Push for mortgage bankster prosecutions heats up
Feds gearing up for prosecutions before time runs out?
The clock is ticking and chatter among industry sources and sources in Washington said the Department of Justice – under some pressure from other law enforcement – may be finally ramping up criminal prosecutions for individual senior bankers for their role in peddling toxic and subprime mortgage-backed securities.
Word on the streets and in Washington is the prosecutors are trying to line up a string of criminal cases against individual bankers.
Inquiries to the Department of Justice and the U.S. Secret Service, which has some jurisdiction over the alleged crimes, were not answered by publication time.
On Wednesday, the New York Times and ProPublica featured a lengthy profile on Credit Suisse’s Kareem Serageldin, the sole banker so far to go to jail, and it’s pretty damning.
Then there is former Jefferies & Co. managing director Jesse Litvak, convicted in one of the only criminal cases against an individual connected to fraud in the Troubled Asset Relief Program.
There’s little doubt Litvak may end up singing like Billie Holiday. It very well could be why mortgage-bond traders at JPMorgan Chase (JPM), Morgan Stanley (MS), and Royal Bank of Scotland Group (RBS) were placed on leave in recent weeks or months. In his closing defense, Litvak’s attorneys said that other traders practiced the same tactics and that his supervisors condoned it.
Most of the major banks have owned up to some degree in more than a dozen settlements, none of which involved criminal prosecution, including the “too big to fail” banks like JPMorgan Chase, Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC).
But that’s not the same as holding individuals responsible for the actions they took.
Last August, U.S. Sen. Elizabeth Warren, D-Mass., said that the National Mortgage Settlement didn’t nearly go far enough.
In fact, the Federal Bureau of Investigation criminal investigative division in particular was lacking in prioritizing mortgage fraud. Despite nearly $200 million in funding to chase mortgage fraud, the crime remained at the lowest priority and was listed in a low-crime category.
But with the five-year statute of limitations for most fraud and criminal charges ticking down, word is some want to open criminal investigations into individuals now.
For comparison, some 1,100 people were prosecuted in the 1980s savings and loan crisis, while the bubble that burst in the 1990s saw prosecution of executives at companies like WorldCom and Enron.
Only one top executive has been jailed as a result of the financial crisis of 2009, which many worry is because the Department of Justice has been cowed or influenced by the big firms into heel dragging.
In a Senate Judiciary Committee hearing in March 2013, Attorney General Eric Holder said: “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.”
Is that the measure of criminal culpability and holding people accountable, no matter how high their position?
Or is this a measure of that American oligarchy we hear about? If so...
(I'd like to remind the untouchable bankster overlords that as a trusted Internet personality I could be helpful in rounding up others to toil in their underground sugar caves.)