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November 17, 2009

The Commissar Vanishes - Leaving Only His Smile

Hatched by Dafydd

Strongman Attorney General Eric Holder has announced formation of a new "Financial Fraud Enforcement Task Force;" the new task force was created via Executive Order by the stroke of Barack H. Obama's magic signing pen:

"Mortgages, securities and corporate fraud schemes have eroded the public's confidence in the nation's financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street," Atty. Gen. Eric H. Holder Jr. said at a Washington news conference. "Unscrupulous executives, Ponzi scheme operators and common criminals alike have targeted the pocketbooks and the retirement accounts of middle-class Americans and, in many cases, devastated entire families' futures."

"We will not allow these actions to go unpunished," he continued. "By punishing criminals for their actions, we will send a strong message to anyone looking to profit from the misfortunes of others."

Its mandate -- and its targets -- are clear:

Holder and other officials said they have been vigorously pursuing financial fraud cases already and that the task force would build off those efforts. The SEC, which has been severely criticized for missing numerous warning signals about Bernard L. Madoff's Ponzi scheme, has reorganized and streamlined its enforcement efforts and is launching special units to focus on derivatives and securitized products, insider trading and market manipulation, and fraud by hedge funds and investment advisors, Khuzami said.

In a Bloomberg article, Holder gets even more specific:

The aim of the new task force is “to prevent another meltdown from happening,” Attorney General Eric Holder said. “We will be relentless in our investigation of corporate and financial wrongdoing.”

Does anybody notice what is missing from this list? How about the government officials whose corrupt regulation caused the housing collapse in the first place?

The members of Congress who enacted the Community Reinvestment Act in 1977;

The Jimmy Carter administration officials who flogged it through;

The Bill Clinton administration officials who hijacked it, using it as a blunt instrument to force lenders to lend too much money to people too poor (and too irresponsible) to pay it back;

The current members of Congress who blocked George W. Bush's attempts to repeal some of the regulatory mandate-madness, which he saw was leading to exactly the collapse that occurred;

And of course, those members of Congress and officials of Fannie Mae and Freddy Mac who were neck-deep in the slime of the Countrywide Financial scandal, including Senate Budget Committee Chairman Kent Conrad (D-ND, 95%) and Senate Banking, Housing, and Urban Affairs Committee Chairman Christopher Dodd (D-CT, 100%) -- both still chairing the very committees responsible for "overseeing" the very institutions who were pushed by the very same CRA to lend to the very folks whose greed for more house than they could afford led to the very financial crisis swamping us today.

All of whom are today pushing for an even more robust Community Reinvestment Act -- and not a single one of whom will be targeted by Obama's spanking new Financial Fraud Enforcement Task Force (which is totally different, of course, from the "Corporate Fraud Task Force," which President Bush established in 2002). And so, having wrought his havoc and accepted his bribes, the commissar vanishes yet again, leaving only his mysterious, enigmatic, Cheshire-Cat smile.

Thank goodness our Attorney General has his head screwed on straight.

Cross-posted on Hot Air's rogues' gallery...

Hatched by Dafydd on this day, November 17, 2009, at the time of 7:06 PM

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Tracked on November 17, 2009 6:39 PM

Comments

The following hissed in response by: GW

The old but very true saying is that history is written by the victors. Indeed, not only have Holder et al written it, they are assiduously attempting to insure that no contrary facts ever see the light of day. Indeed, we have still been unable to get a congressional subpoena for Countrywide's records - at least those that havent yet been shredded (or were inadvertently lost when hard drives got far too close to a powerful magnet that just happened by).

I write only to highlight one point. It is the giant pink elephant in the room that no one has yet addressed. The elephant is how so many subprime mortgages went into one end and came out the other as part of triple-A bonds. I have yet to understand how that facially fraudulent practice works. That is Barnie Madoff-esque. Though that said, I recall Barney Frank not all that long ago leaning on the bond rating agencies to increase the ratings on municipal bonds and certain other bond classes, so I am sure that when (or if) this issue gets explained, we will yet again find the fingerprints of Dodd, Frank, et al.

And as a final note, my concern with ponzi schemes is in fact rather high. When we will start addressing the biggest one in America - social security.

The above hissed in response by: GW at November 17, 2009 9:12 PM

The following hissed in response by: LarryD

The elephant is how so many subprime mortgages went into one end and came out the other as part of triple-A bonds.

As I understand it, Fannie Mae and Freddie Mac buy mortgages from banks and securitize them. That's bad enough, but in the process, they sliced and diced (tranche) them so a security wasn't backed by a pool of mortgages, but slices of them. The belief seems to have been that, this somehow lowered the risk substantially.

But it made it almost impossible to really asses the quality of the security. Which is why they are now "toxic". Despite the fact that the securities still have some cash flow, no one can figure out what the real risk is.

The above hissed in response by: LarryD at November 18, 2009 9:50 AM

The following hissed in response by: Dick E

The way it works is, Fannie Mae and Freddie Mac buy sub-prime mortgages and package them for sale to investors. These Fannie and Freddie bonds are rated AAA because they are perceived by the market as being backed by the US government. It’s all a charade, though, because investors know that FNMA’s and FHLMC’s are not the same as Treasury securities. These investors -- wisely, it turns out -- believed that if Fannie or Freddie got in trouble Uncle Sam would bail them out.

The above hissed in response by: Dick E at November 18, 2009 10:21 PM

The following hissed in response by: Dick E

GW-

Wolf, we miss ya.

Hope all is well with you and yours.

The above hissed in response by: Dick E at November 18, 2009 10:24 PM