No Bankers In Jail:
• Rolling Stone – Goldman Non-Prosecution: AG Eric Holder Has No Balls
That’s how law works on Wall Street. The bank walks into the room with the sordid activity, and the law firm’s partners huddle up and whip their associates – for hundreds and hundreds of billable hours straight, if necessary – until a way is found to call stealing or tax evasion or accounting fraud or whatever legal. That’s the way it should work on the prosecutorial side, too. You should start with a simple moral premise – this group of crooks ripped off X group of victims for fifty million dollars – and then you should bury yourself in law books until you find a way to put them all in jail. If Linklaters gets paid to be creative, well, Mr. Holder, we’re paying you to be creative, too. Again, though, Holder didn’t need to be creative in the Goldman case. Levin gift-wrapped the whole thing for him. He could have had a dozen easy convictions just on the evidence in that report, and if he had been creative, if he had used his vast power to roll up the guilty and flip them into more revelations, then he’d have had enough cases to last the AG’s office the next decade. But the Holders of the world do not want to be creative when the targets are politically influential rich people. Instead, they use their creativity against Roger Clemens, Barry Bonds, immigrant housekeepers, and guys who knock over liquor stores.
• Dealbook (NYT Blog) – No Criminal Case Is Likely in Loss at MF Global
A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case. The hurdles to building a criminal case were always high with MF Global, which filed for bankruptcy in October after a huge bet on European debt unnerved the market. But a lack of charges in the largest Wall Street blowup since 2008 is likely to fuel frustration with the government’s struggle to charge financial executives. Just a few individuals — none of them top Wall Street players — have been prosecuted for the risky acts that led to recent failures and billions of dollars in losses.
The story below is a great example of why bankers are so hated and why they don’t get it. Even if it is true that history will be kind to TARP (we think the exact opposite will happen), do not even try to make this argument for at least a decade.
As we wrote a few weeks ago, bankers’ reputations are somewhere between that of a used car salesman and a drug dealer right now. TARP is so hated it was the catalyst for some of the biggest political movements of our lifetime, namely the Tea Party (they hated bailouts/TARP and blamed the government) and Occupy Wall Street (they hated bailouts/TARP and blamed Wall Street).
Given all this, for a banker to say “history will be fairly kind to TARP” redefines the term “tin ear.”
• Real-Time Economics (WSJ Blog) – Bank CEO: History Will be Kind to TARP
There aren’t any Wall Street banks left in the Wall Street bailout. But there are hundreds of Main Street banks–many unable to fully repay the Treasury Department nearly four years after the program’s launch. What do they think of the Troubled Asset Relief Program? “TARP successfully stabilized not only the banking industry but a number of other industries as well. The general view I would have is that history will be fairly kind to TARP,” Sterling Financial Corp. Chief Executive Greg Seibly said in an interview. The Treasury Department this week announced that it expects to earn about $113.3 million in a public offering of the shares it holds in the Spokane, Wash.-based bank. Treasury also has received about $6.7 million in dividends from Sterling, and will get yet a little more back when it sells warrants it continues to own. Still, it’s a steep discount and a clear net loss on the original investment of $303 million. Overall, Treasury estimates that TARP will cost taxpayers $47.75 billion, largely due to expenses related to the auto bailout and housing programs.
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