Perp Walks

Crossposted from The Stars Hollow Gazette

As I’ve pointed out before one of the confusing things about Bankster Fraud is that there are no less than 11 different criminal frauds that are all lumped together.

In my next piece I’m going to examine one particular part of this puzzle, but I should note that starting tomorrow we’re going to be one step closer to the jump-suited perp walks we’ll need to see in order to unwind this discredited neo-liberal disaster of an economy with the release of the Financial Crisis Inquiry Commission report which recommends investigation by the Department of Justice for Criminal Prosecution.

Financial Crisis Commission Finds Cause For Prosecution Of Wall Street

Shahien Nasiripour, The Huffington Post

01/24/11 07:29 PM

(T)he decision to refer cases for potential prosecution could provoke a different conclusion: It may yet satisfy public craving for what Treasury Secretary Timothy Geithner once referred to as the “very deep public desire for Old Testament justice.”

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The commission drew on testimony from less prominent senior executives with intimate knowledge of how Wall Street engaged in modern-day financial alchemy, turning mountains of dubious mortgages into seemingly rock-solid investments rated as safe as American Treasury bonds.

Richard Bowen, former chief underwriter for Citigroup’s consumer-lending unit, testified that, in the middle of 2006, he discovered more than 60 percent of the mortgages the bank had purchased from other firms and then sold to investors were “defective,” meaning they did not satisfy the bank’s own lending criteria.

Keith Johnson, former president of Clayton Holdings, one of the top mortgage research companies, testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm for Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added.

FCIC Will Refer Report to Authorities for Potential Criminal Prosecution

By: David Dayen, Firedog Lake

Tuesday January 25, 2011 6:00 am

Many have found themselves disappointed in the FCIC’s work to this point, be it their inability to gain headlines, their inability to issue subpoenas without bipartisan cooperation, or even the commission’s personnel. But lest we forget that the FCIC uncovered, virtually by itself, the enormous mortgage bond scandal, based on testimony they gathered from Clayton Holdings in October. William D. Cohan said at the time that this strong, if pulled properly, could lead to justice:

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This could be the building block for the criminal referrals, or it could be something deeper. But we know it will be backed up by a voluminous amount of evidence. In addition to their long report on the origins of the crisis, Yves Smith notes that the FCIC will release audio archives of all of their interviews with hundreds of witnesses. She was one of them. They will also release all the source documents, which is crucial.

As for the report itself, the Democratic version promises to be extremely satisfying to those who recognize quickly that corporate greed, deregulation and a financial industry determined to sidestep oversight entirely with the shadow banking system caused the crisis. One official told Reuters that Commission Chair Phil Angelides subscribed to the “vampire squid” view of the crisis, recalling the famous turn of phrase Matt Taibbi used to describe Goldman Sachs.