Tag: Bank Fraud

Why are these two tales of fraud not the same in the eyes of the law?

Charges for 106 in Huge Fraud Over Disability

By William K. Rashbaum and James C. McKinley Jr.JAN. 7, 2014

The retired New York City police officers and firefighters showed up for their psychiatric exams disheveled and disoriented, most following a nearly identical script.

They had been coached on how to fail memory tests, feign panic attacks and, if they had worked during the Sept. 11, 2001, terrorist attacks, to talk about their fear of airplanes and entering skyscrapers, prosecutors said. And they were told to make it clear they could not leave the house, much less find a job. [..]

Former police officers who had told government doctors they were too mentally scarred to leave home had posted photographs of themselves fishing, riding motorcycles, driving water scooters, flying helicopters and playing basketball.

“The brazenness is shocking,” Cyrus R. Vance Jr., the Manhattan district attorney, said on Tuesday.

While those fraudsters were being indicted, arrested and arraigned, these fraudster were planning their next rip off of their investors.

JPMorgan Is Penalized $2 Billion Over Madoff

By Ben Protess and Jessica Silver-Greenberg

Preet Bharara, the United States attorney in Manhattan, and Jamie Dimon, the chief executive of JPMorgan Chase, gathered in Lower Manhattan as Mr. Bharara’s prosecutors were considering criminal charges against Mr. Dimon’s bank for turning a blind eye to the Ponzi scheme run by Bernard L. Madoff. Mr. Dimon and his lawyers outlined the bank’s defense in the hopes of securing a lesser civil case, according to people briefed on the meeting. [..]

Within weeks of meeting Mr. Bharara and recognizing their limited bargaining power, JPMorgan’s lawyers accepted the $1.7 billion penalty, the people briefed on the meeting said, which was within the range that prosecutors initially proposed. The bank also agreed to pay $350 million to the Office of the Comptroller of the Currency, accepting the agency’s only offer, one of the people said.

It could have been worse for the bank. At one point, prosecutors were weighing whether to demand that the bank plead guilty to a criminal charge, a move that senior executives feared could have devastating ripple effects. Rather than extracting a guilty plea, prosecutors struck a so-called deferred-prosecution agreement, suspending an indictment for two years as long as JPMorgan overhauls its controls against money-laundering. [..]

For JPMorgan, the Madoff case is the bank’s latest steep payout to the government. In November, JPMorgan paid a record $13 billion to the Justice Department and other authorities over its sale of questionable mortgage securities in the lead-up to the financial crisis. All told, after paying these settlements, JPMorgan will have paid out some $20 billion to resolve government investigations over the last 12 months. [..]

And critics of Wall Street are unsatisfied, noting that Mr. Bharara’s office opted to defer prosecution and did not charge any JPMorgan employees with wrongdoing.

“Banks do not commit crimes; bankers do,” said Dennis M. Kelleher, the head of Better Markets, an advocacy group.

A United States District Judge for the Southern District of New York, Jed Rakoff, wants to know why have no high-level executives been prosecuted for the financial crisis

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former – if the recession was due, at worst, to a lack of caution – then the criminal law has no role to play in the aftermath. [..]

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years. [..]

In striking contrast with these past prosecutions, not a single high-level executive has been successfully prosecuted in connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears likely that none will be. It may not be too soon, therefore, to ask why. [..]

But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior. [..]

Without giving further examples, the point is that, in the aftermath of the financial crisis, the prevailing view of many government officials (as well as others) was that the crisis was in material respects the product of intentional fraud. In a nutshell, the fraud, they argued, was a simple one. Subprime mortgages, i.e., mortgages of dubious creditworthiness, increasingly provided the chief collateral for highly leveraged securities that were marketed as AAA, i.e., securities of very low risk. How could this transformation of a sow’s ear into a silk purse be accomplished unless someone dissembled along the way? [..]

Thus, Attorney General Eric Holder himself told Congress:

   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.

To a federal judge, who takes an oath to apply the law equally to rich and to poor, this excuse-sometimes labeled the “too big to jail” excuse-is disturbing, frankly, in what it says about the department’s apparent disregard for equality under the law.

As we have documented here at Stars Hollow, the task force that was created to pursue mortgage fraud and hold the banks accountable was, and is, a sham game to protect the banks from real relief for defrauded homeowners.

Your mortgage documents are fake!

by David Dayen, Salon

Prepare to be outraged. Newly obtained filings from this Florida woman’s lawsuit uncover a horrifying scheme

A newly unsealed lawsuit, which banks settled in 2012 for $1 billion, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.

This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama Administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us. [..]

Most of official Washington, including President Obama, wants to wind down mortgage giants Fannie Mae and Freddie Mac, and return to a system where private lenders create securitization trusts, packaging pools of loans and selling them to investors. Government would provide a limited guarantee to investors against catastrophic losses, but the private banks would make the securities, to generate more capital for home loans and expand homeownership.

That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents.

The very same banks that created this criminal enterprise and legal quagmire would be in control again. Why should we view this in any way as a sound public policy, instead of a ticking time bomb that could once again throw the private property system, a bulwark of capitalism and indeed civilization itself, into utter disarray? As Lynn Szymoniak puts it, “The President’s calling for private equity to return. Why would we return to this?”

White-collar fraud expert proves ‘mortgage-backed securities’ neither mortgage-backed nor secure

by Scott Kaufmann, The Raw Story

The forged documents were endorsed by employees of companies long bankrupt, executives who signed their name eight different ways, or “people” named “Bogus Assignee for Intervening Assignments” so that the banks could establish standing to foreclose in courts. The end result, according to white-collar fraud expert Lynn Szymoniak, is that over $1.4 trillion in mortgage-backed securities are still, to this day, based on fraudulent mortgage assignments.

The lawsuit against Wells Fargo, Bank of America, JPMorgan Chase, Citi and GMAC/Ally Bank was settled in early 2012 for $1 billion, but now that the evidence is unsealed, Szymoniak and her legal team are free to pursue the other named defendants, including HSBC, the Bank of New York Mellon, and US Bank. “I’m really glad I was part of collecting this money for the government, and I’m looking forward to going through discovery and collecting the rest of it,” Szymoniak told Salon.

Eric Holder Owes the American People an Apology

Jonathan Weil, Bloomberg News

The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated. [..]

In an updated press release Friday, which corrected its initial release of last October, the Justice Department said a review of the cases found that the inflated figures included defendants who had been sentenced or convicted in fiscal year 2012 — not just people who had been criminally charged, as originally reported. Its original, lofty tally also included cases in which the victims weren’t distressed homeowners. [..]

What a charade. No wonder the government found it so difficult to bring a meaningful number of accounting-fraud cases against bank executives after the financial crisis. Its own books were cooked. [..]

This was the second time, mind you, that Holder’s Justice Department had pulled a stunt like this. In December 2010, Holder held a press conference to tout a supposed sweep by the president’s Financial Fraud Enforcement Task Force called “Operation Broken Trust.” (The mortgage-fraud program was part of the same task force.) As with the mortgage-fraud initiative, Broken Trust wasn’t actually a sweep. All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another. Then it held a press gathering.

Between this sham that protects the banks and the egregious violations of the press and privacy of all Americans with abusive use of FISA, Eric Holder owes us more than an apology, he owes us his resignation as Attorney General.

The foreclosure fraud perpetrated by the banks and private mortgage companies that was given a pass by the Obama Department of Justice.

Nearly a third of all foreclosed borrowers who faced proceedings brought by the biggest U.S. mortgage companies during the height of the housing crisis came to the brink of losing their homes due to potential bank errors or under now-banned practices, regulators have revealed. [..]

The estimates, disclosed Tuesday, far exceed projections made over the past few years after document abuses known as robosigning gained widespread attention in late 2010. [..]

They reveal that nearly 700 borrowers who faced foreclosure proceedings had actually never defaulted on their loans (pdf).

More than 28,000 households that faced foreclosure proceedings were protected under federal bankruptcy laws, while roughly 1,100 had been meeting all the requirements of so-called forbearance plans that their mortgage companies had agreed to, which allow for delayed payments.

Some 1,600 borrowers who faced foreclosure proceedings were protected by the Servicemembers Civil Relief Act of 2003, which forces mortgage companies to cap interest rates and follow special procedures when foreclosing on homes belonging to active-duty members of the armed forces and their families.

Banks are foreclosing on military members, on people who had been approved for a loan modification, and even on people who were never behind in their payments–all part of an astounding settlement that shortchanged millions of homeowners and left hundreds of thousands wrongfully ejected from their homes.  Former Governor Elliot Spitzer; Alexis Goldstein, former Vice President at Merrill Lynch and Deutsche Bank, now an Occupy Wall Street activist ; and Faith Bautista, who was the victim of wrongful home foreclosure in 2009, join Chris Hayes and paint a stark picture of what happened, who is responsible and why there isn’t more justice from the government.

The big banks continue to receive %83 billion a year in tax payer money to bail them out. Where is the justice for these homeowners?

Pres. Barack Obama nominated former US Attorney of the Southern District of New York, Mary Jo White, to head the troubled Securities and Exchange Commission. The announcement comes a day after the damning PBS Fraontline expose of the Department of Justice’s failure to prosecute bank fraud and the resignation of Lanny Breuer, the head of the DOJ criminal division. Ms. White certainly has a fine reputation of being a tough prosecutor during her tenure as US Attorney, she managed something Rudi Guiliani failed to do, finally putting notorious mobster John “The Teflon Don” Gotti behind bars. However, in the 10 years since she left that office, Ms. White has worked diligently to protect the heads of the “Too Big To Fail” banks. In his Salon article, David Sirota called her a “Wall Street enabler” and goes on to enumerate the evidence:

Matt Taibbi, Rolling Stone contributing editor, in his article “Why Isn’t Wall Street in Jail,” recounts how during her tenure as head of litigation at the New York law firm Debevoise & Plimpton, Ms. White defended some very high profile bankers and played a key role in the “squelching of then-SEC investigator Gary Aguirre’s investigation into an insider trading incident involving future Morgan Stanley CEO John Mack”

   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.”…

   Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO … 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…

   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…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…

   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.

In February of 2012 on a panel at a New York University School of Law even, Ms White expressed her doubts about whether banks had committed crimes ahead of the financial crisis stating that care should be taken to “distinguish what is actually criminal and what is just mistaken behavior, what is even reckless risk-taking, and not bow to the frenzy.”

Another point of conflict is Ms. White’s husband. Yves Smith at naked capitalism notes that “John White, who headed the SEC’s corporate finance section under Chris Cox and was heavily involved in detailed Sarbanes Oxley rulemaking, and now that he is back at Cravath, has been lobbying against regulation.”

Nor does Ms. White have a background in finance or the “inner workings of the trading system:”

Although she has represented many executives accused of financial crimes, White is not an expert on the inner workings of trading systems, a lack of knowledge that may not serve her well as the SEC struggles to keep up with rapid changes in increasingly complex financial markets.

“The problem with the SEC is that they don’t seem to have a grip on” high-frequency trading and other major issues affecting modern financial markets, said Joe Saluzzi, co-head of equity trading at independent brokerage Themis Trading and a frequent critic of high-speed trading. “We’re concerned about cleaning up the market, and we need the SEC to take the lead here.”

Her background puts to question how aggressively White might prosecute financial fraud and enforce new rules under the Dodd-Frank financial reform law — most of which have not yet been adopted by the SEC.

Matt Taibbi recounts a conversation he had with a head fund manager regarding Ms. White’s:

His point about White is simple and it makes a lot of sense. She may very well at one time have been a tough prosecutor. But she dropped out and made the move a lot of regulators make – leaving government to make bucketloads of money working for the people she used to police. “That move, being a tough prosecutor, then going to work defending scumbags, you can only make that move once,” was his point. “You can’t go back again, you know what I mean?”

Think about it: how do you go back and sit in S.E.C.’s top spot after all of those years earning millions as a partner for a firm that represented Morgan Stanley, Bank of America, Goldman, Sachs, Deutsche, Chase, and AIG, among others? Think that fact that his firm has retained her firm has anything to do with Jamie Dimon coming out and saying that White is the “perfect choice” to run the S.E.C.? Think of all the things she knows but can’t act upon. Could she really turn around and target Morgan Stanley after being their lawyer for all those years?

Ms. White is not only another example of the government’s revolving door from public service to private practice back to public service but of Pres. Obama’s signal to Wall Street that they are safe to continue with business as usual. Mary Jo White is the fox in the hen house.  

Some regulators think LIBOR, the benchmark for short term interest rates that is fixed by a group of bankers in London, can be fixed. Others feel it is irreparably damaged and was a myth from the start.

Libor Rate ‘Needs A Complete Overhaul,’ But Not To Be Scrapped, British Officials Say

Britain’s top financial watchdog delivered a 10-point plan to fix Libor but stopped short of scrapping the benchmark interest rate in a much-awaited reform of a system plagued by scandal.

“The system is broken and needs a complete overhaul,” said Martin Wheatley, head of the Financial Services Authority (FSA).

Wheatley acknowledged problems with London interbank offered rates, but said Libor is so deeply entrenched in the financial system that it cannot be easily replaced. [..]

CHARGES OF MANIPULATION

Multiple banks have been accused of trying to manipulate Libor, a series of rates set daily in London. Barclays in June agreed to pay $453 million to U.S. and British authorities to settle allegations that it tried to move Libor to help its trading positions.

Wheatley’s programme for reform includes auditing banks that contribute data used to calculate the rates, to ensure they are not submitting false rates to benefit trading positions. [..]

SHRINKING THE NUMBER OF RATES

Rates that are infrequently referenced in trades, such as Australian and Canadian dollar rates, will be phased out, Wheatley said. Maturities that are infrequently used, such as four, five, seven, eight, 10 and 11 months, will also be ended.

The reductions will shrink the current number of Libor rates set daily to 20 from 150. Rates that are rarely traded are easier to manipulate.

More banks will be required to submit their borrowing rates. [..]

The Myth of Fixing the Libor

There were two implicit assumptions in Libor. One was that banks were virtually risk-free, or at least that their risk was small and would not vary much over time. The other was that there was a way to actually calculate what the rate was. Both assumptions turned out to be wrong.

Libor rates are calculated each day by the British Bankers’ Association, a trade group that makes good money from licensing the use of Libor rates. [..]

The scandal made clear that those reports were faked before and during the financial crisis by at least some of the banks. But what is not as widely appreciated is that there is substantial evidence that the deception goes on. Banks continue to report figures that strain credulity, both in their level and in their lack of volatility from day to day or week to week. [..]

The bank regulators believed the fiction. Banks that owned AAA-rated floating rate assets needed to keep virtually no reserves on hand to back them.

We all know what happened. It turned out that risks were far greater than had been realized. Banks failed or were bailed out. Investors in AAA securities suffered major losses.

Libor was manipulated by bankers long before the financial crisis, and it is still based on calculations that have little basis in reality. Mr. Wheatley assures us that more regulation can deal with conflicts of interest. There will, he promises, be a “clear code of conduct” and “clear rules,” enforced by a regulator with “extensive powers.”

Pollyanna lives.

Some folks just cling to their myths.

If you think for that the Justice Department in this administration is going to prosecute or regulate any of the people who were involved in the LIBOR scandal, erase that thought. Regardless of any evidence the government may have now or in the future that would send the average trader to prison for life, the main goal for Attorney General Eric Holder is to protect the banksters from prosecution. There was no reason to give immunity

from prosecution of the Commodities Exchange Act. Since the government already had the e-mails, they had enough to issue subpoenas and arrest warrants. Instead, Holder’s office gave them immunity from prosecution:

A crucial element in any prosecution is criminal intent, and it’s plain from the Barclays e-mails that various participants knew that what they were doing was wrong. As one Barclays trader put it in e-mails to traders at other banks, “don’t talk about it too much,” “don’t make any noise about it please” and “this can backfire against us.”

Faced with what would seem to be an open-and-shut case, how did the Justice Department proceed? Barclays entered into a nonprosecution agreement in which the United States government agreed not to prosecute Barclays as long as it met its other obligations under the agreement, including continued cooperation in what the government said was an investigation still under way. Barclays also received a conditional grant of immunity from the antitrust division. [..]

The United States government “had the smoking guns,” Professor (John C.) Coffee said, and “it could have demanded its price from Barclays,” including a guilty plea to a crime. At the same time, the agreement “isn’t surprising,” he said. “The Department of Justice has done this in almost every major case since the collapse of Arthur Andersen.” (Andersen was the accounting firm indicted after the collapse of Enron.)

Glen Ford nails precisely why there will be no prosecutions, since the ultimate aim is “protecting the banks from the consequences of their crimes:”

“The reason Eric Holder is staging criminal investigations is because that’s the only way he can protect the bankers, through immunities and by gradually narrowing the scope of the case.”

The Obama Justice Department is in theater mode, again, pretending to threaten the bankster class with criminal penalties – prison time! – for their manipulation of the global economy’s benchmark interest rates. The Justice Department claims to be building criminal and civil cases in the LIBOR scandal, which in sheer scope is the biggest fraud by international capital in history. But that’s all a front, a farce. Barack Obama has spent his entire presidency protecting Wall Street, starting with his rescue of George Bush’s bank bailout bill after it’s initial defeat in Congress, in the last days of Obama’s candidacy. He packed his administration with banksters, passed his own bailout and, in collaboration with the Federal Reserve, channeled at least $16 trillion dollars into the accounts of U.S. and even European banks – by far the greatest transfer of capital in the history of the world. Obama has reminded the banksters that it was he who saved them from the “pitchforks” of an outraged public. He pushed through Congress so-called financial reform legislation that left derivatives – the deadly instruments of mass financial destruction that were at the heart of the meltdown – untouched. [..]

Now Obama and Holder are playing the same diversionary game, making tough noises about criminal investigations of the LIBOR conspirators. But the Justice Department has already given immunity to Barclay’s Bank, of Britain, and to the Swiss banking giant UBS. More immunities will follow. The reason Eric Holder is staging criminal investigations is because that’s the only way he can protect the bankers, through immunities and by gradually narrowing the scope of the case. In the end, there will be settlements all around, and the banksters will move on to even more fantastic heights of criminality – thanks to the loyal, protective hands of President Obama.

Prosecutions? Don’t hold you breath.

Back in May of 2009, Eliot Spitzer, former New York State Attorney General, aka “The Sheriff of Wall St,”, wrote this article for Slate after the revelation that New York Federal Reserve Bank Chairman Stephen Friedman’s “purchased some Goldman stock while the Fed was involved in reviewing major decisions about Goldman’s future.” In the article he called into question just who it is that selects the person who sits at the head of the table:

A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be taken-from raising capital to stopping lending-to ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees. [..]

So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros. It was not a group of typical depositors worried about the security of their savings accounts but rather one whose interest was in preserving a capital structure and way of doing business that cried out for-but did not receive-harsh examination from the N.Y. Fed.

The composition of the New York Fed’s board, which supervises the organization and current Chairman Friedman, is equally troubling. The board consists of nine individuals, three chosen by the N.Y. Fed member banks as their own representatives, three chosen by the member banks to represent the public, and three chosen by the national Fed Board of Governors to represent the public. In theory this sounds great: Six board members are “public” representatives.

So essentially, we have the thieves guarding the vault. Willie Sutton would have loved this.

That brings us to the LIBOR scandal and Treasury Secretary Timothy Geithner’s role. In his currentSlate article, Mr. Spitzer again reiterates the growing need to investigate the NY Fed. and Mr. Geithner. What did he know? When did he know it? Why didn’t he refer it to the Justice Department?

The New York Federal Reserve knew about Libor games being played by the banks years ago and seems to have done precious little about it-except perhaps send a memo parroting the so-called reform ideas proposed by the banks themselves. Then nothing more. No prosecutions, no inquiries of the banks to see if the illegal behavior had stopped-just a live-and-let-live attitude.

Apparently, as Mr. Geithner had testified during his confirmation hearing for Treasury, he didn’t see himself as a “regulator.” Yet, that is the most important part of the NY Federal Reserve. But then look who chose him as Fed president:

Hank Greenberg of AIG and John Whitehead of Goldman Sachs–these companies that got bailed out-were on the NY Fed committee that made Tim Geithner their president.

No conflict of interest there? Wow.

MR. Spitzer believes that it is time for the NY Fed to be investigated:

Was there a similar conflict of interest when the New York Fed apparently did nothing adequate about the Libor games? Well, look who was on the board: Dick Fuld of Lehman fame; Sandy Weill of Citibank; Jeff Immelt of GE-the largest beneficiary of the Fed’s commercial paper guarantees; and, of course, Jamie Dimon of JPMorgan Chase, whose bank’s London derivative trades and Libor involvement make his role on the board even more absurd.

Matt Taibbi, Rolling Stone contributing editor, and Dennis Kelleher, president and CEO of Better Markets Inc., join “Viewpoint” host Eliot Spitzer to assess the scope of the unfolding Libor scandal given news that the U.S. Justice Department is building criminal cases and expects to “file charges against at least one bank later this year,” according to The New York Times.

Lets just say that I agree with Atrios, don’t hold your breath for either an investigation or prosecutions.

Financial Fraud Enforcement Task Force is the umbrella group for the RMBS (Residential Mortgage-Backed Security) Task Force. Remember that task force that was so gleefully announced by President Obama in his State of the Union address in January, appointing New York State Attorney General Eric Schneiderman to participate? Yeah, that one. It’s been under the radar for the most part and as yet has inadequate staff no office space or even a phone number.

The gang at FireDogLake has been relentless in tracking down what he FFETF and the RMBS have and haven’t done. My FDL contributor massacio has been a wizard at uncovering new releases that claim the groups are making progress when in reality the Obama DOJ is refusing to go after the big fish:

Like every one else who is following the refusal of the Obama Administration and its cowardly prosecutors to investigate Wall Street for crimes in the run-up to the Great Crash, I figured this was just a name given to a collection of prosecutors around the country who were already working on fraud cases.

The official website of the FFETF confirms this. [..]

I’ve gone back through February looking at the press releases, and this is a fair sample of the work of the FFETF. There is not a single case related to fraud in the creation, sale or operation of real estate mortgage-backed securities, the frauds that led to the Great Crash. The FFETF is a random collection of people working on cases that can be tied to financial fraud.

The FFETF and its 20 subpoenas and its 50 or more personnel and whatever else we hear from them are a sham. Wall Street has nothing to fear from the FFETF and its co-chair, Eric Schneiderman.

Richard (RJ) Eskow points out that Wall St. has nothing to fear from these task forces or for that matter from Attorney General Eric Holder:

Confidential sources say that the President’s much-touted Mortgage Fraud Task Force is being starved for vital resources by the Holder Justice Department. Political insiders are fearful that this obstruction will threaten Democrats’ chances at the polls. Investigators and prosecutors from other agencies are expressing their frustration as the ever-rowing list of documented crimes by individual Wall Street bankers continues to be ignored. [..]

A growing number of people are privately expressing concern at the Justice Department’s long-standing pattern of inactivity, obfuscation, and obstruction. Mr. Holder’s past as a highly-paid lawyer for a top Wall Street firm, Covington and Burling, is being discussed more openly among insiders. Covington & Burling was the law firm which devised the MERS shell corporation which has since been implicated in many cases of mortgage and foreclosure fraud. [..]

But there’s no evidence that Mr. Holder’s Justice Department has mounted a serious effort to investigate bank crime. Its first, much-touted “coordinated effort” to crack down on mortgage fraud turned out to be a PR trick, not a law enforcement effort, which the Columbia Journalism Review described with the headline, “The Obama Administration’s Financial-Fraud Stunt Backfires.” That’s not the kind of press a President wants to see repeated in an election year.

“Democrats have been having good luck painting Romney as the candidate of the one percent,” said one observer. “But that could change quickly with a few bad headlines.”

While nobody we spoke with was willing to raise the subject of a Holder resignation, they did insist that time was running out for the Attorney General to show concrete results.

Without criminal investigations and indictments, bankers will continue to commit crimes. The LIBOR scandal, which implicates a number of leading banks, proves that. The Justice Department’s inaction is putting the world economy at risk by allowing bankers to continue their reckless and illegal behavior.

The clock is ticking on many of these case since there is a five year statute of limitations under federal law for civil charges. There is now mounting evidence that Obama administration is letting that statute of limitations expire on the criminal charges, too. David Dayen at FDL News reports that he spoke with Rep. Brad Miller (D-NC), a member of the House Financial Services Committee, concerning the Justice Department stonewalling prosecutions of securitization abuses. He asked Miller about the coalition of housing advocates charging the Justice Department with stonewalling the investigation and denying it critical resources:

Miller, who at one point was a potential choice to be the executive director of the working group, said that he had not personally spoken with anyone involved in the task force since he missed out on the position in late February/early March. But as an interested observer, he made a few points. “It does appear that the task force is really not doing anything that the various agencies weren’t doing already,” Miller said. “They’re just saying they are doing it as part of this task force.”

And Miller added something else, that members of the various agencies associated with the working group have acknowledged this in conversations with members of Congress. Miller cautioned that he hadn’t heard this from agency officials personally, but that other members have. [..]

Miller also noted that the statutes of limitations, at least on criminal fraud claims, have almost certainly run out. “I said a few weeks ago that the clock on the statute of limitations was ticking like Marisa Tomei’s biological clock in My Cousin Vinny,” Miller said. “If there have not been extensions worked out in private negotiations, and if the law is that the statute runs from occurrence rather than discovery, it’s probably the case that most statutes have expired.”

And unless we forget our erstwhile Treasury Secretary Timothy Geithner, maybe up to his ears in the multi-trillion dollar LIBOR fraud:

The flames of the Libor scandal have been creeping up under the feet of Treasury Secretary Timothy Geithner. Evidence showed that the New York Fed found out about the rate-rigging from Barclays and other banks in 2007, when Geithner was still the bank President. This appeared to display regulatory impotence in the face of massive fraud. Geithner had to respond. And he did with a classic version of CYA. [..]

Geithner passed the documents around to anyone who wanted them last night. If there can be something less than the bare minimum, a two-page document to the Bank of England – not the banks implicated in the rate-rigging over which the NY Fed has control, but some other regulator – would be it. He didn’t speak out publicly, he didn’t use his regulatory power over the banks he had authority and in defense of the stateside financial products calculated using the Libor benchmark rate, he just wrote a memo.

The memo says that the Bank of England should “eliminate the incentive to misreport” Libor on the part of the banks. So there’s no doubt in the minds of the regulators that there was misreporting going on.

Timmy’s excuse for doing nothing now is that he did nothing then

The Federal Reserve Bank of New York will release on Friday documents showing it took “prompt action” four years ago to highlight problems with the benchmark interest rate known as Libor and to press for reform, an official at the regional U.S. central bank said on Wednesday.

As early as 2007, the New York Fed may have discussed problems with the setting of the London Interbank Offered Rate with Barclays Plc, the British bank currently at the center of the Libor scandal and investigation

Well, Timmy did send a memo.

Contributing editor for Rolling Stone, Matt Taibbi and Yves Smith, creator of the finance and economics blog Naked Capitalism appeared with Bill Moyers on his PBS program, Moyers and Company to discuss How Big Banks Victimize Our Democracy.

JPMorgan Chase CEO Jamie Dimon’s appearances in the last two weeks before Congressional committees – many members of which received campaign contributions from the megabank – beg the question: For how long and how many ways are average Americans going to pay the price for big bank hubris, with our own government acting as accomplice? [..]

Taibbi’s latest piece is “The Scam Wall Street Learned from the Mafia.” Smith is the author of ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.

Full transcript