47 online
 
Most Popular Choices
Share on Facebook 16 Printer Friendly Page More Sharing
OpEdNews Op Eds   

Two New Fraud Deals Show Wall Street's Washington Insiders at Work

By       (Page 1 of 2 pages)   2 comments
Message Richard Eskow
Become a Fan
  (15 fans)
Cross-posted from Huffington Post

(Image by Unknown Owner)   Details   DMCA

It must've been like old home week when the old gang of Wall Street and Washington insiders finalized a couple more cushy settlements last week.

Everybody knew the drill: Ignore the potential criminal charges and agree on settlement figures they think the public will swallow -- figures that are big enough to sound impressive but far smaller than the banks' ill-gotten gains.  They've done this dozens of times before.

But there was an empty chair at the negotiating table.

Bank of America was there, as it has been so many times before. So were the other too-big-to-fail banks.  Representatives from the Attorney General's office were undoubtedly there, too. The Attorney General was a high-priced Wall Street attorney.

The banks' "independent" reviewers were there, too, or at least their reports were. Those reports said that there were very few problems with the banks' transactions. That should've have raised some red flags around the negotiating table: An audit in San Francisco found that 84 percent of foreclosures were performed illegally, while another in North Carolina found "singular irregularities" in roughly three-quarters of the mortgages reviewed.

So it shouldn't have been such a surprise when an as-yet unpublished GAO report showed that these rosy reviews were disastrously flawed.

But then, the insiders had it wired. The reviewers included Promontory Financial Group, whose CEO was Comptroller of the Currency under President Bill Clinton. Then he became a senior attorney at Wall Street defense firm Covington & Burling. Small world: The Attorney General of the United States worked at Covington & Burling too.

Promontory and the other reviewers have an underlying conflict of interest: they're reviewing their own client base. That's the same conflict of interest that corrupted the for-profit "ratings agencies," leading them to rate their clients' toxic mortgage-backed securities as "AAA."

Promontory was also the firm that said "well over 99.9 percent" of the loans issued by Standard Chartered bank complied with the law and only $14 million of them were illegal. Then the bank admitted that $250 billion of its deals, not $14 million, were illegal. That's 17,000 times as much illegality as Promontory found in its "review." (17857.142 as much, to be precise, but who's counting?)

Promontory kept the foreclosure gig anyway, with no objection from Washington's regulators or law enforcement officials.

But then, who around that table would question Promontory? We know them, they probably thought. We've always known them.

Promontory and the other "independent" reviewers collected $1.5 billion in fees for worthless work, from a settlement that was supposed to help the occupant of that empty chair.

But of course the chair was empty. The occupant's invitation was never sent out. It never is.

The Securities and Exchange Commission has attended many such meetings -- meetings in which senior bankers bind their shareholders to billions in fines and restitution, sometimes as penalty for fraud against those very same shareholders. (The banks also have a knack for covering their obligations  with money from investors they've already defrauded, including working people's pension funds.) The SEC's senior attorney always has a seat at the table, either  literally or figuratively, whenever a big bank settlement is negotiated.

A new person was appointed to that position just today. The SEC's new chief counsel held a senior regulatory position under President Clinton, too. But if you think he went to work for Covington & Burling after leaving public service like his colleague did, you're wrong.

He worked for Arnold & Porter.

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

News 2   Must Read 1   Well Said 1  
Rate It | View Ratings

Richard Eskow Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

How to Fix the Fed: Dismiss Dimon, Boot the Bankers, and Can the Corporations

The Top 12 Political Fallacies of 2012

Pawn: The Real George Zimmerman Story

What America Would Look Like If Libertarians Got Their Way

"His Own Man's" Man: Jeb Bush and the Return of Wolfowitz

"F" The Bureaucracy! The White House Can Help Homeowners Right Now

To View Comments or Join the Conversation:

Tell A Friend