PFGBest Is MF Global All Over Again: Gambling and Living High With Customer Funds

And another failure of self-regulatory industry groups and the inept CFTC.

Once again I must turn to Lauren Lyster on RT for the in depth look into US financial fraud coverage.

The mainstream financial news networks in the States are an extended infomercial for Wall Street. And their coverage of economic news and issues might make even Rupert Murdoch blush.

And so many watch these official Wall Street channels with the volume turned low, for just the numbers and any headlines, and turn to alternative sources for the real news, judging from the ratings reports.

Increasingly surreal, as life imitates Orwell.

Not Prosecuting Corporate Crime Aggressively Has Been US Government Policy Since 2008

In case you were wondering what the Congress and the Administration were doing with all those faxes, cards, phone calls, and letters you were sending in about the need for financial reform and tougher law enforcement, they decided to make it official policy not to aggressively prosecute the laws against white collar crime in 2008. Another innovation in outsourcing justice through extended self-regulation.

Apparently they told this privately to the Wall Street banks and their lawyers in 2008, but neglected to copy the American public on the memo.

Some have noticed the lack of reform, but the monied interests have done quite a successful PR job in refocusing the national discussion on priorities involving social issues, and the reform of the support systems for the weak, the unfortunate, and the elderly. Turning one group against another, and objectifying your intended victims through slogans and stereotypes, has always been an effective method of bending the herd to your will. Score one for Edward Bernays.

As W.C. Fields said, 'Never give a sucker an even break.'

How about it, feeling more confident yet? We know some people who are.

At least they have not overtly played the disability or the race card - yet. But things are relatively calm, and why be glum, the night is still young.

New York Times
Behind the Gentler Approach to Banks by U.S.
By GRETCHEN MORGENSON and LOUISE STORY
July 7, 2011

As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.

Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.

Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.

The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.

But this approach, critics maintain, runs the risk of letting companies off too easily.

“If you do not punish crimes, there’s really no reason they won’t happen again,” said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. “I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space."

While “deferred prosecution agreements” were used before the financial crisis, the Justice Department made them an official alternative in 2008, according to the Sullivan & Cromwell note.

It is among a number of signs, white-collar crime experts say, that the government seems to be taking a gentler approach.

The Securities and Exchange Commission also added deferred prosecution as a tool last year and has embraced another alternative to litigation — reports that chronicle wrongdoing at institutions like Moody’s Investors Service, often without punishing anyone. The financial crisis cases brought by the S.E.C. — like a recent settlement with JPMorgan Chase for selling a mortgage security that soured — have rarely named executives as defendants..."

Read the rest of the story here.

The Allure of Outsourcing Financial Regulation

One has to be fascinated with the proposal by the Obama Administration to effectively outsource the regulation of US markets and the protection of consumers to the Federal Reserve, an agency that is owned by the industry which it would be asked to regulate.

It is especially interesting given the recent history of the failure of that organization to do its job properly, failure to engage in open and transparent dialogue about its non-core (non-monetary) operations, and continuing resistance to taking direction from the government in matters related to fiscal and legislative policy that would fall under its regulatory purview while asserting its independence.

Its almost surreal. I cannot believe anyone is taking this proposal seriously.

There are three reasons why the Obama Administration is proposing it and the Congress is giving it serious consideration.

1. The special interests, the banks, who are significant donors to the Democratic and Republican parties would like to have it since they effectively own the Fed, and Wall Street likes no regulation better than self-regulation.

2. Government enjoys outsourcing its responsibilities to outside agencies like the Fed, because when the lapses and failures come, it gives them a great opportunity for finger pointing and hearings to chastise the party that failed, and shift the blame for the responsibility for the failure from themselves to someone outside their organization.

3. Larry Summers wants to be both the chairman of the Federal Reserve and of the SEC and a proposed Financial Consumer Protection Agency to attempt to maximize his ability to manipulate and control the financial system. And Larry does not work for you or your interests.

Would you like to have seen Alan Greenspan as not only the chairman of the Federal Reserve, but also the head of the SEC and the Consumer Protection Agency for financial products?

What is being proposed amounts to a financial Star Chamber. It makes the machinations behind the founding of the Federal Reserve in 1913 look tame by comparison.

Has the US a shred of common sense and regard for democratic principles left?