Sunday, April 27, 2008

Justice Is Blind and Dumb Too

"A legal settlement with federal regulators requires former senior executives of Fannie Mae, including former Chief Executive Franklin Raines, to donate about $2 million to charities and give up stock options that may turn out to be worthless. .. 'The settlement is a capitulation by Ofheo,' said Steven Salky, who represented Timonthy Howard, Fannie's former chief financial officer. An Ofheo spokeswoman said the government got a good settlement. 'This settlement is at the high end of settlements in similar matters,' she said. ... Under the settlement, the three executives are to pay fines totalling about $3 million, but those will be covered by Fannie insurance policies, according to lawyers involved with the settlement. ... In a statement, Mr. Raines said the settlement 'is not an acknowledgement of wrongdoing on my part, because I did not break any rules while leading Fannie Mae'," WSJ, 19 April 2008.

"Securities regulators refused a congressional request to disclose why they dropped an investigation into whether Bear Stearns Cos. harmed investors by improperly valuing complex debt securities. The [SEC] cited confidentiality in its decision involving the late-stage probe of the Wall Street firm. At issue is a move by the SEC to abort an enforcement case into activities at Bear Stearns several months before the firm imploded in March. ... 'The Commission does not disclose the existence or nonexistence of an investigation or information generated in any investigation unless the matter is made a matter of public record in proceedings brought before the Commission or the Courts,' SEC Chairman Christopher Cox said in an April 16 letter to Sen. Charles Grassley. ... Legislators also could argue that the SEC wouldn't be releasing data to the public, but rather to Congress. Meantime, the SEC's inspector general is investigating circumstances related to the dropped Bear Stearns case, following a request by Sen. Grassley", WSJ, 23 April 2008.

Another Bush administration triumph. What's $2 million to Raines? Nothing. No indictment, no fines Raines must pay. Nothing. He surrenders some worthless stock options. And these clowns, through the SEC fined Joe Jett $8.4 million, see my 12 September 2007 post. Where's the DOJ?

Chris Cox, congratulations! Why isn't the Bear Stearns investigation a matter of public record? The public's got at least a $29 billion stake in it. I have long seen your SEC as the most cowardly and incompetant I have encountered in my professional career. Now you just pushed aside Harvey Pitt's SEC as the most venal. I hope Congress holds you in contempt. I'll make things real easy for you David Kotz (DK), SEC "Inspector General", whatever that is. I surmise the SEC ended its Bear Stearns (BS) investigation because the SEC couldn't find BS improperly valued debt securities. Why? Because BS valued them the same way as every other Wall Street house, including, dare I think it, Goldman Sachs. See how easy that was DK? Did our old friend Robert Steel, see my 7 April 2008 post, quash the investigation? Did Hank Paulson? Robert Rubin? Well DOJ, will you look into whether or not someone obstructed the operations of a federal agency, 18 USC 1505? Hey Conrad Hewitt, what's your opinion? You're the SEC's Chief Accountant, aren't you? See my 6 February 2008 post. Will the DOJ look into this? Why? Just go and incarcerate ten more peasants, each with half a dozen $10 crack rocks. See also my 1 April 2008 post. Imagine, the SEC had time to prosecute the "PWC two" and did not have time to finish its Bear Stearns investigation. Amazing!

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