Could Some Banksters be Going to Jail…Finally?

Submitted by Lawrence Rafferty, (rafflaw), Guest Blogger


It has been almost 4 years since the economy crashed in 2007, causing what some people have referred to as the worst economic disaster since the Great Depression.  Since that time there has been little or no action on indicting the alleged participants in the cause of the disaster.  Maybe now, that dismal record will change.

“The chairman of the U.S. Senate’s investigative subcommittee said he believes Goldman Sachs officials made misleading statements about their trading during the financial crisis and should be investigated criminally.  Sen. Carl Levin (D-Mich.) said on Wednesday that he plans to refer Goldman officials, and potentially officials from other organizations, to the Justice Department for possible prosecution and to the Securities and Exchange Commission for possible civil proceedings.  “In my judgment, Goldman clearly misled their clients and they misled the Congress,” said Levin, the chairman of the Senate Permanent Subcommittee on Investigations.”Legal Times  Senator Levin has called out the Goldman Sachs officials in particular for their alleged false statements to Congress and to their own customers. The committee’s 639 page report is the result of an exhaustive 2 year bipartisan investigation into the actions of Bank and Investment house officials. Levin-Coburn Report  Both Levin and the Republican Ranking Member, Senator Tom Coburn have come down hard on the actions of these officials.  Just what is at the heart of this investigation?

The Legal Times article linked above gives a succinct description of the issues at hand here.  “At issue are the investments Goldman made regarding mortgage-backed securities. Citing e-mails and other internal company documents, the Levin-Coburn report alleges that Goldman placed major bets against those types of securities even as it continued to sell them to clients. Blankfein testified a year ago that Goldman was “not consistently or significantly net short the market in residential mortgage-related products in 2007 and 2008.”  The Levin-Coburn report says Goldman’s denials ‘“are directly contradicted by its own financial records and internal communications, as well as its own public statements in 2007, and are not credible.”’ When the Republican Ranking Member agrees that the Goldman Sachs officials are unethical at best, that should open some people’s eyes. “Coburn added, “It shows without a doubt the lack of ethics in some of our financial institutions, who embrace known conflicts of interest to accumulate wealth for themselves.” Legal Times

In a Think Progress article on this subject, Senator Levin gave more details.  “This deal was just one example of Goldman “profit[ing] from the failure of many of the…securities it had underwritten and sold.” As the report explains, Goldman frequently touted securities that it expected to fail to outside investors, and then bet against those securities by taking a “short position” on them. In total, Goldman “generated net revenues of $3.7 billion” by betting against securities, while their alleged victims were left with an investment that was worth only a fraction of what they paid for it.” Think Progress

It has taken quite some time for the Levin-Coburn report to come out, but for once, the Senators have not minced words.  Levin doesn’t like that fact that the Goldman Sachs officials lied to him in the Senate hearing and the detail and breadth of this investigation is finally an indication that someone in Washington is taking this alleged criminal activity seriously.  Is that what it takes for Congress to take allegedly criminal behavior seriously?  Would Levin and Coburn have delved so deeply into this matter if they hadn’t felt lied to?  At this point, I for one am just happy that Levin and Coburn are doing the right thing and referring the matter to the Justice Department and to the SEC.  Now, if we can only get Attorney General Holder’s Justice Department to seriously follow-up on the Senatorial referrals, we just may have a little bit of the rule of law back in play. Maybe!

Respectfully submitted by Lawrence Rafferty, Guest Blogger

Additional Source:  Levin You Tube

45 thoughts on “Could Some Banksters be Going to Jail…Finally?

  1. Rafflaw,

    Is this the same justice department, that won’t close Gitmo, or prosecute the Bush war criminals?

    I have no faith in Holder or justice department…

    I hope I am wrong.

  2. anon nurse,

    It was a valid, thorough investigation by Levin and Coburn, but, it doesn’t mean it will go anywhere.

    Sorry to say it but “you can bank on that”

    And you’re right anon nurse – great post.

  3. Great post Rafflaw….

    With respect to Levin is is good…I agree with the rest of the sentimental respect for the Holder DOJ…It ain’t gonna go no where…especially before the election….at least….too many “Banksters” to fleece for campaign contributions…

  4. I understand everyone’s distrust of the Department of Justice, but with this bipartisan report and referral, maybe, just maybe they will proceed on it. Not holding my breath, but I have my fingers crossed!

  5. I would assume that GS got sign off and advice from their lawyers re their behavior towards clients and Congress?

    Should the heads of GS go to jail, what should happen to the lawyers?

    Rafflaw? What actions will you take personally to maintain the integrity of your profession re: GS?

    Thought so.

    Thanks anyway.

  6. Rafflaw,

    I think AY has said it beat.

    “…especially before the election….at least….too many “Banksters” to fleece for campaign contributions…”

    You just can’t offend the people that own ya.

    I would honestly start praying (again) if I thought there was even a 1 in a million shot that this would proceed.

    I hope I am way wrong.

  7. anon,
    thank you for your concern for the integrity of lawyers. GS has the option, if they can prove it, to file malpractice claims against their attorneys if they did anything wrong. Your assumption that everything that they do is vetted by attorneys might be a stretch. The attorney can recommend and advise, but they can’t teach them morals.

  8. Bud,
    Any indictments might not happen before the 2012 elections,but since it was a bipartisan referral, we may see a response prior to that. Of course, we may not like the response!

  9. “anon,
    thank you for your concern for the integrity of lawyers. ”

    Similarly, I thank you for your concern about well, just about anything you post that you have no direct say in. It’s as BS as mine, isn’t it?

    I however can stand knowing that law and how you and yours corrupt it, is involved with the rights and behaviors of myself and all citizens. So my concern as to your professional nonsense is not out of place.

    And as you avoided my question, let me repeat it.

    What did you, Rafflaw, do to disbar John Yoo?

    Thanks, thought so.

  10. “anon,
    thank you for your concern for the integrity of lawyers. ”

    Seriously, what sort of comment is this for a lawyer to make?

    Could it be any more arrogant?

    The public should not be concerned about the integrity of lawyers. Thank you very much rafflaw.

    I sincerely appreciate all you do on behalf of us peons.

  11. raff said, “The attorney can recommend and advise, but they can’t teach them morals.”

    And they can’t force them to act properly either. If GoldmanSacks (misspelling intentional) went against the advice of their attorneys? Well they wouldn’t be the first or the last client to do so.

  12. “Rafflaw? What actions will you take personally to maintain the integrity of your profession re: GS?

    Thought so.

    Thanks anyway.”

    Ask (and self-answer) an arrogantly framed question, get an arrogant answer, sport.

    Life is like crazy circles.

    Save the mock indignation.

  13. rafflaw,

    Here’s hoping that the prison terms they deserve will be served.

    (certain comments are boing-boing … lots of noise, no substance … usually called a “boing-boing drive-by” :) )

  14. The best the Justice Dept. has been able to do so far is Bernie Madoff, who ran a Ponzi scheme more than anything else. I doubt that anyone on Wall Street (of any significance) is going to jail; they haven’t yet and there’s been more than enough time to start the proceedings and knowledge of their actions. Thing is, most of the what was done and is still done is legal- encouraged by high regard for risk-taking and lack of regulation.

    I have a better idea but it’s !NSFW-NSFW-NSFW-NSFW!

  15. Anon,
    I apologize for taking so long to respond to your nonsense. It is interesting that you hold me responsible for th conduct of all attorneys. And you call me arrogant? By the way, what did you do to solve the world’s problems?
    Thanks for the help. Blouise, thanks for your comments too! I appreciate it.

  16. You forget the Three Laws of Obamics

    1 Obama may not injure a Bankster or, through inaction, allow a Bankster to come to harm.
    2 Obama must obey any orders given to it by Banksters, except where such orders would conflict with the First Law.
    3 Obama must protect his own re-election as long as such protection does not conflict with the First or Second Law.

  17. My understanding rafflaw is that lawyers are bound by some ethical code and can be disbarred if they violate those ethical rules.

    Here you are, like in so many of your posts, calling for someone to rain crap down on someone you dislike.

    Well, I dislike GS too, and would be happy to see crap rained down on them.

    But ya know rafflaw, as an engineer, I would be happy to discuss all sorts of ethical questions in physics and engineering with you. What culpability did engineers have in the holocaust in germany? Which physicists and why left the manhattan program after trinity? What should physicists and engineers do with respect to nuclear power.

    I have seen taxpayer funds wastefully used on engineering projects and I have alerted city officials.

    But you, rafflaw, in this thread and in many others, when asked WHAT DID YOU RAFFLAW do to stop John Yoo, you rafflaw, avoid the question. And how?

    1) First you tell me I am not qualified to judge such concerns, I should leave it to you.
    2) Then you claim I am asking you to take on all the worlds ills and not just the ones that fall into your own domain as a lawyer.

    And why?

    Because rafflaw you disliked my question: WHAT IS THE CULPABILITY OF THE LAWYERS AT GS.

    And to that question you gave the bizzaro world apology that you felt the GS heads were probably not advised by their lawyers on their economy cratering tactics.

    Rafflaw, you are so full of it. And so typical of the law.

    Protect your own, while pompously arrogantly lording over everyone else how smert you are.

    So Rafflaw, just what did you to stop John Yoo? Not the whole world. Just John Yoo?

    Brad DeLong, an economist, has taken many steps.

    What have you done Rafflaw? Apart that is from telling people that are not lawyers they should shut up when in your presence?

    What are YOU going to do to make sure GS banksters go to jail?

    When your answer is continually nothing and evasive insults, then don’t blame me for concluding you’re all talk.

  18. I am going to repeat my first question. I think it’s an ontopic question and goes to the heart of professional integrity and what ethics within a profession is all about:

    “I would assume that GS got sign off and advice from their lawyers re their behavior towards clients and Congress?

    Should the heads of GS go to jail, what should happen to the lawyers?

    Rafflaw? What actions will you take personally to maintain the integrity of your profession re: GS?

    Thought so.

    Thanks anyway.”

  19. anon,
    once again I will give you the answer that you don’t seem to care to hear. Lawyers can’t prevent stupid and/or bad people from doing bad things. They can advise against the wrongdoing, but they can’t stop them. If they participated in the wrongdoing, they should also spend some time behind bars. Just like engineers who have violated the law. Or Doctors, or scientists or government officials, politicians, etc
    I don’t know what your problem is with me, but it is time to take a breath and go on with life.
    I have done what I can to lead an ethical life as a person and as an attorney. I have limited ability as a private citizen to bring John Yoo to justice, but I have written for years against him and his fellow torture comrades. I have donated money to politicians that I thought would do something with the torture crowd. So far that hasn’t worked so well. I didn’t know this was a contest, but what did you do?
    If that isn’t enough for you, my apologies for being human.

  20. Goldmansachs members arent going anywhere except to fill empty whitehouse staff openings.

    Not only that but Goldmansachs was obamas biggest campaign contributor, not only during his presidential bid, but as far back as his bid for his senate seat.

    On a different note though, none of the financial sleight of hand goldmans is famous for could even be possible without the federal reserve’s currency and interest rate manipulation. You are only looking at one half of the big picture of incestuous facism/socialism that passes for a government and an economy in this country of ours.

  21. ekeyra:

    you tell ’em. You got that fascism/socialism concept down, no matter what Buddha is Laughing thinks or says in his irrational, myopic support of socialism.

  22. Chan,

    Its an easily blurred line between the two. Socialism would ential the no strings attached giveaways like goldmansachs received. Yes it was a corporation, still a handout. On the other hand General Motors got billions too, but had to fire their ceo. Yes they received government money, but had to surrender their autonomy to government directed avenues of production, in other words fascism.

  23. rafflaw:

    Even if the report does not result in indictments, there are some very good civil claims for securities fraud. I think it entirely possible that this investigation could ultimately result in the liquidation of Goldman Sachs.

  24. rafflaw,

    I thought you might be interested in reading a couple of excerpts from the following Rolling Stone article written by Matt Taibbi. It appeared in the March 3, 2011 issue.


    Why Isn’t Wall Street in Jail?Financial crooks brought down the world’s economy —but the feds are doing more to protect them than to prosecute them

    Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

    “Everything’s fucked up, and nobody goes to jail,” he said. “That’s your whole story right there. Hell, you don’t even have to write the rest of it. Just write that.”

    I put down my notebook. “Just that?”

    “That’s right,” he said, signaling to the waitress for the check. “Everything’s fucked up, and nobody goes to jail. You can end the piece right there.”

    Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.


    The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency’s failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America’s most powerful bankers.

    Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. “It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller,” Aguirre recalls. “And he wasn’t just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day.” A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million.

    After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg’s who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg’s case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. “Mack is busting my chops” to give him a piece of the action, Samberg told an employee in an e-mail.

    A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank’s clients, as it happened, was a firm called Heller Financial. We don’t know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter’s annual salary for just a few minutes of work.

    The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn’t likely to fly, explaining that Mack had “powerful political connections.” (The investment banker had been a fundraising “Ranger” for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)

    Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank’s regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn’t take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm’s lawyers, Mary Jo White, was on the phone with the SEC’s director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as “smoke” rather than “fire.” White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.

    Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target’s firm is being represented not only by Eliot Spitzer’s former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC’s enforcement division — not Aguirre’s boss, but his boss’s boss’s boss’s boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.

    Aguirre didn’t stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. “It all happened so fast, I needed a seat belt,” recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.

    Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, “O.J.’s search for the real killers.”) It wasn’t until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case.

    “At best, the picture shows extraordinarily lax enforcement by the SEC,” Senate investigators would later conclude. “At worse, the picture is colored with overtones of a possible cover-up.”

  25. Elaine M.

    So everything’s fucked up and nobody goes to jail? :-)

    (I’m quoting…)

    Pretty much says it all…

    (Great link. Thanks.)

  26. Elaine M.,

    Thanks for clarifying that source of that quote! (Sorry for that omission.)

    And thanks for the Taibbi/MSNBC link, too.

  27. For anyone interested–here’s a link to Amy Goodman’s interview with Matt Taibbi on Democracy Now!:

    Matt Taibbi: “Why Isn’t Wall Street in Jail?” (Complete Interview)

    Excerpt from Interview:
    AMY GOODMAN: Talk about John Mack and Gary Aguirre.

    MATT TAIBBI: This is an amazing story, just because it demonstrates how far above the law these people are. John Mack is one of the most powerful people on Wall Street. Right now he’s the chairman of the board at Morgan Stanley. He used to be their CEO. Way back in 2001, when he was sort of between jobs, he had left Morgan Stanley and was interviewing with Credit Suisse First Boston. He was involved in a case that was investigated by the SEC. A hedge fund called Pequot made a very suspicious investment into a company called Heller Capital, which was about to be acquired by General Electric. This hedge fund bought, you know, an enormous amount of Heller stock three weeks before this acquisition by GE of Heller. Credit Suisse First Boston was Heller’s investment banker. John Mack was interviewing for the job with Credit Suisse a few days before Pequot made its purchases, and he was in direct contact with the hedge fund guy who made those purchases. Under any normal circumstances, he would be targeted for investigation by the SEC.

    AMY GOODMAN: And his name was?

    MATT TAIBBI: The investigator’s name was Gary Aguirre. And Aguirre—

    AMY GOODMAN: And the guy buying up?

    MATT TAIBBI: Art Samberg was the name of this hedge fund manager. He was a big star on Wall Street. In fact, there are articles about, you know, how does Art Samberg manage his amazing returns year after year? Well, you know, this was sort of a clue as to how.

    Anyway, this SEC investigator named Gary Aguirre wanted permission to go interview John Mack, and his superiors at the SEC told him—they basically told him that he couldn’t, and the reason they said was because Mack has, quote-unquote, “powerful political connections.” At the time, he was a Ranger, one of Bush’s fundraising Rangers. He would later become a major fundraiser for Hillary Clinton. So he played both sides of the fence. This, again, is very typical of Wall Street. And Aguirre, when he pressed the matter, he was fired by the SEC.

    AMY GOODMAN: And talk about the high-level people involved, like Mary Jo White.

    MATT TAIBBI: Mary Jo White was the former U.S. attorney in the Southern District of New York. She was basically Rudy Giuliani for a few years. This is the top cop on Wall Street, basically. And she, at the time, was representing Morgan Stanley for the defense firm Debevoise & Plimpton. Again, this is what all these investigators do. When you leave a high-ranking position from the SEC or the U.S. attorney’s office, they all jump to these lucrative partnerships at corporate defense firms, where they make, you know, $2, $3, $4 million a year. So the incentives to really prosecute these guys are all backwards. And they all leave, and they take these jobs. Mary Jo White had left the U.S. attorney’s office. She’s representing Debevoise & Plimpton. She intercedes on behalf of Mack. And one of the SEC officials that she was in contact with, Paul Berger, Aguirre’s superior, ended up working for Debevoise & Plimpton a year later. And this is a very typical situation.

    AMY GOODMAN: And Aguirre is fired.

    MATT TAIBBI: He’s fired. He was—

    AMY GOODMAN: He’s told to investigate, and then he starts to seriously investigate, and he’s fired.

    MATT TAIBBI: Right. They gave him—two days after he started work at the SEC, one of his superiors handed him Pequot, just generally. They said, you know, “Look at this company.” Within a year or so, he was onto the Samberg case, and he had targeted Mack as a clear suspect in the case. He had overwhelming evidence. I mean, there were emails, there was documentary evidence. They put Martha Stewart in jail for much, much less than they had on Mack.


    The Power of Mockery (Nicholas Kristof, April 16)

    A crucial lesson, he said, is the power of nonviolence: “If somebody is beating you, don’t attack him. Don’t use any violence against them. Just take photos of them and put them on the Internet.”

    Toppling dictators is only one application of this kind of grass-roots movement. One of the most exciting trends in the struggle against poverty and social pathologies such as crime is the use of similar youth-owned movements to change cultural norms from the bottom up. (end excerpt)

  29. anon 1, April 17, 2011 at 3:56 am

    I am going to repeat my first question. I think it’s an ontopic question and goes to the heart of professional integrity and what ethics within a profession is all about:

    “I would assume that GS got sign off and advice from their lawyers re their behavior towards clients and Congress?

    Should the heads of GS go to jail, what should happen to the lawyers?

    Rafflaw? What actions will you take personally to maintain the integrity of your profession re: GS?

    Thought so.

    Thanks anyway.”
    anon, have you met Kay?

    ….be careful who you piss off here, you will be accused of being ‘smarmy’ or ‘crazy’.

    …and it takes nothing more than pointing out the truth….

  30. Elaine,
    Great links to the Taibbi interview. It is a scary story when the Banksters ave so much power that Thayer can tell the SEC and Justice to take a hike!

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