Why isn’t Wall Street in jail? Control fraud on a massive scale


A veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who’s in office or which party’s in power.

Karl Denniger

Some people call it “regulatory capture.” Others call it “control fraud” (William Black, primarily, along with me.) But I take it further; this is Control Fraud within the government, which is the most-pernicious form of all.

Control fraud is the delberate looting of a corporation or country by a few at the top. This is done primarily by rigging accounting rules, regulations, and laws (as well as by corruption, of course ) so that the few have no accountability and essentially are immune from the law. Don Corleone could only wish he had it so good. The crucial point here is, as William Black says, the failure of the entity is not a failure of the fraud. The plundering elite at the top does not care if their actions destroy the corporation (or country) because they’ve already stolen everything they could.

Bank elites and control fraud

William Black on the lack of criminal prosecutions by DOJ

What has gone so catastrophically wrong with DOJ, and why has it continued so long? The fundamental flaw is that DOJ’s senior leadership cannot conceive of elite bankers as criminals.

The feds confuse the bank with the banker. The bankers walk away with personal fortunes. They don’t care if their actions cratered the bank. That’s what control fraud is, the looting of a corporation by rigging accounting rules so elites can pay themselves huge amounts based on phony profits.

Another possibility would be that DOJ’s senior leadership has been corrupted, except that could never happen here, right?

Oops, I did it again, says Bank of America

Bank of America explains how their foreclosures are fine, just fine.

Why it was just last week BofA was squawking about how error-free their foreclosure process was, no problems here, thanks for asking.

Now that they’ve deigned to actually examine their foreclosures, they now say, oopsie, pesky bookkeeping errors were happening all over the danged place. Well, it must be bookkeeping errors because otherwise suspicious types might instead say it could be fraud by criminals disguised as bankers.

Among those suspicious types are the battalion of lawyers about to wallpaper the banksters with class action suits.

The Federal Reserve is on the job, tracking down the evildoers

The federal government, not to be left behind, is galloping backwards on their horses to the rescue and no doubt will arrive at the wrong location with the wrong plan, far too late. You think I’m exaggerating?

“We are looking intensively at the firms’ policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” Bernanke said. “We take violations of proper procedures seriously.”

Wow, that’s really taking command of the situation with bold decisive leadership, isn’t it? Federal regulators say they will have a report by next month, which will no doubt call for more careful and ponderous study before they try to bury the whole thing and then steadfastly do nothing. Meanwhile, a bunch of bloggers have already assembled all the proof the government needs to act. That massive fraud occurred is not in doubt, except for the always ready to accommodate the banksters Federal Reserve.

Bill Black , An actual regulator, in the sense that he actually regulated, (quaint concept that, isn’t it, regulators that regulate, Bernanke should try it sometime) has called for the resignation of Bernanke, Geithner, and Holder. Black was a regulator during the S&L crisis, and helped put hundreds of bankers in prison (there’s another quaint concept, criminal prosecution of bankers for crimes committed rather than getting Get Out of Jail cards from the feds) and devised the concept of control fraud, whereby a few at the top of corporations and countries deliberately loot the entity. Which of course is precisely what’s happening now.

Fraudulent bank foreclosures. Will anyone be criminally indicted?

A friend of mine notes the wave of fraudulent foreclosures, foreclosures where firms simply faked the paperwork needed to prove they have standing to foreclose (that they actually own the mortgage.) There have been some moves to stem the fraud, not the least of which is by Florida’s Attorney General Bill McCollum, but those who appear to be the worst offenders are firing back, going after him and other judges who have thrown out cases.

This is a logical consequence of refusing to go after banksters for fraud. The fraud was so systemic (the majority of CDOs based on housing) that virtually every major executive was involved. The DOJ and others chose not to prosecute criminally, and as a result the message was sent that the executive class, as a group, will not be prosecuted for fraud.

So, of course, they doubled down.

During the S&L crisis, thousands of bank executives went to prison. Yet in this much worse and even more obviously criminal crisis, there have been virtually no criminal indictments. The firms get a slap on the wrist fine. None of those responsible are punished. And in this, Obama is as equally culpable as Bush. The fix, it seems, is in at a very high level indeed.

B of A joins JPMorgan and ally in admitting it never validated foreclosure docs

Connecticut suspends all foreclosures

Bill Black. Control Fraud crushed Kabul Bank

Bill Black, a regulator during the S&L crisis of the 80’s and author of The Best Way To Rob A Bank Is To Own One, devised the concept of control fraud.

He says

Kabul Bank has been revealed to be a “control fraud.” Control frauds occur when those that control a seemingly legitimate entity use it as a “weapon” to defraud. Control frauds cause greater financial losses than all other forms of property crime – combined. Control frauds can also cause immense damage to a nation because they are run by financial elites that curry favor from political elites. The result is that they are often able to loot “their” banks for years with impunity. They also degrade the integrity of the entire system.

Now US taxpayers are about to bail out this criminal entity. Why is this?