http://market-ticker.org/akcs-www?post=218430
Our Disintegrating Government
WASHINGTON — Attorney General Eric Holder's stunning admission that it was difficult to prosecute large banks because of the potential economic impact may be a turning point of the drive to break them up.It's not stunning at all.
It is, however, an admission of what we have known for years.
Now the pants of "Nobody committed any crimes" have in fact been artfully dropped to the floor and what's in our face is the ugly anatomical truth thatcrimes were committed and intentionally ignored.
That is something that Congress and the Administration had better fix -- right now.
The Rule of Law works and guides a just society only because it applies to everyone.
Nobody gets to rape, rob, pillage or murder. If you do, no matter who you are, you face the same punishment, the same process, the same sentence.
We all know there are disparities in the process and always have been. But there's a difference between the foibles of mankind -- everyone has their bias, and there is no such thing as a human process that is flawless -- and intentional, designed-in or willful refusal to prosecute certain people for acts that land others in prison.
The latter is the defining action of a dictatorship.
A dictatorship can only exist by declaring war upon the people. When a certain subset of the population is given license to pillage or worse that is the very definition of "diktat" from which the term "dictatorship" comes.
Fast and Furious, incidentally, falls into this category as well.
This is an extraordinarily dangerous state of affairs and must not be permitted to continue. The government and its actors have lost all moral and ethical appeal to fair play and the rule of law -- by exempting certain people they have declared both themselves and those they exempted beyond the protections that exist in a civilized society.
I doubt Eric Holder realizes what happened in that hearing room or how clearly he rang the bell, but there is now a gauntlet before both the Administration and Congress that they have laid at their own feet. Coupled with Rand Paul's filibuster over one simple question -- the murder of non-belligerent Americans on American soil without due process of law, without charge, without trial, we have a truly historical pair of events -- and unfortunately they're not the sort of historical events you wish to witness.
This is in fact arguably the most-serious Constitutional Crisis that has occurred in decades, although it is not yet ripe and likely won't be for some time.
That it will ripen and then rot, however, if left unaddressed is a matter of historical fact and certainty.
I pray for our nation; this is not what I wanted to hear today.
and......
http://www.zerohedge.com/news/2013-03-06/eric-holder-some-banks-are-so-large-it-difficult-us-prosecute-them
Eric Holder: Some Banks Are So Large That It Is Difficult For Us To Prosecute Them
While it is widely assumed that the too-big-to-fail banks in the US (and elsewhere) are beyond the criminal justice system - based on simple empirical fact - when the Attorney General of the United States openly admits to the fact that he is "concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them," since, "it will have anegative impact on the national economy, perhaps even the world economy," one has to stare open-mouthed at the state of our union. It appears, just as the proletariat assumed, that too-big-to-fail banks are indeed too-big-to-jail.
GRASSLEY: On the issue of bank prosecution, I'm concerned that we have a mentality of too-big-to-jail in the financial sector of spreading from fraud cases to terrorist financing and money laundering cases -- and I cite HSBC. So I think we're on a slippery slope.HOLDER: The concern that you have raised is one that I, frankly, share. And I'm not talking about HSBC now. That (inaudible) be appropriate.But I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large.Again, I'm not talking about HSBC. This is just a -- a more general comment. I think it has an inhibiting influence -- impact on our ability to bring resolutions that I think would be more appropriate. And I think that is something that we -- you all need to -- need to consider. So the concern that you raised is actually one that I share.
and Ass Backward justifications - why can it thinking ?
WEDNESDAY, MARCH 6, 2013
(Washington’s Blog) The Government Has It Bass-Ackwards: Failing To Prosecute Criminal Fraud by the Big Banks Is Killing – NOT Saving – the Economy
U.S. Attorney General Eric Holder said today:
I am concerned that the size of some of these institutions [banks] becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy
As we’ve repeatedly noted, this is wholly untrue.
If the big banks were important to the economy, would so many prominent economists, financial experts and bankers be calling for them to be broken up?
If the big banks generated prosperity for the economy, would they have to be virtually 100% subsidized to keep them afloat?
If the big banks were helpful for an economic recovery, would they be prolonging our economic instability?
In fact, failing to prosecute criminal fraud has been destabilizing the economy since at least 2007 … and will cause huge crashes in the future.
After all, the main driver of economic growth is a strong rule of law.
Nobel prize winning economist Joseph Stiglitz says that we have to prosecute fraud or else the economy won’t recover:
The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.***
I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That’s the point. There were victims all over the world.
Economists focus on the whole notion of incentives. People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future.
Indeed, professor of law and economics (and chief S&L prosecutor) William Black notes that we’ve known of this dynamic for “hundreds of years”. And see this, this, this and this.
(Review of the data on accounting fraud confirms that fraud goes up as criminal prosecutions go down.)
The Director of the Securities and Exchange Commission’s enforcement division told Congress:
Recovery from the fallout of the financial crisis requires important efforts on various fronts, and vigorous enforcement is an essential component, as aggressive and even-handed enforcement will meet the public’s fair expectation that those whose violations of the law caused severe loss and hardship will be held accountable. And vigorous law enforcement efforts will help vindicate the principles that are fundamental to the fair and proper functioning of our markets: that no one should have an unjust advantage in our markets; that investors have a right to disclosure that complies with the federal securities laws; and that there is a level playing field for all investors.Paul Zak (Professor of Economics and Department Chair, as well as the founding Director of the Center for Neuroeconomics Studies at Claremont Graduate University, Professor of Neurology at Loma Linda University Medical Center, and a senior researcher at UCLA) and Stephen Knack (a Lead Economist in the World Bank’s Research Department and Public Sector Governance Department) wrote a paper called Trust and Growth, showing that enforcing the rule of law – i.e. prosecuting white collar fraud – is necessary for a healthy economy.
One of the leading business schools in America – the Wharton School of Business – published an essay by a psychologist on the causes and solutions to the economic crisis. Wharton points out that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable:
According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. “Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG.” The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. “Normal expectations of what is safe and dependable were abruptly shattered,” Sachs noted. “As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred.”Note that Sachs urges “hold[ing] the perpetrators of the economic disaster responsible.” In other words, just “looking forward” and promising to do things differently isn’t enough.
People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down.
He framed his argument with a fictional patient named Betty Q. Public, a librarian with two teenage children and a husband, John, who had recently lost his job. “She felt betrayed because she and her husband had invested conservatively and were double-crossed by dishonest, greedy businessmen, and now she distrusted the government that had failed to protect them from corporate dishonesty. Not only that, but she had little trust in things turning around soon enough to enable her and her husband to accomplish their previous goals.
“By no means a sophisticated economist, she knew … that some people had become fantastically wealthy by misusing other people’s money — hers included,” Sachs said. “In short, John and Betty had done everything right and were being punished, while the dishonest people were going unpunished.”
Helping an individual recover from a traumatic experience provides a useful analogy for understanding how to help the economy recover from its own traumatic experience, Sachs pointed out. The public will need to “hold the perpetrators of the economic disaster responsible and take what actions they can to prevent them from harming the economy again.” In addition, the public will have to see proof that government and business leaders can behave responsibly before they will trust them again, he argued.
Robert Shiller – one of the top housing experts in the United States – says that the mortgage fraud is a lot like the fraud which occurred during the Great Depression. As Fortune notes:
Shiller said the danger of foreclosuregate — the scandal in which it has come to light that the biggest banks have routinely mishandled homeownership documents, putting the legality of foreclosures and related sales in doubt — is a replay of the 1930s, when Americans lost faith that institutions such as business and government were dealing fairly.Indeed, it is beyond dispute that bank fraud was one of the main causes of the Great Depression.
Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith’s, definitive study of the Great Depression, The Great Crash, 1929:
The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy.Galbraith also says:
In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting ….
This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor.
***
The government that permits this to happen is complicit in a vast crime.
There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that’s a process which needs to get underway.Galbraith recently said that “at the root of the crisis we find the largest financial swindle in world history”, where “counterfeit” mortgages were “laundered” by the banks.
As he has repeatedly noted, the economy will not recover until the perpetrators of the frauds which caused our current economic crisis are held accountable, so that trust can be restored. See this, this and this.
No wonder Galbraith has said economists should move into the background, and “criminologists to the forefront.”
The bottom line is that the government has it exactly backwards. By failing to prosecute criminal fraud, the government is destabilizing the economy … and ensuring future crashes.
Postscript: Unfortunately, the government made it official policy not to prosecute fraud, even though criminal fraud is the main business model adopted by the giant banks.
Indeed, the government has done everything it can to cover up fraud, and has been actively encouraging criminal fraud and attacking those trying to blow the whistle.
http://www.zerohedge.com/news/2013-03-06/financial-stress-test-deja-vu
Financial Stress Test Deja Vu
Submitted by Tyler Durden on 03/06/2013 14:38 -0500
With the Fed pumping $118 million per hourinto excess (and fungible) reserves into the banking system, the market has once again front-run the exuberance expected from the CCAR (or bank stress tests). Sadly, just as we saw last year, the 'hope' priced into US financial stocks is absolutely not priced into US financial credit markets and the strange case of deja vu all over again that we saw in last year's stress test makes us wonder why all those professional investors aren't snapping up the 'cheap' debt of the banks - unless they are well aware of reality. Of course, as we noted last year, the combination of pure economic guesswork and financial analysis leaves belief in theStress Tests a total 'act of faith' and it seems, once again, credit markets don't believe.
Charts: Bloomberg
and Grounds Hog Day in the UK - Nat West again having " problems " ? .......
http://www.dailymail.co.uk/news/article-2289358/Thousands-Natwest-customers-left-access-money-banks-crashes.html
Thousands of Natwest customers left without access to their money after bank's computer system crashes
- It is believed more than a million of the bank's customers have been affected
- Last year millions were unable to use cards or move money for days
- Customers have vented frustrations on social networking sites
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Meltdown: Customers were left unable to get to their money following problems with the Natwest computer systems
Furious customers were left stranded without access to their money as Natwest computer systems went into meltdown.
Diners were left unable to pay for meals and workers unable to get home as the bank confirmed that its ATMs, telephone banking and internet banking were down.
It is believed the problems started around 9pm and that more than a million customers have so far been affected.
The news comes less than a year after millions of the bank’s customers were left unable to use their cards or move money for days due to a compute glitch.
Some customers took to social networks to warn others not to rely on their cards.
Mark Hillman wrote: ‘The whole system is down! No ATM’s, no online banking and cards WILL be declined. Just found out the hard way.’
Many more, frustrated by a perceived lack of response from their bank, took to twitter to vent their anger.
Deryn Cullen wrote: ‘@Natwest_Help Help? Really? So why not a single word about tonight’s fiasco? Great to know you’re there for your customers.’
Tara Marsden echoed the same sense of annoyance and said: ‘#Natwest Hopeless. No time scale given to rectify the problem according to customer services. Not good enough.’
At 10.30pm Natwest responded to their customers on Twitter saying they were ‘aware’ of the issues but did not comment on what had been the cause.
The bank said: ‘We are aware of the problems our customers are having and apologise, we will provide more information as soon as we have it.’
But the continual problems may still drive stranded customers into the arms of their competitors in the hopes of a more reliable system.
Problems: Natwest responded to their customers on Twitter saying they were 'aware' of the issues but did not comment on what had been the cause
Lee Barnes wrote: ‘Not happy about @natwest time to move my bank account I think.’
This is just the latest embarrassment for the bank which came in for a raft of criticism from its customers after a number of computer failures in the last year.
In June 2012 a computer glitch resulted millions of people having trouble using their debit and credit cards for three days.
Just a month later and Natwest were back in the news when more than 700,000 customers wereaffected by a ‘human error’ which resulted in some accounts being debited twice.
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