HSBC: Too Big to Jail?

Seeing as the new right-wing mayor of Antwerp is boasting how he's going to lead a new War on Drugs, after 30 years of epic fail in the States, this is just so maddening. I'm getting pretty sick and tired of hearing that the left is full of naive irrational hippies while the right keeps enacting expensive policies no matter how much proof of its futility exists.

This is the best thread I could find for this. Bill Moyers and Matt Taibbi: Everyone Pays If the Banksters Don't Go to Jail | http://www.alternet.org/corporate-ac...

Its about time:

The Justice Department plans to file civil fraud charges against the nation’s largest credit-ratings agency, Standard & Poor’s, accusing the firm of inflating the ratings of mortgage investments and setting them up for a crash when the financial crisis struck.

Apparently the talks broke down over what is admitted:

Settlement talks between S.& P. and the Justice Department broke down in the last two weeks after prosecutors sought a penalty in excess of $1 billion and insisted that the company admit wrongdoing, several people with knowledge of the talks said. That amount would wipe out the profits of S.& P.’s parent, the McGraw-Hill Companies, for an entire year. In one session with the government, S.& P. had proposed a settlement of around $100 million, the people said.

$100 million? What a $#@%$ joke. They put the golden seal of approval on crap (which unsuspecting people bought) for a long time. They have been accused of threatening institutions with a lower rating if they didn't play ball and pay them on unrelated deals.

It has been too long and justice may never really be done.

On a side note, how long until they drop the ratings on US bonds...

This is just scapegoating. Note that it's not the banks being charged, but the tiny and politically weak rating agency.

The banks were the ones who invented the stuff, and they fooled the ratings agencies just like the rest of us. Blaming S&P is a distraction, to make you feel like something is being done, while the real criminals skate.

These guys were victims more than they were perps.

Malor wrote:

This is just scapegoating. Note that it's not the banks being charged, but the tiny and politically weak rating agency.

The banks were the ones who invented the stuff, and they fooled the ratings agencies just like the rest of us. Blaming S&P is a distraction, to make you feel like something is being done, while the real criminals skate.

These guys were victims more than they were perps.

Or the ratings agencies recognized that if they didn't rate and approve these, they wouldn't get paid as much by the banks for their ratings? Certainly an industry I don't understand, because that looks like a massive conflict of interest to me.

We gave up a chance of actually punishing the actual offenders in about 2000/2001. Someone got this idea out to the president and congress that regulatory agencies with the power to actually regulate were bad things.

Token scapegoats are all we have left. The problem is, these penalties are going into the DOJ general fund, not to the SEC or FTC, all while those agencies are still losing funding. It might help the DOJ a bit, but the SEC and FTC are the agencies that need to investigate these crimes. It is like your state or county or city cutting police funding, while the Attorney General/DA gets a funding increase to get "tough on crime."

Malor wrote:

This is just scapegoating. Note that it's not the banks being charged, but the tiny and politically weak rating agency.

The banks were the ones who invented the stuff, and they fooled the ratings agencies just like the rest of us. Blaming S&P is a distraction, to make you feel like something is being done, while the real criminals skate.

These guys were victims more than they were perps.

I am going to have to disagree with the last sentence. But first...

I agree with the idea that the people who created this crap should go be punished. Everyone from the people who filled out fraudulent applications, the sales people who pushed this crap, the underwriters who rubber stamped the applications, the sales people who combined the junk mortgages in to big steaming messes and bundled them for sale, the financial wiz kids who grouped them into traunches with out regard to what was actually in the loans, the investment bankers who pushed them out like a frat boy on a bender at Taco Bell, and the ratings agencies who were entrusted to rate them accurately. They had access to all of the books and if they had concerns, they could have down rated (essentially stopped) the bonds.

The ratings agencies seemed to be trying to get as much income as possible and if they turned a blind eye, then so be it.

S&P's defense at this time seems to be that the other ratings agencies had the same ratings as them - therefore that was ok.

Defense attorney Floyd Abrams spent months talking with government lawyers in an unsuccessful bid to avoid a lawsuit. He argued that the Federal Reserve, Treasury Department and Securities and Exchange Commission — as well as rival credit-rating firms — similarly misjudged the financial risk mortgage-backed securities posed before the crisis.

From the same article:

Investigators found evidence of more than $5 billion in losses suffered by federally insured financial institutions from mortgage-backed bonds S&P rated between March and October 2007, just before the crisis exploded.

"During this period, nearly every single mortgage-backed collateralized debt obligation that was rated by S&P not only underperformed, but failed," Attorney General Eric Holder said at a Washington news briefing. "Put simply, this conduct is egregious, and it goes to the very heart of the recent financial crisis."

Lots of institutional investors relied on the ratings agencies for part of their due diligence. This should have killed the ratings agencies. (It also should have punished a ton of other people - I am hoping that this is a start, not an end)

Find out a middle eastern country is supporting terrorism: invade.

Find out a large bank is supporting terrorism: meh.

If Afghanistan and Iraq had put a couple million dollars a year into lobbying US politicians the world would be a very different place right now.

HSBC gets no criminal charges, 5 weeks profit in fines, deferred bonuses for laundering billions for narco-terrorists. [Global Post]

deferred bonuses

The pain must be excruciating.

Banks are not untouchable: the government can jossle them for petty change once in a while.