crime if you can throw some cash at a few victims once you get caught. This new America has a lot of potential.

Well other than the fact that this happens all the time for people of both great and modest means(I've gotten indigent clients off the hook because they scraped together a few bucks to pay someone back for what they stole or whatever), what I'm arguing for is stepping back and asking why you want these people prosecuted. If you think it will do some future good, then go ahead, it's a good idea. I don't see that I, I see people screaming for blood because they hate these people and want to see them suffer. That's not a system of justice, no matter what the race or class of the defendant is.

Besides, not all of us urge just putting low-level functionaries in jail. Get the button-men to roll on the capos, get the capos to roll on the don.

My original point was that I think SCRA issue that was brought up doesn't apply to the capos or the don (obviously I'm working mostly off intuition here), since it requires knowledge that your foreclosing on someone who is protected by it, and I doubt anyone at Bank of America of any import knew they were foreclosing on a specific servicemembers house.

There might be a crime that the top people can actually be convicted of, but this isn't it.
posted by Bulgaroktonos at 1:13 PM on December 1, 2011 [1 favorite]


Well, I'm just thankful that my actual government doesn't waste what little money it has chasing down anonymous people that will just be replaced
Tell that to the millions of people in prison for drug offenses.

You could actually do an investigation where you get low level people to 'flip' on higher ups. But basically what you're arguing is that there should be no penalties because they would just get 'low level' people so why bother enforcing the law at all?

Under that logic, you could get away with any crime, so long as you have a large enough hierarchy. It's moronic.
There might be a crime that the top people can actually be convicted of, but this isn't it.
Then why should they be the ones who go to jail? Someone broke the law, this is a crime with jail time attached. You're essentially arguing that no one should go to jail of an organization can 'bury' the actual decision well enough. It's completely absurd. A crime was committed, and someone was responsible. Why shouldn't they go to jail?
posted by delmoi at 1:21 PM on December 1, 2011 [2 favorites]


it requires knowledge that your foreclosing on someone who is protected by it, and I doubt anyone at Bank of America of any import knew they were foreclosing on a specific servicemembers house.

I doubt it, too, and I don't think a State AG can do much in the way of a RICO-style prosecution either. Though I think the feds should -- John Gotti didn't know what every flunky was doing either.

But I'm sure Bob the robo-signer will testify against his boss. I don't know how much higher you can follow that chain. But someone ought to be finding out. Maybe then someone in these lenders' offices might actually wonder sometime "is this legal?" And besides, once you start aggressively putting management in prison for a while, it incents a willingness to settle for much more reasonable sums. Maybe even enough that they lose money by doing this crap, which is less than the minimum consequence it should have.
posted by tyllwin at 1:23 PM on December 1, 2011 [1 favorite]


Bulgaroktonos But wouldn't the SCRA violations at least be enough to nail the big guys for something? Conspiracy at the very least?

Because otherwise we've got serious problems.

Let's be very generous and assume that the high ups are truly innocent in a certain sense. But even if it was just the high ups saying "make me profit no matter what, I don't care if its legal or not!" and the mid level types deciding to violate the law, and ordering low level types to actually carry out the crimes, shouldn't the high up and mid level types get **SOME** sort of penalty?

Personally I'm not a major fan of jail time for non-violent crimes. But as long as we're living in a world where the peons get decades of time for non-violent crimes then I bloody well demand that the elites face the exact same penalties. It is banana republic level wrong for there to be two systems of justice, one where the peons get harsh and brutal penalties for the mildest of infractions, and another where the elites walk away with no real penalties at all.

In my ideal world the penalties for financial crimes would be paying back, say, 200% of the stolen money followed by a long ban, possibly a lifetime ban, on participation in the economy beyond the level of working for McDonalds as a fry cook.

But since we live in a world where prostitutes, and drug users, and any number of non-elites are serving decades of jail time for non-violent crimes then I will accept nothing less than decades of jail time for the elite criminals as being truly just and equal.

When did we abandon the idea of equality under the law and start actually advocating and embracing a two tier system of justice? When did it become ok for people to demolish the economy, steal thousands of homes, and walk away free to repeat their crimes and facing no penalties other than a laughable fine doesn't even equal 100% of the amount they stole?

You'd think, at the very least, they'd be required to pay back all the money they stole, no? Yet here we are ready to accept a "penalty" that is nowhere near the amount stolen. WTF?
posted by sotonohito at 1:23 PM on December 1, 2011 [4 favorites]


The problem, Bulgaroktonos, is that institutions are capable of being far more crafty in their wrongdoing than individuals, and are open to much less lasting consequences. If I steal a car, chances are I'll be doing time for it. If a bank screws over some customers, a small fraction will actually do anything about it, and paying off all those who were loud about getting screwed over will still result in a net profit off of those who weren't loud enough or sufficiently informed to get in on the settlement.

The thinking is that punishments for corporate wrongdoing need to be grave enough that they actually keep the corporations from doing this shit. Large corporations are much more rational than individuals, and I expect would respond much more rationally to severe consequences with real enforcement than we see with individuals.

What those consequences could be are up to debate. If it means jailing people who greenlight bad activities, it's one way to go but will require some pretty heavy investigations and will be really expensive. OTOH, if corporations are expected to pay restitution on the order of 10x or 100x damage caused, it may be enough to actually deter them from being bad actors.
posted by kaibutsu at 1:24 PM on December 1, 2011 [3 favorites]


I think sononohito is close to what I feel emotionally: Stealing someone's house is worse than selling them a joint. The consequences ought to be worse, and at every level. Bob the robo-signer should get off no easier than Bob the street-level dealer.
posted by tyllwin at 1:27 PM on December 1, 2011 [1 favorite]


Tell that to the millions of people in prison for drug offenses.

Oh for fucks sake; in a previous life, I defended indigent people charged with (among other things) drug offenses, I know very well (better than you), how much money is wasted on drug prosecutions and I hate it, and how it's pointless and ruins lives for no gain. That gives me more, not less sympathy for Bob the Robosigner; he's a patsy and putting him in jail ruins his life and doesn't make the community any better off. It's not in any way more defensible than putting drug users in jail.

Bob the Robosigner isn't the problem, the system is the problem. Show me a crime that the higher ups at Bank of America, et al. are guilty of, and put them in jail for that crime, and I think you might start changing that system, but putting random robosigners in jail doesn't change the banking system anymore than putting drug users in jail stops the drug trade.

What those consequences could be are up to debate. If it means jailing people who greenlight bad activities, it's one way to go but will require some pretty heavy investigations and will be really expensive. OTOH, if corporations are expected to pay restitution on the order of 10x or 100x damage caused, it may be enough to actually deter them from being bad actors.

Yeah, I agree 100%, I haven't said anything that contradicts that. I said that I think the SCRA charge is not one that the head of Bank of America is guilty of and that getting upset that he's not being charged with that is more indicative of a desire for vengeance than actually thinking about the issue.
posted by Bulgaroktonos at 1:35 PM on December 1, 2011 [2 favorites]


How much knowledge do you think they have of any specific foreclosure? The answer is probably zero, and the crime clearly requires knowledge that the person is in the military.

Due to a federal law called, IIRC, the Servicemembers Protection Act, every foreclosing lender is required to file an affirmative affidavit pledging that the homeowner they're foreclosing on is not in the active military. They use social security numbers found on loan documents and a database provided by the department of defense to check this.
posted by Diablevert at 1:38 PM on December 1, 2011 [3 favorites]


Bob the Robosigner isn't the problem, the system is the problem. Show me a crime that the higher ups at Bank of America, et al. are guilty of, and put them in jail for that crime
So who exactly is responsible for breaking the law here? No one? If no one forced them to foreclose on active duty military, then they should go to jail. If someone forced them to do it, then those people should go to jail.

But someone, somewhere, made the decision.
posted by delmoi at 1:40 PM on December 1, 2011 [2 favorites]


I doubt anyone at Bank of America of any import knew they were foreclosing on a specific servicemembers house...

I don't see that I, I see people screaming for blood because they hate these people and want to see them suffer. That's not a system of justice, no matter what the race or class of the defendant is.


Where does the buck stop? Yes, incarceration and justice in America are both overdone, but notice where the pain from that kind of injustice lies - i.e. among the poor and defenseless.

Much of what the poor and defenseless experience in this country is made possible by the rapacious corporate policies set by senior corporate executives, helped along by weak enforcement of those who have fucked with this country for years, with impunity, because they have been able to buy off policy makers and make what would be normally considered thievery, legal.

Keep in mind that these people are RESPONSIBLE for what their underlings do, especially when said underlings take on actions that are committed over a long period of time.

What you see IS a system of justice, a system that is tempered with outrage and anger, and wants to see the people at the top of this stinking pile of banking corruption LOSE EVERYTHING!

They do NOT deserve an easy out. We're talking about an entire group of corporate leaders and money managers and others who have caused more harm and more loss and more travail than probably all the thieves that we currently have locked up in American jails.

There SHOULD be an element of self-righteous anger and revenge as a part of the recipe for leveling justice on these institutions, and their leaders. They have, as a part of their cynical buying out of policy, the very foundations of democracy and transparency that permitted their institutions to thrive, in the first place.

Personally, I want to see ASSETS stripped from these jerks, to the point where they have NOTHING left. Jail time? Who cares? I also want to see them forbidden to participate in ANY further finance-based occupation. I want to see them have to start over, from nothing. They need to feel a pain similar to the pain they have caused to millions of others.
posted by Vibrissae at 1:41 PM on December 1, 2011 [4 favorites]


Due to a federal law called, IIRC, the Servicemembers Protection Act, every foreclosing lender is required to file an affirmative affidavit pledging that the homeowner they're foreclosing on is not in the active military. They use social security numbers found on loan documents and a database provided by the department of defense to check this.
Right. In order to foreclose one someone who is in the military, you have to sign a form saying they are not active duty. If you sign the form, knowing it's false, then you should go to jail. It's not all that complicated.

If someone forced you to do it, then try to strike a deal.
posted by delmoi at 1:42 PM on December 1, 2011


Great link to Rakoff's decision throwing out the Citigroup settlement, EmpressCallipygos - thanks very much for that. I've downloaded the decision and I'm looking forward to reading it.
posted by kristi at 1:44 PM on December 1, 2011


So who exactly is responsible for breaking the law here? No one? If no one forced them to foreclose on active duty military, then they should go to jail.

Yeah, the person signing the form is guilty(or at least every one of them who signed the form for someone who was active duty military, you could almost certainly convict him. I've never questioned that there is someone, somewhere, guilty of this crime. I just don't see that putting those people in jail does anyone anywhere any good. I don't like seeing people in jail, period. Where I don't think that it's going to do any good, I oppose it. This is apparently where we disagree.
posted by Bulgaroktonos at 1:47 PM on December 1, 2011


And this isn't the kind of thing you walk away from with a fine, you're supposed to go to jail.

The very thing you link to quotes the relevant statute as saying that it is a misdemeanor, and that the penalty is a fine, or imprisonment less than a year, or both. Here, I'll grab it for you.

MISDEMEANOR.—A person who knowingly makes or causes to be made a sale, foreclosure, or seizure of property that is prohibited by subsection (c), or who knowingly attempts to do so, shall be fined as provided in title 18, United States Code, or imprisoned for not more than one year, or both.

Do you see that first part there? In that thing that you linked to? The part that says "shall be fined?" How in the name of all that's holy do you get from the law saying that you can be fined to claiming that fines are supposed to be off the table? How?

Fuck. I get that people are disappointed with Obama and that it's now some natural law that every couple of days demands a new thread for people to rehash the exact same talking past each other as the previous eight billion threads. But really, would it fucking kill you to at least look at the stuff you link to make sure that it doesn't directly contradict your claims about it? Is that really too much to ask?
posted by ROU_Xenophobe at 1:50 PM on December 1, 2011 [3 favorites]


If, as you claim, the resources just plain aren't there to prosecute banksters then the state AG's need to put everyone into bankster type justice. Otherwise what you're basically saying is "they're too rich so we can't/won't apply the law to them". -sotonohito

For the most part, Bulgaroktonos responded well enough to your arguments, so I'll just offer a bit more on top.

My statement was meant on a general level toward government attorneys seeking settlement, but to a degree, I don't think you're wrong, but are applying the wrong emphasis. It's not that the other guys are too rich, it's a question of whether the government attorneys can/want to allocate the resources in an endeavor as big as taking something like this to travel. More so, settlement in these cases wouldn't be "let's get a slap on the wrist and call it victory," it'd be and appears so, an earnest effort to make the other party hurt some, if not to the full extent a trial MIGHT achieve.

A settlement at least in theory guarantees the harmed something. Is that perfectly satisfactory? No, not at all, but it's the cards dealt and one that can only be really fixed by a populace willing to support a pretty major investment in the legal apparatus that exist to protect their interests, be it in a prosecutorial role or defensive.

Per the current argument, I wonder if some form of negligence might be alleged against the higher ups, in that they should have had a more active oversight in how corporate policy was been carried out.
posted by Atreides at 1:54 PM on December 1, 2011


Chase banker admits they pushed subprime loans on naive lenders.
posted by emjaybee at 1:57 PM on December 1, 2011


Yeah, the person signing the form is guilty(or at least every one of them who signed the form for someone who was active duty military, you could almost certainly convict him. I've never questioned that there is someone, somewhere, guilty of this crime. I just don't see that putting those people in jail does anyone anywhere any good.
Well, it would serve as a deterrent from people continuing to do it. The same thing with every other law on the books.
posted by delmoi at 1:57 PM on December 1, 2011


If I draw up fraudulent paperwork and sell you my neighbor's house, do you think I ought to go to jail? Or do you think I should have to pay you back a small fraction of the purchase price once I get caught? Because that's more or less what we're talking about here, and the latter option seems bananas to me. It would ultimately eliminate the notion of private property. Oh, unless we're talking about "laws for banks" here, in which case carry on.
posted by Nahum Tate at 1:59 PM on December 1, 2011


When did we abandon the idea of equality under the law and start actually advocating and embracing a two tier system of justice? When did it become ok for people to demolish the economy, steal thousands of homes, and walk away free to repeat their crimes and facing no penalties other than a laughable fine doesn't even equal 100% of the amount they stole?

We didn't. A prostitute shows up with one court-appointed lawyer, whereas a bank shows up with 100, so the resources it takes to prosecute the two are different. Unless you want the AG to rule with a blank cheque, they simply don't have the resources to tackle cases of this magnitude, because their opponents have a blank cheque.

You could spend $20 million prosecuting these suckers and stand a good chance that you lose, or you can accept pennies on the dollar in fines. Which would you prefer? Keep in mind that a $20 million loss makes it that much harder to prosecute future crimes too.
posted by Rodrigo Lamaitre at 2:04 PM on December 1, 2011


Due to a federal law called, IIRC, the Servicemembers Protection Act, every foreclosing lender is required to file an affirmative affidavit pledging that the homeowner they're foreclosing on is not in the active military. They use social security numbers found on loan documents and a database provided by the department of defense to check this.

Right. In order to foreclose one someone who is in the military, you have to sign a form saying they are not active duty. If you sign the form, knowing it's false, then you should go to jail. It's not all that complicated.


This. This is the type of crap that just gets my blood boiling. This is such a fundamentally simple concept that has just been totally ignored in case after case after case. The SCRA has been around since WWII. The military makes it as simple as can be to find out if someone is on active duty and subject to the Act's protections (which extend to all civil actions, not just foreclosures BTW). You just punch a name into a web page, push "search" and presto-whammo, you've got an affidavit-worthy response in like 2 f*cking seconds direct from the military. It is as simple as that. You don't even need a login, address or anything else except a first and last name. Here, you try it. It's free, too! I mean, this is an example of how government should work.

It's so simple that the ONLY possible explanation for not doing it is intentional disregard of the law.

This sort of blatant disregard by the banks for the rules of the game that everyone else has to play by is absolutely maddening to me. You can talk all day along about whether Obama could've/should've negotiated this or that way, about whether the stimulus was a good idea, too big, too small or whatever. But for the administration to be talking settlement with the banks about simple to prove, easy to prosecute violations like this that have direct and profound effects on families is inexcusable.
posted by webhund at 2:05 PM on December 1, 2011 [2 favorites]


Bulgaroktonos wrote "I don't see that I, I see people screaming for blood because they hate these people and want to see them suffer."

No, you see people screaming for **CONSEQUENCES** when people impoverish the majority, destroy the economy, steal homes from the working people, etc.

You won't see screaming for blood until, as you keep advocating, the elites keep on being protected, keep on facing no penalties, and keep on making us poorer and poorer so they can get richer and richer. Then, in a few more decades of this sort of evil, we'll see cries for blood. And then there will be blood.

Me? I'd rather avoid the blood and actually punish the guilty and stop letting the elites get away with horrible crimes. That seems to be anathema to you and I don't understand why. Can you please explain why you believe so strongly that it is wrong for the elites to face the same penalties everyone else does?

I know a guy who is doing several years in prison for owning marijuana. You tell me, given that background, that it's ok for the elites to face no penalties at all? Just a fine that doesn't even hurt them? How can you believe something so utterly at odds with the idea of equality under the law?

I've never questioned that there is someone, somewhere, guilty of this crime.

But you do seem very insistent on the idea that the elites are completely innocent of any and all crimes and it would be very horrible if they were to face any penalties for their evils at all.

You seem down with punishing a few low level functionaries, but the very concept of punishing their bosses seems utterly unthinkable to you. Funny that.

The thing, cousin, is that the buck stops at the top. If all those super special elite billionaire bank CEO's are worth the billions they demand every year because they're possessed of such incredible managerial skills they really deserve that money, then they're guilty. If they aren't possessed of that super skill then they're guilty of stealing from the company and falsely representing themselves.

You can't have it both ways. Either the super CEO's are really worth all they're paid, in which case they're guilty of crimes, or they aren't in which case they're guilty of fraud at the very least.

We saw the same line of BS with Enron. The magic CEO's who were, back when the company was seemingly profitable, worth billions because they were so great, so amazing, so in charge, suddenly become incompetent know nothings the instant the crimes they ordered were exposed.

Ordering an employee to break the law is probably a crime, yes? Even if the order is done through hints and coy implication rather than directly.

You don't honestly think all those low level robosigners just decided, on their own, to start committing massive fraud that benefited the elites of their corporations do you? You can't be that stupid.

Atreides wrote "More so, settlement in these cases wouldn't be "let's get a slap on the wrist and call it victory," it'd be and appears so, an earnest effort to make the other party hurt some, if not to the full extent a trial MIGHT achieve."

After seeing Goldman walk away with a mere $500 million fine, you can't think I'm stupid enough to believe that.

I'm not so dumb that I'll fall for that BS twice cousin. We know damn well what the "justice" system does with elites, Goldman's laughable fine proved that once and for all. Do you really think the 50 state settlement would amount to any real punishment for the wrongdoers?

A settlement at least in theory guarantees the harmed something.

No, a big settlement might do that, in theory. Settlements such as we know the elites now get do nothing of the sort, and therefore make the whole game seem rigged to mere peons like me who are still at the non-existent mercies of the brutal, vicious, and harsh justice system that exists for us non-elites.

Again, there are people doing decades in prison for petty crimes. Write three hot checks in California and you will be in prison for life. But you want me to think its ok for the elites of society to steal homes, destroy the economy, and get away with a fine that doesn't even pay back all they stole?

I wonder if some form of negligence might be alleged against the higher ups, in that they should have had a more active oversight in how corporate policy was been carried out.

Yeah, because I'm totally sure that none of the higher ups were at all aware of the massive conspiracies and fraud that were making them ever richer. They were totally innocent and never once suspected that their massive fraud was illegal...

Do you really think I'm that stupid? Do you really think you can make me believe such transparent lies?

The high ups ordered it. They had to have. Low level robosigners didn't just start stealing houses for fun. The low level robosigners didn't even profit from their fraud, all the money went to the elites. But you think the elites didn't know about it? Didn't order it? Really?

Rodrigo Lamaitre Then it's time to stop prosecuting all crimes. Because if you've agreed that the elites are, effectively, immune from all punishment it is evil beyond measure to punish the non-elites.
posted by sotonohito at 2:08 PM on December 1, 2011 [3 favorites]


> You could spend $20 million prosecuting these suckers and stand a good chance that you lose, or you can accept pennies on the dollar in fines. Which would you prefer? Keep in mind that a $20 million loss makes it that much harder to prosecute future crimes too.

Isn't this the same argument as "we have to vote for Obama, because the alternative would be worse?"

The fallacy's even clearer here - because this is the system and crime has become the norm, the paltry fines simply part of the cost of doing business.

Fines are clearly not discouraging companies from committing crimes.

What you're saying is that the large players should not be prosecuted for their felonious actions, because it'll fail. I think if even 10% of the criminals involved went to jail, it'd make the other 90% think hard.

And as for the poor, poor robosigners - remember, these are people who forged documents in order to evict active servicemen from their homes. The argument that these people are somehow victims of the system is ridiculous. You wouldn't accept the "I couldn't get another job" argument from someone in a gang; why would you accept it in this case?

Prosecute these people to the full extent of the law. Use RICO aggressively. It'd be easy to raise crippling fines on Goldman Sachs and the other banking criminals, ones that would pay for any investigation many times over, if our rulers really had any interest in making them obey the law.

I'm not asking for much. We've spent trillions of dollars on the drug war in the last century - I'm asking for less than 1% of that money spent on jailing actual criminals who damaged the lives of literally millions of Americans.
posted by lupus_yonderboy at 2:16 PM on December 1, 2011 [7 favorites]


Oh, and here's a nice essay pointing out that the AG is kicking off a new war against IP theft when he hasn't jailed a single financial criminal yet.

Again, it should be clear. IP theft is a crime that individuals commit against corporations and must be punished. Mortgage fraud is a crime that corporations commit against individuals and the state and the perpetrators cannot ever face the consequences of their actions.
posted by lupus_yonderboy at 2:22 PM on December 1, 2011 [10 favorites]


Prosecute these people to the full extent of the law. Use RICO aggressively. It'd be easy to raise crippling fines on Goldman Sachs and the other banking criminals, ones that would pay for any investigation many times over, if our rulers really had any interest in making them obey the law.

Goldman Sachs hold $911 Billion in total assets. Their operating income in 2010 was $12.9 Billion. How big do you want that fine to be, keeping in mind that the bigger the fine, the bigger the response, and therefore the bigger the AG has to get to prosecute it?

My point is that this is a game of chicken where one party is willing to risk it all; it does that for a living. Are the American people ready to dive in to the point of perhaps bankrupting their country and social programs to try to take them down? I doubt it.
posted by Rodrigo Lamaitre at 2:29 PM on December 1, 2011


But for the administration to be talking settlement with the banks about simple to prove, easy to prosecute violations like this that have direct and profound effects on families is inexcusable.

From the release about the settlement, here is what you get if you're in the service and your house gets foreclosed on:

(1) Your house (this seems implicit from part 2)
(2) Any lost equity in your house
(3) $116,785 or more

What would a servicemember receive if their house were foreclosed on, and the government behaved as you suggest? We can quibble about remedies, but something on the order of

(1) Their house
(2) The satisfaction of some low-level peon being in jail for a few months

Which do you think is a better deal for people who've been affected by the banks' misdeeds here? Some satisfaction, or being made whole plus another hundred grand for the trouble?

And which do you think a bank cares more about? Some peon who's not even in the country club going to jail for a while, or the bank having to write out $100K checks for each of these grotesque fuckups?
posted by ROU_Xenophobe at 2:30 PM on December 1, 2011


Rodrigo Lamaitre That kind of undercuts the whole idea of equality under the law, doesn't it?

Seriously, how do you justify enforcing any laws at all, if you're willing to say that the elites can get away with anything because they're too rich to take to court?

ROU_Xenophobe Where are you getting your first set of points? And why should we believe that will happen rather than a Goldman style slap on the wrist?
posted by sotonohito at 2:34 PM on December 1, 2011


(That press release is hard to make heads or tails of when it comes to whether the servicemen are getting their houses (back). But even if I'm reading that wrong, I'd still prefer to get all my equity back out of the house plus another hundred grand than watch someone rot in jail for a few months, and no hundred grand)
posted by ROU_Xenophobe at 2:34 PM on December 1, 2011 [1 favorite]


ROU_Xenophobe Where are you getting your first set of points? And why should we believe that will happen rather than a Goldman style slap on the wrist?

The press release about this.
posted by ROU_Xenophobe at 2:35 PM on December 1, 2011


$20 million.

From Bank of America.

No admission of wrongdoing.

No high ups facing any penalties at all.

Yeah, for the individual servicemember that's an ok deal. But for society as a whole it's ruinous.

And, of course, there's the fact that servicemembers were only a fraction of the victims of Bank of America, they appear to be getting nothing from that deal, only the assurance that since Bank of America faced no real penalty it will continue with its program of stealing houses.

Please explain why you think this is a good deal?
posted by sotonohito at 2:40 PM on December 1, 2011


sotonohito, which do you think is a better deterrent to bank higher-ups?

(1) Bank has to write checks for millions of dollars and pay other damages too.

(2) Some peon you don't even know, and never would have met, and don't care about except that you're annoyed at having to pay them, who can be immediately replaced by some other poor schlub who needs a job, has to do a few months in prison.
posted by ROU_Xenophobe at 2:45 PM on December 1, 2011


The problem with making banks pay millions of dollars is that the people who would have to actually bear that burden are in the black by billions.
posted by Holy Zarquon's Singing Fish at 2:48 PM on December 1, 2011 [1 favorite]


sotonohito, which do you think is a better deterrent to bank higher-ups?

(1) Bank has to write checks for millions of dollars and pay other damages too.

(2) Some peon you don't even know, and never would have met, and don't care about except that you're annoyed at having to pay them, who can be immediately replaced by some other poor schlub who needs a job, has to do a few months in prison.


I mean, aside from the part where you keep ignoring the suggestion of getting the peons to flip on the higher-ups, I'll still take option #2. Hiring new people is a pain in the ass. Replacing every secretary and administrative assistant at Bank of America is a hell of a lot more irritating to those bankers than writing an insignificant check which doesn't even begin to put a dent in the money they're making by continuing to churn out shoddily-done robosigned foreclosures. Not only that, but if you get hired to a job at Bank of America, and the last X people to hold that job before you all went to jail for robosigning documents, what are you going to do when someone tells you to robosign some documents? Well by golly, seems to me you might just say "No."
posted by mstokes650 at 2:52 PM on December 1, 2011 [1 favorite]


ROU_Xenophobe If (1) represented a real penalty for the bank, obviously 1.

But that's the problem. The total settlement in your link amounts to $20 million. Which, for Bank of America, is chump change. For me that'd be a crippling fine. For them it's a license to steal.

Moreover, why should 2 be limited to schlubs? The idea that the elites didn't order this laughable. I observe that the schlubs didn't gain financially from their crimes, only the elites did.

I think some real fines, fines that would hurt, might change behavior. I think fines that would hurt coupled with some real penalties against the elites would be more effective at changing behavior.

This keeps being presented as being a choice between punishing low level bank workers, or imposing a fine with teeth. But unfortunately the fine doesn't have teeth, it's chump change, and the other option isn't to go after peons, but to go for the big fish.

But if, as you claim, the big fish are utterly immune to any and all prosecution then at the very least we can try for fines that would matter.

BoA made 6.2 BILLION in profit just this last quarter alone. A penalty of two or three billion might make them hurt enough to change their behavior. A penalty of a measly $20 million will make them laugh and laugh as they plot to do it all over again.
posted by sotonohito at 2:53 PM on December 1, 2011


What would a servicemember receive if their house were foreclosed on, and the government behaved as you suggest? We can quibble about remedies, but something on the order of

(1) Their house
(2) The satisfaction of some low-level peon being in jail for a few months


The servicemember is not going to get their house back (unless BofA still holds title to it AND it's spelled out expressly in the settlement, which I don't see in your link).

Agreed that what we do not need is yet again low-level peons (your word) being punished for the misdeeds of their corporate overlords. But there's a thing called RICO (see previous posts) that would be a fantastic starting point for the government to use to go after the corner office people who directed this. Haven't seen that happen.

Yes, it's great that affected individuals "will be eligible" for $116K+ in compensation from BofA. But think about what message this type of settlement does NOT send to the rest of the banksters. There's absolutely no incentive here for anyone in a position of authority in a bank to say, woah, we better not do this in the future or it's going to put us out of business/cost us 3 years of profits/subject us to punitive damages/etc.... No, what you see here does nothing to deter the banksters from engaging in more of the same calculations down the road: take risk of possibly getting caught and having to pay out a few million, but keeping the other billions we made.
posted by webhund at 2:58 PM on December 1, 2011


> Are the American people ready to dive in to the point of perhaps bankrupting their country and social programs to try to take them down? I doubt it.

Are you seriously claiming that the cost of prosecuting Wall Street criminals is so high that it would conceivably bankrupt the country and social programs?!

Sorry, I think you're just making it all up.

The US government spends $15 billion a year on the Drug War alone. Think what a tiny fraction of that money spent prosecuting the really destructive criminals would do - and with proper fines, it could pay for itself.

The SEC has pretty amazing powers to levy fines, which they just aren't using. Not so long ago they got Drexel Burnham Lambert to pay $650 million dollars in fines for crimes far, far less serious than any of the crimes we're talking about here. And they went out of business for it, and the markets did not collapse, and for a few years everyone was really careful about avoiding criminal activity...

Tell me, why are you so dead-set against criminals getting punished for their crimes?
posted by lupus_yonderboy at 3:04 PM on December 1, 2011 [3 favorites]


> The satisfaction of some low-level peon being in jail for a few months

These "low-level peons" are people who knowingly forged documents to deprive people of their homes. It's irrelevant whether someone else told them to commit this felony or not - they are serious criminals and I don't think a few months is long enough.

And, as you keep ignoring, if you lean on all the "low-level peons", you have leverage with them to get them to incriminate their criminal bosses - as everyone above me has pointed out.
posted by lupus_yonderboy at 3:07 PM on December 1, 2011 [1 favorite]


But you do seem very insistent on the idea that the elites are completely innocent of any and all crimes and it would be very horrible if they were to face any penalties for their evils at all.

I have said several times that if you show me a crime the higher ups at Bank of America committed, I would support them being prosecuted and punished for it. I happen not to think that the SCRA violations are something that people particularly far up the ladder are guilty of (in the legal sense of guilty). This statement is completely 100% false.

You seem down with punishing a few low level functionaries, but the very concept of punishing their bosses seems utterly unthinkable to you. Funny that.

For the love of God, I have said EVERY SINGLE FUCKING TIME that I do not want to see lower level people prosecuted. It's basically all I've been saying. Are you even listening? Have you confused me with delmoi? This makes no sense at all.

You don't honestly think all those low level robosigners just decided, on their own, to start committing massive fraud that benefited the elites of their corporations do you? You can't be that stupid.

I believe that people at the bottom feel an incredible pressure to perform, the meet the number of foreclosures that the higher ups expect and demand, and that they broke the law to do that. That's the moral fault of the people in charge, if I were a shareholder I'd vote for new leadership, but I do not think that it constitutes a violation of the SCRA for one simple reason: to violate the SCRA you must knowingly foreclose on an active duty servicemember's house. I don't think that there is anyone at Bank of America with knowledge that they were foreclosing on an (specific) active duty service member's house who is at a high enough level that prosecuting them makes any sense.

You seem to believe that the CEO of Bank of America is sitting there saying "PFC Johnson is on deployment...QUICK FORECLOSE ON HIS HOUSE"; that didn't happen. The link between the top and the wrong doing is so (legally, not morally) distant that I think you have very little chance of winning a criminal SCRA prosecution.

All that bullshit you're trying to sell about me defending the elites or saying that CEOs were worth millions has nothing to do with my opinion about this specific application of a specific law. Like I've said (and you've ignored) find a law that the CEO did violate and I'll be behind the prosecution 100%; if you can't find any, create some laws that made some of things that he did illegal, so it's less likely to happen again.
posted by Bulgaroktonos at 3:07 PM on December 1, 2011


Moreover, why should 2 be limited to schlubs?

It shouldn't. But the schlubs are going to be the people you can convict, because it's their signature on the form. Absent some sort of written instruction that clearly states "I, RALPH HIGHERUP, HEREBY COMMAND YOU TO FORECLOSE ON SERVICEMEN IN VIOLATION OF THE SCRA," which I doubt many higher-ups were dumb enough to issue, how on earth do you think you're going to scrape together enough evidence to show guilt beyond a reasonable doubt?

Yeah, paying $20 billion in fines would be a better deterrent than $20M. That's not the question I was asking. I was asking whether $20M was a better deterrent than some people getting jail time, and I think that bankers care little enough about their employees that the $20M has more deterrent power.
posted by ROU_Xenophobe at 3:11 PM on December 1, 2011


they are serious criminals and I don't think a few months is long enough.

That's all that's up for grabs. The law itself says no more than a year at the absolute most.
posted by ROU_Xenophobe at 3:13 PM on December 1, 2011


Tell me, why are you so dead-set against criminals getting punished for their crimes?

Well, in your example, Michael Milken served 22 months of a 10 year sentence and is now worth over $2 Billion. If that's the power of the SEC, I would think the 5,000 people who lost their jobs when Drexel pled no contest (and more when they actually folded) probably paid for it a lot worse than the actual conspirator did.

Of course, Milken also actually had a hand in the crimes, as he bought warrants for himself and his children and was directly implicated. RICO is a lot harder to pin on people who are miles above where the actual action happened, so I revert again to my argument that you're going to spend an inordinate amount of money trying to prosecute a very difficult case against the best lawyers that money can buy.
posted by Rodrigo Lamaitre at 3:29 PM on December 1, 2011


> The law itself says no more than a year at the absolute most.

No, that's simply the law against foreclosing on veterans.

There are also laws against forgery, punishable by up to ten years in jail. Usually if you "forge" something, you also "utter" - up to another ten years, which can be served consecutively.

And organizing with other people to commit a crime is called "conspiracy" and there's no question they were doing this, that's also worth a few years.

And remember that there are multiple counts of each charge!

You could easily put these people away for the rest of their lives, if you were motivated to do so.
posted by lupus_yonderboy at 3:33 PM on December 1, 2011 [1 favorite]


> Well, in your example, Michael Milken served 22 months of a 10 year sentence and is now worth over $2 Billion. If that's the power of the SEC, I would think the 5,000 people who lost their jobs when Drexel pled no contest (and more when they actually folded) probably paid for it a lot worse than the actual conspirator did.

So let me see. Your original problem was that conviction was impossible to get - now you're saying that the issue is that judges are too lenient on these criminals once they are convicted. Surely that's easy enough to fix, eh - if our legal system treated these crimes with the same seriousness they'd do for, say, drug trafficking?

Actually, I was working at Drexel when this happened and I didn't see people suffering. There was a long time between the fine and the collapse, and a lot of people left already. Wall Street would soon be hiring again, DBL looked good on your resume (though I left the Street personally).

But that's irrelevant. We can't simply allow people and organizations to get away with crimes because other people in that corrupt organization might be damaged as a result. What you are saying is that if your company is big enough, you should be completely above the law - that's madness.

> Of course, Milken also actually had a hand in the crimes

Take a look at RICO again. You don't actually have to prove that the higher-ups really had a hand in the crimes.

This is an extremely logical tactic when dealing with a large organized criminal conspiracy. Do you think a top Mafia boss knows about the low-level hits that have been ordered? In fact, I imagine the organization deliberately protects higher-ups from this information in the Mafia.

But that tactic is useless against the RICO laws. If you run a corrupt organization, where people below you are systematically committing crimes and you profit, you can go to jail regardless of whether they can prove you knew the specifics or not.

If you're running a company, it's your responsibility to make sure that your subordinates aren't committing crimes. That's the law, and that's also just and reasonable.
posted by lupus_yonderboy at 3:48 PM on December 1, 2011 [7 favorites]


> I revert again to my argument that you're going to spend an inordinate amount of money trying to prosecute a very difficult case against the best lawyers that money can buy.

And I revert again to pointing out that they got $650 million out of DBL, who had the best lawyers that money could buy, and that such money would pay for a lot of prosecuting.

And the recent crimes are much larger in scale, had much greater consequences and were more blatant.

And I mention again that $15 billion is being spent on the drug war each year, whereas the SEC's entire budget is just over $1 billion (and only about 10% of what they do is criminal investigations).

I mean, if they put just $100 million - two days' drug war! - into prosecuting Goldman Sachs, I'll bet they could actually jail some people, and certainly shake them down for a lot more cash than that $100 million.

Remember discovery, and subpoena power. Just $10 million worth of discovery and subpoenas could paralyze Goldman Sachs' business for a year. And if people refuse to cooperate, you can just drag them in front of a judge and jail them for contempt of court.

Again, consider what they do with drug dealers - they freeze their assets when they are charged. There's no reason why the SEC couldn't at least attempt to do the same thing, the argument that these businesses are RICO cases is extremely strong.

It's simply the case that (almost) no-one up top is trying - that they really don't see financial criminals as criminals in the same way they do pot dealers.

I can't tell you how sick of the argument, "We the good guys are powerless, so even attempting to do anything is pointless," I am after three years of Mr. Obama...
posted by lupus_yonderboy at 4:18 PM on December 1, 2011 [6 favorites]


Oh I don't know that say, BoA is going to spend 10% of its worth defending a criminal action: not if it's against an ex-CEO, say. If it's aimed at fining the company, sure. But I suspect they'd disown that former CEO as soon as it's profitable to do so.

The problem is that, as lupus_yonderboy says, they simply aren't even trying. How much effort goes into prosecuting these guys as opposed to what went into prosecuting Gotti? How many times did they try with Gotti before they convicted him of anything? That alacrity is notably lacking here.
posted by tyllwin at 4:59 PM on December 1, 2011


(2) Some peon you don't even know, and never would have met, and don't care about except that you're annoyed at having to pay them, who can be immediately replaced by some other poor schlub who needs a job, has to do a few months in prison.
Eventually you run out of peons.
For the love of God, I have said EVERY SINGLE FUCKING TIME that I do not want to see lower level people prosecuted. It's basically all I've been saying. Are you even listening? Have you confused me with delmoi? This makes no sense at all.
First of all, I am saying you ought to prosecute the peons who carried this stuff out. If a Mob enforcer comes to your store to extort money, and then beats the crap out of if you refuse, should he be prosecuted? Obviously. Why should it be any different for these people. It's mind boggling to me that you're just sitting here saying that no one should be prosecuted.

If not the low-level people then who? Who do you think should actually be liable here? You still haven't said.

The government didn't have any trouble prosecuting the Galleon guys -- the difference is they stole from other rich investment banks, including stealing data from GS on upcoming underwriting activities. But steal from the average person, and suddenly it's "too expensive" to prosecute...
posted by delmoi at 7:50 PM on December 1, 2011 [2 favorites]


The government didn't have any trouble prosecuting the Galleon guys -- the difference is they stole from other rich investment banks, including stealing data from GS on upcoming underwriting activities.

Isn't a more important difference that they had the high-ups in Galleon, including Rajaratnam, on tape committing the crimes? That makes a huge difference in an actual criminal prosecution, as opposed to screaming "these guys DESTROYED THE ECONOMY!" which surprisingly is not effective as a legal argument.
posted by dsfan at 8:09 PM on December 1, 2011 [1 favorite]


Isn't a more important difference that they had the high-ups in Galleon, including Rajaratnam, on tape committing the crimes? That makes a huge difference in an actual criminal prosecution, as opposed to screaming "these guys DESTROYED THE ECONOMY!" which surprisingly is not effective as a legal argument.
Fabrice Tourre sent emails back and forth about defrauding Goldman Sachs clients by selling them known shit mortgage derivatives that a hedge fund was shorting. The result was a fine and now Tourre works in London.

We know they got the Galleon guys on tape because they ended up prosecuting them. We don't know what evidence they might have against BoA or other banks because... dunt dunt dun... no one has been prosecuted
posted by delmoi at 8:21 PM on December 1, 2011


Fabrice Tourre sent emails back and forth about defrauding Goldman Sachs clients by selling them known shit mortgage derivatives that a hedge fund was shorting. The result was a fine and now Tourre works in London.

Tourre was a mid-level guy though (his own self-opinion notwithstanding--a VP at an investment bank is often someone 3-4 years out of business school). He wasn't the Brian Moynihan of Goldman Sachs. They don't seem to have been able to get him to "roll" on Lloyd Blankfein et al., most likely because they didn't commit crimes in that matter.

We know they got the Galleon guys on tape because they ended up prosecuting them. We don't know what evidence they might have against BoA or other banks because... dunt dunt dun... no one has been prosecuted

This is totally at odds with everything I know about federal prosecutions, like the Galleon prosecution was. They have an incredibly high win rate (much higher than state prosecutions) because they rarely bring weak cases. They're not going to announce the results of an investigation that didn't lead to sufficient cause to indict, and I have a hard time imagining any federal indictment along the lines people seem to be offering here: "well, crimes appear to have been committed by someone in the firm, so we're going to indict the CEO, with no real evidence of any knowledge on his part of the crime."

By the way, we definitely have one significant federal prosecution of bankers involved in the subprime crash, Ralph Cioffi and Matthew Tannin who lead a Bear Stearns hedge fund. The feds got their ass kicked, to the point that one juror even said she would invest her own money with them.

Think about what's being argued here. People seem to think there are clear, obvious, prosecutable crimes that have been committed by senior bank executives that aren't being prosecuted. Think about what a career boost any successful prosecution along these lines would be--Rudy Guiliani rode much smaller prosecutions to become mayor of New York (bankers in the '80s somehow didn't have any power I guess). Does this really seem plausible? Isn't it rather more likely that prosecutors are reluctant to take on cases they know they probably can't win?
posted by dsfan at 8:53 PM on December 1, 2011


> Isn't it rather more likely that prosecutors are reluctant to take on cases they know they probably can't win?

The thread above has presented you with what appears to be gross evidence of criminal behavior and if you don't accept those that I can send you numerous other examples. These aren't hypotheticals, these are clear cases that have been investigated, presented by the regulatory agencies, and revealed clear felonies - which were cleared up by paying token fines, yes, but the evidence is there for you to read.

I don't think you're really disputing that many crimes were committed - what you're claiming that these crimes are not prosecutable - in other words, these criminals are de facto above the law.

The magnitude of these crimes is such that prosecutors should be aggressively bringing cases even if a successful result isn't guaranteed, if only to discourage the next prospective criminals. The current state of affairs, where everyone now knows they can just pay a small percentage of the proceeds from their criminal activities and get off without even admitting guilt, should be intolerable to anyone with the faintest interest in justice or fair markets.

But I don't believe they're really that interested in prosecuting. Really, look at the enforcement agencies - look at their press releases - look at what the Administration is saying - look at how almost no changes were put in after the collapse to prevent it happening all over again. Look at how the SEC's budget has been cut in the wake of the collapse, FFS!

And look at who they are using resources to prosecute. File sharers again! That'll end well. Medical marijuana!

As I said before, I'm sick of this feckless, "We did nothing, and that's the best you can hope for," line. There's zero evidence they're really trying at all.
posted by lupus_yonderboy at 9:47 PM on December 1, 2011 [2 favorites]


These aren't hypotheticals, these are clear cases that have been investigated, presented by the regulatory agencies, and revealed clear felonies - which were cleared up by paying token fines, yes, but the evidence is there for you to read.

I don't think you're really disputing that many crimes were committed - what you're claiming that these crimes are not prosecutable - in other words, these criminals are de facto above the law.


I'm virtually certain crimes were committed, and I have no problems at all with them being prosecuted. The fact that I'm skeptical that incarcerating these people in large numbers is a useful policy doesn't mean I oppose prosecution! Fines, loss of career--these things matter! What I am less confident in is that crimes were committed by high-level executives.

The magnitude of these crimes is such that prosecutors should be aggressively bringing cases even if a successful result isn't guaranteed, if only to discourage the next prospective criminals.

Well...while you don't want to only prosecute "guaranteed" wins, prosecuting cases where you aren't confident that 1) the defendant is guilty beyond reasonable doubt and 2) you can convince a jury the defendant is guilty beyond reasonable doubt is dubious ethical behavior for a prosecutor.

And look at who they are using resources to prosecute. File sharers again! That'll end well. Medical marijuana!

No argument from me that these are not effective uses of resources.
posted by dsfan at 10:04 PM on December 1, 2011


> The fact that I'm skeptical that incarcerating these people in large numbers is a useful policy

Aha, we get down to the meat of it!

Why not? These people are repeat offenders who have caused huge damage to the nation. Clearly the policy of fines hasn't worked at all to discourage them from their massively destructive, anti-social behavior. Millions of people's lives have been seriously damaged while they made billions in profit.

There are seriously penalties for the crimes they committed on the books. Why should they get a pass when you or I would go to jail for minor offenses?

Perhaps it's impossible. But it'd be really, really "useful" for almost everyone on the planet if a lot of financial executives were spending a few years as guests of the United States government - as well as giving up a lot of the cash they essentially stole in the run-up to the financial collapse.

> What I am less confident in is that crimes were committed by high-level executives.

As I pointed out above rather emphatically, under RICO it is not necessary to prove the the high-level executives had any knowledge before or after of the crimes - it is simply necessary to prove that the organization is substantially corrupt, it's the CEO's business to know what's going on and to prevent criminal activity.

Moreover, RICO isn't the only applicable body of law. Sarbannes-Oxley requires very strict record-keeping for public corporations and extremely tight controls on money with respect to trusted employees. Again, it's possible under Soxley for a CEO to have no knowledge of any infractions, even to have made a best effort to have complied with its requirements, and still face jail time for what's essentially a large accounting mistake made by a subordinate.

Again, as I explained above, these rules are natural and fair because otherwise large organizations would give criminals extreme flexibility to whitewash away crimes.
posted by lupus_yonderboy at 11:40 PM on December 1, 2011 [1 favorite]


The SEC has pretty amazing powers to levy fines, which they just aren't using.

Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement
posted by homunculus at 11:54 PM on December 1, 2011


The Daily Show: How the f#@k is it that Martha Stewart went to jail?
posted by homunculus at 11:56 PM on December 1, 2011 [2 favorites]


Bulgaroktonos Well, the fact is that we don't know whether there is evidence of crimes because no one seems interested in investigating. Like you, they all appear to have simply given up on the idea of actually nailing the evil scum responsible for this whole mess.

You seem to be arguing that, in essence, being a CEO is the ultimate defense against everything. That unless we can produce an actual memo from a CEO specifically ordering a low level employee to do something illegal then the CEO is completely free from any and all penalties for the events they cause.

Bloody hands at arm's length shouldn't be a defense.

I rather doubt we'll ever find a memo specifically instructing a robosigner to break the law. But that doesn't mean the CEO's aren't responsible.

A culture where the elites can say "I really want a new yacht, squeeze a crapton of money out of the mortgages we've got, and [wink wink, nudge nudge] be **REALLY SURE** to keep it legal" and the low level types then go out and break the law as they were so coyly instructed to do and then no one gets penalized for anything is a bad culture.

If Murder Inc has low level employees killing people for money, but the CEO claims he never personally authorized killing people for money then I don't think the CEO should escape all punishment.

Still, the funny thing is that no investigations have been going on to see just how involved the CEO's are. Maybe there really are memos ordering violation of the law. It'd be nice to have an aggressive investigation to find out, wouldn't it?

But fine. Say you're right. If so I think our legal system is unutterably messed up, but fine.

In that case we've got no tools at our disposal but nailing the low level types to the wall as hard as we possibly can in hopes of convincing future low level types not to go along when their superiors broadly hint that they need to break the law.

I don't like that at all. It sucks. But if, as you claim, our only options are letting massive fraud and theft escape entirely unpunished so it is absolutely guaranteed to be repeated or limiting prosecutions to the low level types then we've got no choice but to nail the low level types.

If we're going to do that, I think RICO should be aggressively used in hopes of nailing some higher ups, but there must be some consequences or we're fucked as a society.

At the very least can't we get a law passed that says any bank where fraud of this sort has taken place is, forever and always, forbidden from ever getting any bailout of any sort ever again?

Because right now, as it stands, what has come about from this whole mess is a flat out guarantee that in the future the banks will do this same thing again. If they can steal billions and pay laughable fines of millions and face no other consequences then they will continue to steal billions.

I don't know about you, but I think leaving things set up so that in the future the banks will continue to steal billions is a really bad idea. Because eventually the people will get sufficiently tired of being continually ripped off and impoverished by the elites, and the elites facing absolutely no consequences of any sort whatsoever, that there will be a bloody revolution. Like I said earlier you're wrong, people aren't (yet) screaming for blood. But if you keep getting your way and the elites keep getting away with their massive crimes then eventually people really will be screaming for blood and there will be blood.

I don't want that. Revolutions are awful and almost never result in a really improved situation. But the people won't put up with this forever. If the law needs to change to allow us to nail the elites then the law needs to change. But if something doesn't happen there will be extremely bad things happening in a few decades.
posted by sotonohito at 7:38 AM on December 2, 2011 [3 favorites]


I have a hard time imagining any federal indictment along the lines people seem to be offering here: "well, crimes appear to have been committed by someone in the firm, so we're going to indict the CEO, with no real evidence of any knowledge on his part of the crime."

The Feds did it to the mayor of Providence, why not a bank CEO?
posted by mstokes650 at 8:33 AM on December 2, 2011 [1 favorite]


I thought the point of all this sarb-ox stuff was to theoretically push some of the blame upwards to the officers of a company, so the folks in charge sign things saying "i affirm that things are all above board".
posted by rmd1023 at 8:49 AM on December 2, 2011


I will add that if Coakley can win a sufficiently large civil settlement, something in the multiple tens of billions, against the banks that would satisfy me that the banks may have faced sufficient penalties that they might, might, not repeat their crimes.

I'm doubtful though. I note that Exxon never did pay the Valdez settlement and managed to repeatedly cut it down until it was nothing. Unlike us peons, the elites get to simply refuse to pay their fines, and then send legions of lawyers to negotiate down the fine until it becomes mere chump change.

Even if Coakley wins and gets a truly effective penalty imposed, I feel confident that the Supreme Court will vacate the fines, same as they did for Exxon.

Something must change.
posted by sotonohito at 8:50 AM on December 2, 2011 [1 favorite]


I also note that the Supreme Court, which in 2008 completely eliminated the punitive damages against Exxon, just recently told the 9th Circuit that it was very, very, wrong of that court to free a woman who was almost certainly innocent.

Little people serve life sentences for petty crimes. Elites never, ever, pay any price for their crimes.

Something must change.
posted by sotonohito at 8:52 AM on December 2, 2011 [3 favorites]


As much as I'd love to see the SEC and other regulators go after these criminals, Congress has been cutting their budgets. This is what Norquist's shrinking government until you can drown it in a bathtub looks like. Reduce the effectiveness of government agencies by forcing them to lay off employees and making sure there are not resources for big investigations, then point out how government always fails.
posted by QIbHom at 8:57 AM on December 2, 2011


Bulgaroktonos Just realize that I've been being more of a jerk than seems remotely necessary.

Apologies. I know you aren't actually trying to defend the idea of doing nothing.
posted by sotonohito at 11:11 AM on December 2, 2011


60 Minutes: Two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages. So why haven't the companies or their executives been prosecuted?
posted by homunculus at 6:23 PM on December 4, 2011 [1 favorite]


A Sign Occupy Wall Street Is Having Political Impact
posted by homunculus at 2:33 PM on December 20, 2011


Complex Systems Institute claims "bear raid" market manipulation crashed the global economy
posted by homunculus at 11:30 AM on December 21, 2011


Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement

Here's an interview with the judge: Jed S. Rakoff
posted by homunculus at 4:06 PM on December 28, 2011


Legal battle between SEC, federal judge heats up
posted by homunculus at 4:20 PM on December 28, 2011


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