MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
On January 22, Frontline airs a program asking why the executives on Wall Street who oversaw the economic meltdown in 2007 have remain unprosecuted.
According to a Frontline release, "In 'The Untouchables,' premiering Jan. 22, 2013, at 10 P.M. on PBS (check local listings), FRONTLINE producer and correspondent Martin Smith investigates why the U.S. Department of Justice (DOJ) has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse."
Frontline asks "asks Lanny Breuer, assistant attorney general for the DOJ’s Criminal Division, about his failure to criminally indict Wall Street executives. 'I think there was a level of greed, a level of excessive risk taking in this situation that I find abominable and very upsetting,' says Breuer. 'But that is not what makes a criminal case.'"
Yet, the Sarbanes-Oxley Act was designed to prosecute key elements of the kind of activity that Wall Street engaged in prior to the economic breakdown – and of which there is the possibility that they are still engaging in. All the DOJ has done is fine banks (which is merely a cost of their doing business) along with the Securities and Exchange Commission (SEC).
The lamentable damage to justice is nothing new regarding Wall Street inviolability from a criminal perspective (in regards to financial accountability). In fact, "60 Minutes" aired a compelling, lengthy evidence-filled investigative story on December 4, 2011, in which reporter Steve Kroft begins the segment with this statement:
It's been three years since the financial crisis crippled the American economy, and much to the consternation of the general publie and the demonstators on Wall Street, there has not been a single prosecution of a high ranking Wall Street executive or major financial firm, even though fraud and financial misrepresentations played a significant role in the meltdown.
After interviewing Countrywide Financial's [which is now part of Bank of America] executive vice president, Eileen Foster, in charge of fraud investigations -- and Richard Bowen holding a similar post at CitiGroup -- "60 Minutes" showed how -- based on their testimony and other evidence -- the essence of accountability to shareholders and the government as mandated by Sarbanes-Oxley had been violated. Countrywide, in particular, was a key player in the fraudulent subprime mortgage schemes that played a pivotal role in the economic collapse that occurred at the end of the Bush administration.
"All of this raises several questions," Kroft said in the 2011 "60 Minutes" report. "Why has the Justice Department failed to go after mortgage fraud inside Countrywide? There has not been a single prosecution. Even more puzzling is the Justice Department's reluctance to employ one of its most powerful legal weapons against Countrywide's top executives. It's called the Sarbanes-Oxley Act of 2002."
Kroft provided additional background on Sarbanes-Oxley:
It was overwhelmingly passed by Congress and signed by President Bush following the last big round of corporate scandals involving Enron, Tyco and Worldcom. It was supposed to restore confidence in American corporations and financial markets.
The Sarbanes-Oxley Act [which includes criminal provisions] imposed strict rules for corporate governance, requiring chief executive officers and chief financial officers to certify under oath that their financial statements are accurate and that they have established an effective set of internal controls to insure that all relevant information reaches investors. Knowingly signing a false statement is a criminal offense punishable with up to five years in prison.
In fact, according to a civil suit filed by the Securities and Exchange Commission, Countrywide's chief executive officer, Angelo Mozilo, knew as early as 2006 that a significant percentage of its subprime borrowers were engaged in mortgage fraud and that it hid this and other negative information about the quality of its loans from investors.
Mozilo, who admitted no wrongdoing, accepted a lifetime ban from ever serving as an officer or director of a publicly traded company, and agreed to pay a record $22 million fine, less than five percent of the compensation he received between 2000 and 2008.
Lanny Breuer, the head of the criminal division at the Justice Department was interviewed at the time by Kroft. Breuer claimed on air that the Los Angeles US Attorney had dived into potential prosecution of Countrywide, but Breuer admitted that the investigation was dropped. When asked by Kroft if Breuer was aware that the chief Countrywide executive in charge of ferreting out fraud was fired for exposing it – as it continued unabated – Breuer pleaded ignorance about the details of the case.
He also made an astounding assertion for the head of the criminal division of the DOJ. Breuer, who had claimed the LA feds had done an exhaustive job of looking into Countrywide, said that it was the duty of the compliance exec at Countrywide to come forward. He was at a loss to explain why she wouldn't have been interviewed as part of a thorough inquiry.
It should be noted that Breuer is responsible for the approval of the brutally excessive prosecution of Aaron Swartz by US Attorney Carmen Oritz. Although we can't say with certainty that Breuer is the kind of DC insider who values career advancement over the impartial and fair administration of justice, it certainly has that appearance.
As BuzzFlash has noted many times, the DOJ has a double standard for the rule of law: one of exoneration and impunity for the elite financial and political managerial class – and another for those US citizens who challenge the status quo.