I had thought that Obama would stand up for what is right, but I guess Americans need to hit him harder to do what is right!–KAS
By Gustav Wynn
The common practice of selling justice may have hit a snag as Judge Jed Rakoff slammed the brakes on another sweetheart settlement proposed between Obama’s SEC and Wall Street titans Citgroup. At the heart of the issue is selling immunity for large pay-outs that often times are split with law firms assisting the banks.
Judge Rakoff Pummels Obama and Wall Street by GW
In an audacious move against Citigroup, the SEC, and the practice of “selling immunity”, a Federal Judge in a NY District Court abruptly put the brakes on a settlement agreement proposed between the Obama Administration and another giant Wall Street firm accused of betting against their own investors.
Judge Jed Rakoff sent a message today to Wall Street and the Securities Exchange Commission that may send shockwaves through the financial world, refusing to approve a $285 million dollar payout to drop an investigation against Citigroup for defrauding investors without admitting any guilt.
Business Insider’s haunting pullquote is a somber reminder of a core message of the Occupy movement. : “Judge Rakoff: Truth is Confined to Secretive, Fearful Whispers”
You might recall last year Goldman Sachs paid a $535 million dollar settlement “without admitting guilt” in a case brought by investors claiming fraud in a somewhat similar collateralized debt obligation scam. Goldman squirmed by, conceding they had provided ‘incomplete information’ but in this case, Citigroup had profited more blatantly at the expense of their clients.
With prosecutions for bank fraud today at a twenty year low, the Occupy movement has widely decried the questionable glad-handing between Wall Street titans and federal officials who are supposed to keep them honest. On his way out in 2008, President Bush issued a DOJ directive that encouraged the practice of “deferred prosecutions” which gave DOJ and SEC desk jockeys incredible latitude to craft immunity deals in secret in exchange for millions in fines and promises to be better.
But you might be disgusted to learn that the fines paid out to the government were at times equal to the payments made to legal firms, enriched by banks as grants of immunity prevented victimized investors from seeking further damages.
Rakoff’s stand is consequential because any finding of guilt at last empowers the little-guy investor to bring civil suits.
As we contrast coverage of this ruling in the NY Times’ Behind Rakoff’s Rejection of Citigroup Settlement with Rupert Murdoch’s Wall Street Journal piece Citi Ruling Could Chill SEC, Street Legal Pacts, taxpaying voters might wonder what in God’s name ‘street legal’ pacts means.
Indeed, this might be heralded as a rousing victory by #OWS protestors who in recent weeks have seen a number of anti-Wall Street actions proposed by leaders in business, politics and clergy.
#OccupyWallStreet was just weeks old when Bill Gates, America’s richest citizen taxpayer stood up in front of the G20 in France calling for a ‘Robin Hood Tax’ that would impose as little as a one-tenth of a penny fee on stock or bond transactions. Gates explained massive volumes of speculative, volatile computerized trades were preventing more productive sectors of business from attracting sorely needed capital.
The call for this same transaction fee was echoed by the Pope as part of his updated canons against the “obscene” unethical accumulation of wealth, intentionally hoarded “at the expense of others”.
In Congress, House and Senate bills recently proposed call for Constitutional amendments to reverse the Citizens United ruling that granted horribly lopsided new powers for the wealthy to crowd out political messaging during elections via unlimited, anonymous media spending.
Not surprisingly, the Senate bill, co-sponsored by Chuck Schumer, Jeff Merkeley, Tom Udall, Sheldon Whitehouse, and Dick Durbin has been “whitewashed” for weeks – given virtually no coverage by the major media networks who expect to reap exorbitant profits on upcoming US elections for selling prime-time ad spots.
The failure of the so-called Super-Committee is also supposed to have steeled populist candidates to run against Republicans whose crucial ‘sticking point’ was the claim that raising taxes on the rich would stifle job growth. They called revenue increases as “a job-killing tax hike on small business.” But Brookings debunks this: “less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets”.
Putting up a first-of-it’s-kind roadblock in the decades long slide towards rigged backroom settlements, Rakoff noted the proposed deal would have benefitted Citi and the SEC – but not the public interest.
Rakoff was critical not only of the “insufficient” amount offered as a pay-off, but the lack of transparency and especially the idea of shirking accountability for serious misconduct.
This closely parallels a line in the OWS proclamation of Sept. 27 which notes Wall Street firms “determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.”
The banks, who have till now witnessed a plethora of judges rubber-stamping anything approved by the SEC, will now have to work up a new deal with the SEC to resubmit to the court, negotiate a limited admission of guilt directly with Rakoff, or try to prove their innocence to a jury at trial.
It is not known whether Rakoff would accept any settlement that does not make Citi acknowledge guilt and give redress to individual investors.
The public recognition and debate of Rakoff’s rejection here will be keenly observed by other judges, banks, the Obama Administration and particularly the understaffed SEC, exposed here for serially horsetrading harmful shortcuts.
Lastly, for those still claiming the #OWS movement lacks focus and cohesion, concentrating on “street level” issues like pitching tents or public urination instead of important socioeconomic issues, here is the full text of that declaration approved by the NYC General Assembly, which aired in full on cable TV by October 5:
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press.
They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad.
They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts.*
*These grievances are not all-inclusive.
(OpEdNews Contributing Editor since October 2006) Inner city schoolteacher from New York, mostly covering media manipulation. I put election/finance reform ahead of all issues but also advocate for fiscal conservatism, ethics in journalism and curbing overpopulation. I enjoy open debate, history, the arts and hope to adopt a third child. Gustav Wynn is a pseudonym, but you knew that. =–> Users may repost my articles, provided it links to the original.