For all those who had been hoping for swift but fair judicial treatment for criminal bank actions … dont hold your breath. “The Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision have spent the past few days completing the settlements with some of the largest U.S. banks, including Bank of America Corp, Wells Fargo & Co, JPMorgan Chase and Citigroup Inc. The pacts would resolve only part of a large probe involving a group of 50 state attorneys general and about a dozen federal agencies.” But don’t worry, banks won’t actually have to part with even one dollar:
For all the “investigations” into criminal behavior by the largest Wall Street banks it is Main Street that has felt the pain. According to the NYT some 6.7 million homes have already been lost in the housing bust, and another 3.3 million will be lost through 2012. According to Zillow a staggering $9 trillion in home equity has been lost since the real estate market peaked in June 2006.
Caused in large part by reckless lending and excessive risk taking by major financial institutions, no senior executives have been charged or imprisoned, and a collective government effort has not emerged. This stands in stark contrast to the savings and loan crises in the late 1980s. In the wake of that debacle, special government task forces referred 1,100 cases to prosecutors, resulting in more than 800 bank officials going to jail.
A lawsuit filed against the SEC over the Madoff ponzi scheme was ruled on Tuesday. The suit alleged that the SEC had been repeatedly tipped off to the Madoff situation and flat-out failed to address it.
In any event, a federal judge on Tuesday dismissed the suit, which alleged the SEC had acted with “gross negligence.” U.S. District Judge Laura Swain ruled that the plaintiffs had failed to “identify any specific, mandatory duty that the SEC violated.”
Nevertheless, Swain excoriated the SEC, calling its behavior “sloppy,” “uninformed,” and “irresponsible.” That said, continued Swain, “that the conduct in question defied common sense and reeked of incompetency does not indicate that any formal, specific, mandatory policy was ‘likely’ violated.”
It has become all to apparent that in todays Washington, Wall Street environment that being a bumbling idiot, even to the point of criminal will only get you a “strongly” worded reprimand and, quite possibly, a promotion.