The “Untouchable ” Banks (Up Date)

(10 am. – promoted by ek hornbeck)

Cross posted by The Stars Hollow Gazette

“Too big to fail” now according to the Justice Department, “too big to jail.” The PBS news series, Frontline “investigates why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages” in its presentation of “The Untouchables.”

Phil Angelides was chairman of the Financial Crisis Inquiry Commission, which was created by Congress in 2009 to investigate the causes of the crisis. In its report, submitted in January 2011, the commission concluded that the crisis was avoidable, a result of excessive risk taking, failures of regulation and poorly prepared government leaders. This is the edited transcript of an interview conducted on Oct. 11, 2012.

Lanny Breuer serves as assistant attorney general for the Department of Justice’s Criminal Division. He told FRONTLINE that when fraud from the financial crisis has been detected, the Department of Justice has pursued charges. “But when we cannot prove beyond a reasonable doubt that there was criminal intent, then we have a constitutional duty not to bring those cases,” Breuer said. This is the edited transcript of an interview conducted on Nov. 30, 2012.

The Justice Department’s initial response to the financial crisis did not take long to materialize. In June 2008, three months before the Lehman Brothers collapse, the department brought its first criminal case, charging two former Bear Stearns executives with securities fraud for their alleged roles inflating the housing bubble.

A little more than a year later, a jury found the executives not guilty, dealing the DOJ an early setback. Since then, government investigations into the crisis have almost exclusively centered on civil charges, which requires prosecutors establish guilt beyond a preponderance of the evidence. The bar is higher in criminal cases, requiring they prove guilt beyond a reasonable doubt.

Here are 10 of the most prominent of those cases to date. In nearly all, the government won multi-million dollar settlements, but the companies and officials involved were not required to admit wrongdoing.

The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come

It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?

Wrong.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.

Up Date: After his appearance on “Frontline”, Yves Smith at naked capitalism delightedly announced the news that Lanny Breuer, former Covington & Burling partner and more recently head of the criminal division at the Department of Justice, had his resignation leaked today.

Never mind resign, why hasn’t Obama fired him?