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Who doesn't love some popular culture - a virtual lynch mob piece? I would have less issues with writing like this if they actually cited some exampes where la

by brc 16y ago

Who doesn't love some popular culture - a virtual lynch mob piece? I would have less issues with writing like this if they actually cited some exampes where laws were broken, and which laws were broken. I'm not pretending that the whole thing was always on the right side of the law - I'm not - but you can't just say 'they're all criminals, lock them up!'. Because from what I've read, most of what caused the issues were not only legal, they were government backed up and sanctioned. They might have been a bad idea, some morally wrong, some the result of some very poor judgement or influence by the wrong lobbyists. But criminal in the popular sense is vastly different from criminal in the law sense. I'm right behind locking people up for breaking the laws. But if it's going to happen, someone needs to cite specific examples where specific people (or companies) broke specific laws. Because all I've seen is a case where the government relaxed regulations regarding speculating with depositors money, opened up the monetary taps to let debt flow freely, and then guided that money into questionable lending for social and political purposes. Completely unlike the insider trading accusations from the 1980's most of all the obscene money that was taken off the table was done in plain view of the regulators, and backed up by politicians convinced they'd found the magic cure for endless economic growth.

dman 16y ago
Part of the problem in my opinion is that the financial industry is faster at creating financial instruments than the government is at creating regulations. Afaik there is little regulation in place for trading in dark pools, collateralised debt obligations and for what exactly constitutes conflict of interest.
- brc 16y ago
  But don't forget that a lot of these instruments and strategies were also around in the 1920s. The fallout from the 1929 crash and subsequent depression was many changes in regulation. As these were gradually unwound, the products and strategies came to exist again, with the same consequences.
- jon_hendry 16y ago
  Um, the fine minds of the Fed, Congress, and the Clinton and Bush administrations declared some of the instruments off limits from regulation. Then they went off to Wall Street and collected their millions of dollars.
jon_hendry 16y ago
He gives one example, of an SEC investigator who got fired just for trying to talk to John Mack, now running Morgan Stanley, about a suspected case of insider trading. (An associate of Mack suddenly started buying a company's stock in huge amounts, shortly before the company was acquired, and made $15 million. The acquired company had been a client of Credit Suisse. John Mack interviewed at Credit Suisse just before this, and had been leaning on his associate for a piece of another deal. The implication being that Mack picked up some info at Credit Suisse about the upcoming acquisition, passed it to his buddy, in exchange for a piece of the other deal, which I think made Mack about $10 million.) Morgan Stanley had a bunch of their lawyers pressuring the SEC above the investigator's head. Most of those Morgan Stanley lawyers were former SEC or DOJ bigwigs themselves. As a result, the investigator was fired, even though he had recently received sterling reviews. The fired guy eventually won a $750k wrongful dismissal suit against the SEC.
- brc 16y ago
  With all respect, this is absolutely small fry in the scheme of things. Insider trading goes on all the time, irrespective of market conditions. Insider trading did not cause the financial collapse. This type of story is likely to happen in any decade you care to mention, and is not indicative of the wider culture of taking big bets based on other people's money, and getting richly rewarded for it.
  - jon_hendry 16y ago
    No, but it is an indication of the "enforcement" and regulation bodies being cowed and coopted by the bankers, which certainly effects the handling of the recent clusterfuck by the same bodies. If they aren't going to let an investigator bring John Mack in to talk about a little insider trading case, they certainly aren't going to bring him and his peers in to talk about melting down the financial system, unless their message is "can we throw any more free money at you?"
    - brc 16y ago
      I agree with you here, but this doesn't detract from my main original point. All of the things which caused the problem were totally legal at the time they were done. So while side-issues like this are criminal and deserve to be punished, the actual things that caused the problems were completely legal. The Sec investigators couldn't prosecute for melting down the financial system, because it was being done within the law. The law was (and is) wrong, but that doesn't make most people on 'Wall St' criminals.
ddkrone 16y ago
Did you miss the part about the revolving door? There are no legal issues because the ones that need to make sure everything is happening legally are bankers themselves or close friends of ones. So you standing there and saying "I see nothing legally wrong with this so therefore it's not criminal?" is one of the many reasons bankers continue to defraud common main street investors.
- brc 16y ago
  Look, I completely agree with you that the laws are written in favour of the bankers, and that is something that needs to change. But you cannot lock people up unless they have broken the law. When many people took action, they did so knowing they weren't breaking any laws. You can retrospecitvely lock them up. Change the law, if necessary, but to call people criminal is wrong.
  - rapind 16y ago
    Yeah, you pretty much need to change the laws, rebuild the regulatory bodies, and vastly increase the penalties for white collar crimes. Then do it all over again in 30 years. I do think there should be a law that allows you to lock people up retrospectively though based on their degree of douchebaggery.
    - stretchwithme 16y ago
      The government could stop insuring bank deposits and mortgages. If savers and investors truly thought they could lose their capital, they examine risks a lot more carefully. Life is full of risks and we must consider them. Selecting a group of people who have no financial stake in the outcome to decide what risks should be taken seems unwise. Especially when they can be paid to look the other way. Sure we can hand our thinking to other people. But that might lead to disaster. Oops.
    - Retric 16y ago
      You don't need new laws for most of this stuff. Selling crap that you know is crap as AAA security's is simple fraud.
EugeneG 16y ago
Completely agree: (a) What laws were broken? Who broke them? (b) Why is there never any blame put on those on "main street" who took the loans that they couldn't repay?
- acabal 16y ago
  (b): because things like personal responsibility and basic, common-sense personal finance were long ago replaced in our national culture by blaming the other guy and a sense of entitlement. I'm actually on the side of putting more of the blame on the consumer than the banks, for that reason--but there's still plenty of blame left over for Wall Street.
  - kls 16y ago
    I'm actually on the side of putting more of the blame on the consumer than the banks, for that reason--but there's still plenty of blame left over for Wall Street. I don't know why, they are the experts who are supposed to know who to lend to and who not to lend to based on statistics and analysis. If they where incompetent at doing there job then that is on them, not the consumer. Further they are getting bailed out by the consumer so there is really little blame to put on the consumer we are paying the tab. Blaming the consumer is akin to saying the consumer dressed too much like a hooker.
    - acabal 16y ago
      Accepting a variable-rate mortgage is taking just a big a risk as the lender lending it to you. If you accept one of those, you should be financially prepared for the rate to rise, even dramatically. And if the rate rises beyond what you can reasonably expect to pay, well then, your risk didn't pay off. Owning a house isn't a right, and just as you can make lots of money off them (and many did!), you can lose it all. The difference between that personal risk and the bank's risk is that the government ended up saving the banks, while the commoners got foreclosed on. And that's certainly a good reason to get angry. Edit: Great, downvotes for not blaming it all on those evil Wall Street fat cats.
mryall 16y ago
Articles like this can very rarely call out specific examples or name specific people without he risk of being sued for defamation. Besides, this is an editorial piece not a work of investigative journalism. For a bit more background, I found Michael Lewis's book, The Big Short, enlightening about some of the dodgy actors in the subprime mortgage disaster.
kls 16y ago
You present a chicken and egg problem, where is he going to get the evidence to cite if the SEC is covering it up for them. If they are burying cases then there is no evidence to be had. The fact that many of these firms have paid fines without admitting guilt is pretty telling. Not to mention the whole house of cards collapsed and it was still big bonuses to go around. It is evident that they play by a different set of rules and ignoring that due to lack of evidence (from an entity that can't be trusted to provide that evidence), Is just inviting more of the same abuses. The fact is all of these firms did bury losses a fact that is not in dispute, and in doing so they committed fraud for that they paid a fine and admitted no guilt and suffered no prosecution, that was the deal and they did break the law. As well the investigator that was poking around was let go and later awarded a large settlement for wrongful termination.
- pyre 16y ago
  > and it was still big bonuses to go around. IIRC the particular example of this that was lauded around as Wall Street laughing at the common man wasn't exactly what the headlines made it out to be. The company had guaranteed those bonuses before the collapse. They were contractual obligations. Unless the company was in bankruptcy, I don't think there was anyway for them to escape paying them (and since they most likely technically count as payroll, even bankruptcy might not have been enough to avoid those payments). Putting these in the contracts was probably a bad idea, but once it's there, it's there. [Feel free to cite other examples, or refute what I've said. I'm not married to it. :)]
  - kls 16y ago
    17 firms paid out bonuses, IIRC AIG was the only one that had that binding contract and for good reason, they where built to implode. I don't know if all of the firms had a similar structure, but the bonuses while Rome burned where by no means a one off case. http://www.taipeitimes.com/News/biz/archives/2010/07/25/2003478755 http://www.taipeitimes.com/News/biz/archives/2010/07/25/2003...
dkarl 16y ago
an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities Sounds like he's calling the risk ratings "fraud." It would be a tough case to prove, though. There were two convenient mistakes that nobody wanted to stop making. First, the incorrect ratings, which were motivated by a conflict of interest: the folks selling the mortgage-backed securities paid the ratings agencies to rate their securities. Second, the fact that people bought the securities as if the ratings were trustworthy, despite the glaring conflict of interest. To make a criminal case, you'd have to prove they weren't just stupid. (Sorry, Ivy League grads, that degree is not sufficient evidence by itself.) Somebody would have to find a paper trail that proved the criminals' state of mind, like an email saying, "Hey Joe, I just finished rating the latest mortgage-backed CDOs. The computer gave them all AA (LOL!) I wonder how long we can get away with using this stupid formula to overrate CDOs. Our customers love it so much, and we are getting mega rich. The people who buy these things are suckers, but they're probably getting rich selling them to somebody else LOL. Everybody gets rich except stupid grandma when her pension fund goes broke LMFAO"
- tokenadult 16y ago
  In many cases, discovery of emails has shown that workers in the investment community privately believed that investment instruments were trash, while they told clients otherwise. That is fraud. We would know of more such cases if more discovery of company records had been done by government law-enforcement agencies. But unwillingness of those agencies to subpoena relevant records is precisely what the article is about.
  - nomurrcy 16y ago
    They are also seemingly fraudulent in another sense. Many of these mortgage-backed securities are coming under scrutiny for not being properly "mortgage-backed" at all. When created proper paperwork trails were not kept, and the notes and mortgages were split (which is a no-no in some states) and proper records were not filed at the county level. In a lot of cases county and state law was just wholesale ignored through the MERS system. None of this is ever a problem unless you actually need to collect on the home that serves as collateral for your note. Apparently some in Wall St didn't think far enough ahead. This is beginning to work its way through the courts and will open a whole new bag of worms for those holding these notes at par. Just one example (of many) :http://www.bloomberg.com/news/2011-01-06/foreclosures-may-be-undone-by-massachusetts-ruling-on-mortgage-transfers.html http://www.bloomberg.com/news/2011-01-06/foreclosures-may-be... So not only did the 'system' encourage the writing of irresponsible mortgages and scummy sales tactics, the banks also defrauded their customers: state endowments, pension plans, universities and other purchasers of these improperly structured financial products. Yet this is all a civil matter and nobody will go to jail. Chalk another one up to the 'best and the brightest' of Wall St. The author is a bit sloppy, but their heart is in the right place. What recourse do people have when the government that is supposed to be enforcing laws on the behalf of the citizenry is completely controlled by the very industry ripping them off?
intended 16y ago
As much as I would like to agree with the article, I tend to agree with your statement that this seems to be a virtual lynch mob piece. The little I have read about this situation puts a slightly different light/context on the situation and the SEC's actions. The SEC does not seem to have resources to tackle all their cases. So when it makes an announcement that its going after someone, it usually means that they have a case, and the evidence to back it up. Conversely, it means they go after only strong cases. For example - the SEC's prosecution of Goldman. It was panned in the media, and Goldman even stated they would fight the case. The media actually posted it as SEC being irresponsible and hunting for scalps. On the other hand, one site pointed out that Khuzami wouldn't be bringing a weak case and that Goldman was most likely going to settle - http://www.ritholtz.com/blog/2010/04/10-things-you-dont-know-gs-case/ http://www.ritholtz.com/blog/2010/04/10-things-you-dont-know... http://www.ritholtz.com/blog/2010/07/who-steered-you-wrong-about-the-goldman-sachs-case/ http://www.ritholtz.com/blog/2010/07/who-steered-you-wrong-a... Added benefit - those links mention a law which was broken - False representation to clients. From the commentary there, it appears that in Street parlance - having the SEC go after you is a Big Deal. Goldman got fined about $500 mil iirc. The problem is that settling a case seems to be the worst punishment that can happen on Wallstreet, Jail or larger fines are not. PS: Another very interesting article by the big picture blog is posted lower in this thread - its regarding the housing foreclosure mess and is worth a read.
hristov 16y ago
Did you actually read the article? He gives several examples.
- leot 16y ago
  It seems that the majority of commenters here did not, in fact, RTFA. Let's not have the facts get in way of a prevalent collective delusion, though: that when every incentive and opportunity for malfeasance exists, bankers will consistently "do the right thing" in spite of pitifully lax enforcement. No, the pristine ideals of the ultra-rich financial engineering class are incredibly robust, and it's lazy self-serving government bureaucrats whom we should be most concerned about.
defroost 16y ago
You obviously didn't read the article. The SEC didn't just turn it's back on insider trading. And that is not the only "crimes" here that Taibbi catalogues by the AIG, Goldman Sachs, Bear Sterns, Citigroup, Fanny Mae. There was widespread mis-reporting earnings to investors, using phony accounting techniques to jack-up bonuses, concealing billions of dollars in loans from their balance sheets like Lehman did. Those are crimes, and Taibbi gave example after example of such misdeeds. Tons of specifics that I guess you missed. Great piece yet again by Matt Taibbi on the shameful practices of Wall Street banks while the SEC looked the other way.

by brc 16y ago

dman 16y ago

Part of the problem in my opinion is that the financial industry is faster at creating financial instruments than the government is at creating regulations. Afaik there is little regulation in place for trading in dark pools, collateralised debt obligations and for what exactly constitutes conflict of interest.

brc 16y ago
But don't forget that a lot of these instruments and strategies were also around in the 1920s. The fallout from the 1929 crash and subsequent depression was many changes in regulation. As these were gradually unwound, the products and strategies came to exist again, with the same consequences.
jon_hendry 16y ago
Um, the fine minds of the Fed, Congress, and the Clinton and Bush administrations declared some of the instruments off limits from regulation. Then they went off to Wall Street and collected their millions of dollars.

jon_hendry 16y ago

He gives one example, of an SEC investigator who got fired just for trying to talk to John Mack, now running Morgan Stanley, about a suspected case of insider trading. (An associate of Mack suddenly started buying a company's stock in huge amounts, shortly before the company was acquired, and made $15 million. The acquired company had been a client of Credit Suisse. John Mack interviewed at Credit Suisse just before this, and had been leaning on his associate for a piece of another deal. The implication being that Mack picked up some info at Credit Suisse about the upcoming acquisition, passed it to his buddy, in exchange for a piece of the other deal, which I think made Mack about $10 million.) Morgan Stanley had a bunch of their lawyers pressuring the SEC above the investigator's head. Most of those Morgan Stanley lawyers were former SEC or DOJ bigwigs themselves. As a result, the investigator was fired, even though he had recently received sterling reviews. The fired guy eventually won a $750k wrongful dismissal suit against the SEC.

brc 16y ago
With all respect, this is absolutely small fry in the scheme of things. Insider trading goes on all the time, irrespective of market conditions. Insider trading did not cause the financial collapse. This type of story is likely to happen in any decade you care to mention, and is not indicative of the wider culture of taking big bets based on other people's money, and getting richly rewarded for it.
- jon_hendry 16y ago
  No, but it is an indication of the "enforcement" and regulation bodies being cowed and coopted by the bankers, which certainly effects the handling of the recent clusterfuck by the same bodies. If they aren't going to let an investigator bring John Mack in to talk about a little insider trading case, they certainly aren't going to bring him and his peers in to talk about melting down the financial system, unless their message is "can we throw any more free money at you?"
  - brc 16y ago
    I agree with you here, but this doesn't detract from my main original point. All of the things which caused the problem were totally legal at the time they were done. So while side-issues like this are criminal and deserve to be punished, the actual things that caused the problems were completely legal. The Sec investigators couldn't prosecute for melting down the financial system, because it was being done within the law. The law was (and is) wrong, but that doesn't make most people on 'Wall St' criminals.

ddkrone 16y ago

Did you miss the part about the revolving door? There are no legal issues because the ones that need to make sure everything is happening legally are bankers themselves or close friends of ones. So you standing there and saying "I see nothing legally wrong with this so therefore it's not criminal?" is one of the many reasons bankers continue to defraud common main street investors.

brc 16y ago
Look, I completely agree with you that the laws are written in favour of the bankers, and that is something that needs to change. But you cannot lock people up unless they have broken the law. When many people took action, they did so knowing they weren't breaking any laws. You can retrospecitvely lock them up. Change the law, if necessary, but to call people criminal is wrong.
- rapind 16y ago
  Yeah, you pretty much need to change the laws, rebuild the regulatory bodies, and vastly increase the penalties for white collar crimes. Then do it all over again in 30 years. I do think there should be a law that allows you to lock people up retrospectively though based on their degree of douchebaggery.
  - stretchwithme 16y ago
    The government could stop insuring bank deposits and mortgages. If savers and investors truly thought they could lose their capital, they examine risks a lot more carefully. Life is full of risks and we must consider them. Selecting a group of people who have no financial stake in the outcome to decide what risks should be taken seems unwise. Especially when they can be paid to look the other way. Sure we can hand our thinking to other people. But that might lead to disaster. Oops.
  - Retric 16y ago
    You don't need new laws for most of this stuff. Selling crap that you know is crap as AAA security's is simple fraud.

EugeneG 16y ago

Completely agree: (a) What laws were broken? Who broke them? (b) Why is there never any blame put on those on "main street" who took the loans that they couldn't repay?

acabal 16y ago
(b): because things like personal responsibility and basic, common-sense personal finance were long ago replaced in our national culture by blaming the other guy and a sense of entitlement. I'm actually on the side of putting more of the blame on the consumer than the banks, for that reason--but there's still plenty of blame left over for Wall Street.
- kls 16y ago
  I'm actually on the side of putting more of the blame on the consumer than the banks, for that reason--but there's still plenty of blame left over for Wall Street. I don't know why, they are the experts who are supposed to know who to lend to and who not to lend to based on statistics and analysis. If they where incompetent at doing there job then that is on them, not the consumer. Further they are getting bailed out by the consumer so there is really little blame to put on the consumer we are paying the tab. Blaming the consumer is akin to saying the consumer dressed too much like a hooker.
  - acabal 16y ago
    Accepting a variable-rate mortgage is taking just a big a risk as the lender lending it to you. If you accept one of those, you should be financially prepared for the rate to rise, even dramatically. And if the rate rises beyond what you can reasonably expect to pay, well then, your risk didn't pay off. Owning a house isn't a right, and just as you can make lots of money off them (and many did!), you can lose it all. The difference between that personal risk and the bank's risk is that the government ended up saving the banks, while the commoners got foreclosed on. And that's certainly a good reason to get angry. Edit: Great, downvotes for not blaming it all on those evil Wall Street fat cats.

mryall 16y ago

Articles like this can very rarely call out specific examples or name specific people without he risk of being sued for defamation. Besides, this is an editorial piece not a work of investigative journalism. For a bit more background, I found Michael Lewis's book, The Big Short, enlightening about some of the dodgy actors in the subprime mortgage disaster.

kls 16y ago

You present a chicken and egg problem, where is he going to get the evidence to cite if the SEC is covering it up for them. If they are burying cases then there is no evidence to be had. The fact that many of these firms have paid fines without admitting guilt is pretty telling. Not to mention the whole house of cards collapsed and it was still big bonuses to go around. It is evident that they play by a different set of rules and ignoring that due to lack of evidence (from an entity that can't be trusted to provide that evidence), Is just inviting more of the same abuses. The fact is all of these firms did bury losses a fact that is not in dispute, and in doing so they committed fraud for that they paid a fine and admitted no guilt and suffered no prosecution, that was the deal and they did break the law. As well the investigator that was poking around was let go and later awarded a large settlement for wrongful termination.

pyre 16y ago
> and it was still big bonuses to go around. IIRC the particular example of this that was lauded around as Wall Street laughing at the common man wasn't exactly what the headlines made it out to be. The company had guaranteed those bonuses before the collapse. They were contractual obligations. Unless the company was in bankruptcy, I don't think there was anyway for them to escape paying them (and since they most likely technically count as payroll, even bankruptcy might not have been enough to avoid those payments). Putting these in the contracts was probably a bad idea, but once it's there, it's there. [Feel free to cite other examples, or refute what I've said. I'm not married to it. :)]
- kls 16y ago
  17 firms paid out bonuses, IIRC AIG was the only one that had that binding contract and for good reason, they where built to implode. I don't know if all of the firms had a similar structure, but the bonuses while Rome burned where by no means a one off case. http://www.taipeitimes.com/News/biz/archives/2010/07/25/2003478755 http://www.taipeitimes.com/News/biz/archives/2010/07/25/2003...

dkarl 16y ago

an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities Sounds like he's calling the risk ratings "fraud." It would be a tough case to prove, though. There were two convenient mistakes that nobody wanted to stop making. First, the incorrect ratings, which were motivated by a conflict of interest: the folks selling the mortgage-backed securities paid the ratings agencies to rate their securities. Second, the fact that people bought the securities as if the ratings were trustworthy, despite the glaring conflict of interest. To make a criminal case, you'd have to prove they weren't just stupid. (Sorry, Ivy League grads, that degree is not sufficient evidence by itself.) Somebody would have to find a paper trail that proved the criminals' state of mind, like an email saying, "Hey Joe, I just finished rating the latest mortgage-backed CDOs. The computer gave them all AA (LOL!) I wonder how long we can get away with using this stupid formula to overrate CDOs. Our customers love it so much, and we are getting mega rich. The people who buy these things are suckers, but they're probably getting rich selling them to somebody else LOL. Everybody gets rich except stupid grandma when her pension fund goes broke LMFAO"

tokenadult 16y ago
In many cases, discovery of emails has shown that workers in the investment community privately believed that investment instruments were trash, while they told clients otherwise. That is fraud. We would know of more such cases if more discovery of company records had been done by government law-enforcement agencies. But unwillingness of those agencies to subpoena relevant records is precisely what the article is about.
- nomurrcy 16y ago
  They are also seemingly fraudulent in another sense. Many of these mortgage-backed securities are coming under scrutiny for not being properly "mortgage-backed" at all. When created proper paperwork trails were not kept, and the notes and mortgages were split (which is a no-no in some states) and proper records were not filed at the county level. In a lot of cases county and state law was just wholesale ignored through the MERS system. None of this is ever a problem unless you actually need to collect on the home that serves as collateral for your note. Apparently some in Wall St didn't think far enough ahead. This is beginning to work its way through the courts and will open a whole new bag of worms for those holding these notes at par. Just one example (of many) :http://www.bloomberg.com/news/2011-01-06/foreclosures-may-be-undone-by-massachusetts-ruling-on-mortgage-transfers.html http://www.bloomberg.com/news/2011-01-06/foreclosures-may-be... So not only did the 'system' encourage the writing of irresponsible mortgages and scummy sales tactics, the banks also defrauded their customers: state endowments, pension plans, universities and other purchasers of these improperly structured financial products. Yet this is all a civil matter and nobody will go to jail. Chalk another one up to the 'best and the brightest' of Wall St. The author is a bit sloppy, but their heart is in the right place. What recourse do people have when the government that is supposed to be enforcing laws on the behalf of the citizenry is completely controlled by the very industry ripping them off?

intended 16y ago

As much as I would like to agree with the article, I tend to agree with your statement that this seems to be a virtual lynch mob piece. The little I have read about this situation puts a slightly different light/context on the situation and the SEC's actions. The SEC does not seem to have resources to tackle all their cases. So when it makes an announcement that its going after someone, it usually means that they have a case, and the evidence to back it up. Conversely, it means they go after only strong cases. For example - the SEC's prosecution of Goldman. It was panned in the media, and Goldman even stated they would fight the case. The media actually posted it as SEC being irresponsible and hunting for scalps. On the other hand, one site pointed out that Khuzami wouldn't be bringing a weak case and that Goldman was most likely going to settle - http://www.ritholtz.com/blog/2010/04/10-things-you-dont-know-gs-case/ http://www.ritholtz.com/blog/2010/04/10-things-you-dont-know... http://www.ritholtz.com/blog/2010/07/who-steered-you-wrong-about-the-goldman-sachs-case/ http://www.ritholtz.com/blog/2010/07/who-steered-you-wrong-a... Added benefit - those links mention a law which was broken - False representation to clients. From the commentary there, it appears that in Street parlance - having the SEC go after you is a Big Deal. Goldman got fined about $500 mil iirc. The problem is that settling a case seems to be the worst punishment that can happen on Wallstreet, Jail or larger fines are not. PS: Another very interesting article by the big picture blog is posted lower in this thread - its regarding the housing foreclosure mess and is worth a read.

hristov 16y ago

Did you actually read the article? He gives several examples.

leot 16y ago
It seems that the majority of commenters here did not, in fact, RTFA. Let's not have the facts get in way of a prevalent collective delusion, though: that when every incentive and opportunity for malfeasance exists, bankers will consistently "do the right thing" in spite of pitifully lax enforcement. No, the pristine ideals of the ultra-rich financial engineering class are incredibly robust, and it's lazy self-serving government bureaucrats whom we should be most concerned about.

defroost 16y ago

You obviously didn't read the article. The SEC didn't just turn it's back on insider trading. And that is not the only "crimes" here that Taibbi catalogues by the AIG, Goldman Sachs, Bear Sterns, Citigroup, Fanny Mae. There was widespread mis-reporting earnings to investors, using phony accounting techniques to jack-up bonuses, concealing billions of dollars in loans from their balance sheets like Lehman did. Those are crimes, and Taibbi gave example after example of such misdeeds. Tons of specifics that I guess you missed. Great piece yet again by Matt Taibbi on the shameful practices of Wall Street banks while the SEC looked the other way.