MF Global

Immunizing Crimes: Blankfein, Zirbel, and Arpaio, but Whither Corzine?

DOJ has been doing a lot of immunizing of late. There’s Lloyd Blankfein, who not only ripped off his clients with “one shitty deal,” he then lied to Congress about it. There’s Matt Zirbel,* the CIA officer who had Gul Rahman doused with water and left to freeze to death in the Salt Pit. And there’s Joe Arpaio, who used the Maricopa County Sherriff’s office to investigate his political enemies.

DOJ immunized all these men in the last month, in spite of a vast amount of publicly available evidence clearly showing their crimes. And while DOJ had the courage to announce their decision about Blankfein and Goldman Sachs on a typical news day, not so their announcements about Zirbel and Arpaio–DOJ slipped those announcements into the journalistic distraction of Paul Ryan’s dishonest speech and Clint Eastwood’s empty chair, and the more generalized distraction of an imminent holiday weekend.

But with these grants of immunity, DOJ cleared the board of most of the politically contentious cases of immunized criminals just in time for election season. The Goldman banksters could donate with no worries, the NatSec types wouldn’t pull an October surprise, and Republicans couldn’t claim Arpaio was caught in a witch hunt because of the witch hunts he himself conducted.

DOJ cleared most, though not all, of the politically contentious cases they plan to clear though. The exception may prove the rule.

Continue reading

Another Week, Another Bankster with Impunity

This week, the bankster who will avoid all legal accountability is MF Global and its CEO Jon Corzine. So says the NYT.

While I’m disgusted by that news, I’m not shocked. I’ve grown used to the guarantee that top banksters are immune from all laws.

What I’m interested in is how NYT conveys their news.

First, note what crime they claim MF Global might have committed: fraud. Not theft.

After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

I guess if you said “theft” then you couldn’t suggest the money just disappeared–poof!–rather than got taken to pay off the company’s own obligations.

Plus it’d be a lot harder to accomplish the article’s other main objective, besides reporting yet another Get Out of Jail Free card. While the story seems to have been seeded by people in Preet Bharara’s neighborhood to set the expectation that he would once again fail to bring charges against a bankster, the NYT seems intent on rehabilitating Corzine’s reputation. Consider that they dedicate paragraphs 6 and 7 portraying the tragic plight of a multi-millionaire with a cloud hanging over him.

While the government’s findings would remove the darkest cloud looming over Mr. Corzine — the threat of criminal charges — the former Goldman Sachs chief is not yet in the clear. Continue reading

Fat Al Gore Colludes with Banksters in the Midwest

There’s an ominous storm brewing in flyover country that may amount to little more than higher food and fuel prices, or may amount to something else.

First there’s the drought. Last week’s heat wave and the last month’s dry weather hit just as much of America’s corn crop was set to pollinate. And if the corn doesn’t pollinate, it never grows kernels. Even as I’ve been writing this post, USDA sharply cut forecasts for the corn harvest.

As a result, corn prices (soy prices too) are rising sharply. Which will, for better and worse, have repercussions on all the aspects of our super-processed life that relies on corn.

“The drought of 2012 will be one for the records,” said Peter Meyer, the senior director for agricultural commodities at PIRA Energy Group in New York, who forecasts a drop in output to 11 billion bushels if the hot, dry spell lasts another three weeks. “Whether it’s ethanol or livestock, no one is immune from this impending disaster. The ramifications will be widespread, affecting everything from your food to your gasoline.”

And all that’s before any follow-on effects, if the drought continues. Even in Grand Rapids, we’ve had some unusual fires. Rivers that were experiencing historic floods last year are approaching record lows this year; traffic on the Mississippi has already slowed.

Yet all that–even with our country’s industrialized reliance on corn–might be no more concerning than other droughts, such last year’s drought in Texas.

Meanwhile, banksters keep stealing farmers’ money–first via MF Global and now with Peregrine.

The U.S. futures industry reeled as regulators accused Iowa-based PFGBest of misappropriating more than $200 million in customer funds for more than two years, a new blow to trader trust just months after MF Global’s collapse.

Continue reading

Will Treasury Hire the Guy Who Allowed JP Morgan Help Iran Launder Money?

Two weeks ago, Treasury fired the guy in charge of FinCEN (the part of Treasury that enforces and tracks Suspicious Activities Reports), Jim Freis, reportedly (pay wall) because he wanted to focus on law enforcement and financial crimes, rather than a more focused counterterrorism focus.

The issue wasn’t Fincen’s speed or personality conflicts, but more about control. To put it simply, Treasury wants more oversight of Fincen’s activities, including additional focus on international areas such as terrorist financing. “Fincen ought to be better integrated and tethered to the policy issues that relate to money laundering, terrorist financing and economic sanctions on behalf of the U.S. government. It’s not as well integrated as it should be,” said a senior administration official who spoke on condition of anonymity.

Freis saw Fincen’s role as more independent, and was primarily concerned with the agency’s role in supporting law enforcement agencies as well as tackling other financial crimes such as mortgage fraud.

And if that isn’t enough to make you wonder about this Administration’s commitment to making banks obey the law, consider that the apparent leading candidate to replace Freis is JP Morgan’s anti-money laundering VP, William Langford.

In December 2009, when JPMC extended a $2.9 million loan to the Islamic Republic of Iran Shipping lines, in violation of WMD sanctions, Langford was the VP at JPMC in charge of money laundering. He was there, too, when JPMC decided not to self-disclose the loan until they had almost been repaid.

In the months before March 2011, when JPMC repeatedly claimed it didn’t have 20 documents relating to a wire transfer with Khartoum? Langford was at JPMC for that too.

The 9 wire transfers since April 2006 in violation of a range of sanctions? He was there for most of those.

And he was probably at JPM–though just barely–when JPMC transferred $20M in gold bullion–a ton of gold!–for an Iranian bank?

Now, presumably all this money laundering and sanctions violating happened in remote corners of JPMC, far from Langford’s views (though you would think his office would be involved in the non-responsive answers about the Khartoum documents and decisions about when and whether to self-disclose some of these violations). There is no reason to believe Langford facilitated any of this money laundering and sanctions violating.

Still, even aside from the whole revolving door problem, from the centrality of JPMC in both the MF Global and JPMC’s won Fail Whale investigations, it seems like Treasury might hire someone who couldn’t keep one bank in line, much less all of them.

Overview of the Pat Fitz Resignation Press Conference

Patrick Fitzgerald just finished his resignation press conference (the blockquotes are my notes).

In his own statements, he focused on comments to the people he works for, and those he works with. That was largely a tribute to the 300 people who work in the office, making it clear that the work he often gets thanked for publicly is done by those 300 people. He emphasized that those people would still be here working, doing good work.

I say that not just to make myself to feel less bad. Want citizens to appreciate what a treasure the people I work with are. The other part is that come June 30, that 300 plus team that is really hard working rolls on, and will keep rolling on. Fight against corruption, what we really need is public to keep coming forward.

Both in his opening statements and in later questions, Fitz seemed to want to encourage people to come forward to report corruption. He also talked about the problem of policing so aggressively that people being to fear the authorities.

We’d prefer to learn about corruption from people coming forward, not from a bug.

[snip]

When you start to see people being afraid of us, when citizens fear being shaken down, that’s a bad thing.

Jumping ahead, an emphasis on the continuity of the office is largely how he answered my question about MF Global. I asked whether DOJ had yet decided whether this office or SDNY would have the lead in that case. He refused to comment, but said anyone working in this office would continue to do good work. (Note, he said “this office,” not DOJ generally.) (I asked Randall Samborn later whether the decision on who had the lead in the MF Global case had been made and he would not say either.)

Fitz largely explained his departure in terms of a natural time to leave.

Not an easy decision. Am I rushing out in 11th year of my term. People have terms for a reason. Won’t be here until I’m 65. Comes a time when me and my family have to figure out what we do next. For the office it’s important that there be change.

I think it’s healthy after a certain point that there be change at the top. Always a matter of when, not if, I think you sort of know when it’s time.

As for what next, I don’t know, and that’s sincere. I’m going to run as fast as I can for 30 days that I have left.

When asked about whether he felt bad about the people he had jailed, he described the empty feeling he got after his first jury verdict on Valentines Day in 1989. As part of that, he emphasized that imprisonment is always a waste, not just in the case of white collar cases.

Feb 14 1989, first jury verdict day. Defendant convicted of drug offense. Taken into custody that day.

We think about prison in white collar cases, but we often don’t think about it on the violent side.

He also, in response to a question about being “overzealous” suggested it’s an injustice to bust the low guy on the totem pole without going after the top of the pyramid.

Someone asked whether there were any cases Fitz regretted not having charged. I called out, “Karl Rove.” He answered the question generally, without acknowledging my question. Harumph.

Fitz was asked whether he thought he could be a Defense Attorney.

I respect what defense attorneys do, but I don’t know what I’ll do next. There are some things I’m not comfortable with.

In response to a question whether he’d be interested in public service–possibly the FBI Director job–he said he had not been approached about the FBI job, but that if he was offered a public service job, he would certainly consider it, though he would balance the needs of his family.

Public service is in my blood. If a phone rings down the future and ID says public service, I answer the phone. I would consider if I can make an impact?

Finally, I asked if he had any reflection on our counterterrorism efforts so many years after he first indicted al Qaeda (note, I fucked up my question and said it had been 14 years; it has been 24 since the 1998 indictments). He said that they’ve made great progress against core al Qaeda. While affiliates remain a threat, core al Qaeda has largely been wrapped up.

We’ve made incredible progress. Core Al Qaeda has largely been rolled up. Remarkable progress in core al Qaeda.

He also emphasized the continuing, under-appreciated effort of FBI agents still chasing down leads.

Still dangerous threat out there we shouldn’t under-estimate. Remarkable job. People don’t appreciate people overseas,squads of FBI agents.

I did much better at this whole press scrum thing than I usually do, but as proof I’m not an expert yet, I failed to follow-up on what he thought about efforts to force terrorism trials into Military Commissions.

Finally, the funniest detail from the press conference. Apparently, when he called Dick Durbin to tell him he was resigning yesterday, the phone wasn’t working. He claims he may have missed most of the conversation.

When I spoke to Durbin yesterday phone was malfunctioning ,I missed a lot of call, may have had conversation in which I have no idea what he said.

There’s more in my Twitter stream. Plus, a plethora of questions about whether or not, as a Mets fan, he really could be baseball commissioner.

Glad I made it to the presser to at least ask a few serious questions. And make sure Karl Rove got mentioned as the single biggest person (Jon Corzine potentially aside) whom he didn’t prosecute.

Jamie Dimon: Inspiring Fear Among “Wealthy Private Clients” Even in Disgrace

I’ve got that wonderfully satisfied yet mildly sick feeling I used to get after eating too many sweets as a kid, what with all the schadenfreude directed at Jamie Dimon and his $2 billion loss.

But I’m particularly struck by this story, in which Gretchen Morgenson recounts how Jamie DImon called Paul Volcker and Richard Fisher “infantile” at a party a month ago, for warning about Too Big To Fail banks. That piece of news, like all the rest, added to my sugar buzz. But I was struck by this passage, describing Morgenson’s sources.

The party, sponsored by JPMorgan for a group of its wealthy private clients, took place at the sumptuous Mansion on Turtle Creek hotel. Mr. Dimon was on hand to thank the guests for their patronage and their trust.

During the party, Mr. Dimon took questions from the crowd, according to an attendee who spoke on condition of anonymity for fear of alienating the bank. One guest asked about the problem of too-big-to-fail banks and the arguments made by Mr. Volcker and Mr. Fisher.

Mr. Dimon responded that he had just two words to describe them: “infantile” and “nonfactual.” He went on to lambaste Mr. Fisher further, according to the attendee. Some in the room were taken aback by the comments.

That is, Morgenson’s source(s) is not some entry level trader. He or she is a private client, a very rich person, whom Dimon was brought in to suck up to. Not just suck up to, but “thank … for their trust.”

Here we are a month later and Dimon and JPM generally have proven that trust was misplaced. If it were me, I’d be pulling my money out of JPM before Dimon pulls an MF Global with it. Yet even still, this very rich person is afraid of “alienating the bank.”

Not that that’s surprising. After all, Goldman Sachs still commands the kind of fear that leads people to invest with it, even after it became clear it was suckering clients to buy shitpile that it could then short.

Still, if there’s a sign of just how perverse our finance system is right now, it’s that the rich people Dimon is supposed to be sucking up to actually fear him, even after he has been disgraced.

Never Put Money within Reach of Jamie Dimon

I actually don’t think Federal Reserve Bank of NY Board Member Jamie Dimon got his hands on the almost $3 billion of Iraqi money deposited in the FBRNY that has vanished.

An audit by [Special Inspector General for Iraq Reconstruction Stuart] Bowen’s office published on Sunday investigated the roughly $3 billion the Iraqi government gave the Defense Department to pay bills for contracts the Coalition Provisional Authority awarded before it dissolved in 2004. Most of these funds were deposited into an account at the Federal Reserve Bank of New York.  Even though DOD was responsible for maintaining the proper documentation, it could only account for $1 billion of the money.

“It’s symptomatic of the poor record keeping that was rife throughout the early stages of the reconstruction effort,” Bowen, who has conducted three other major audits into the original pot of roughly $21 billion in Iraqi funds the U.S. managed in 2003 and 2004, said.

After all, that money dates to 2004 and Dimon’s service on the FBRNY Board didn’t begin until January 2007. (Though I will note that Jamie Dimon and Iraq’s money overlapped at the FBRNY for a year.) Moreover, it was DOD’s responsibility to keep track of the money, not the FBRNY or Jamie DImon.

Still, I can’t help but notice that the announcement that we’ve lost almost $3 billion of Iraqi’s money (on top of the more than $100 million in cash that managed to walk out of Saddam’s former palace) came within a day of the time some are declaring the missing MF Global $1.2 billion has “vaporized.”

Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.

As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.

That money does seem to have been lost in the immediate vicinity of Dimon’s JP Morgan.

As the week progressed, MF Global executives came to believe that JPMorgan Chase & Co., one of MF Global’s primary bankers and a middleman moving that cash, was dragging its feet in forwarding the funds.

Corzine phoned Barry Zubrow, then JPMorgan’s chief risk officer, to question the slow payments. Corzine also called William Dudley, president of the Federal Reserve Bank of New York, to update him on MF Global’s status and told him that payments were slow to arrive from JPMorgan and others.

[snip]

JPMorgan was able to slow the delivery of funds, worsening MF Global’s distress. As a result, they note, hundreds of millions of dollars of MF Global money may be still stuck in accounts at JPMorgan.

So while I’m not suggesting Jamie Dimon bears any personal liability for these missing billions (or those of Lehman or Bear Stearns), I will note that Dimon seems to have the 21st Century equivalent of the Midas Touch: Rather than turning things into gold when he touches them, when billions get within reach of Jamie Dimon, they seem to vaporize.

Poof!

Ubercapitalist Begs for Government Intervention

Fresh off the Friday news dump that its profits stalled in the last quarter (after it had to stop laundering money for Iran and inheriting the lost money of MF Global customers), fresh off the news that JPMorgan Chase might lose $5 billion in the Europe crisis, and, it should be said, fresh off the departure of a JPMC Exec from the White House Chief of Staff position, Jamie Dimon is calling for a real solution to the housing market.

“I would convene all the people involved in the business, I would close the door, I’d stay there until we resolved a bunch of these issues so we could have a more healthy mortgage market,” the 55-year-old chief executive officer of JPMorgan Chase & Co. said today.

The patchwork of U.S. and international regulatory policies governing the housing and mortgage markets are hampering recovery here and abroad, Dimon said on a conference call with analysts after the New York-based bank released fourth-quarter earnings. In the U.S., state foreclosure laws conflict with a variety of federal policies on refinancing or modifying loans to troubled borrowers, Dimon said.

Leadership is needed to overhaul the industry, including reviving the market for private-label residential mortgage bonds and reforming regulations governing mortgage repurchases and foreclosures, he said.

“You could fix all this if someone was in charge,” Dimon said, tapping on the table for emphasis. “No one is in charge.”

Which is pretty funny, since a bunch of Attorneys General just did show some leadership.

Attorneys general or representatives from nearly 15 states met in Washington, D.C., on Tuesday to discuss and share different enforcement options and strategies around various mortgage-related issues, according to sources familiar with the conversation.

The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series, said these sources.

[snip]

“This past Tuesday, a group of like-minded Attorneys General met in D.C. to discuss ongoing and future investigations into the mortgage finance and foreclosure industries,” said Delaware Deputy Attorney General Ian McConnel.

“The talks weren’t just about investigations,” said a source with knowledge of the discussions. “They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf.” [my emphasis]

Or maybe it’s this show of leadership that’s got Dimon whining?

But what I find most amusing about this ubercapitalist begging for government intervention is this: Dimon says he’s gonna lock “all the people involved in the business” in a room until they come up with a solution. But note who he’s going to invite?

Jamie Dimon has a plan to fix the U.S. housing market: lock mortgage lenders and regulators behind closed doors until they figure it out. [my emphasis]

Because if you realized that homeowners, too, were a fundamental part of the housing business, you might lose your cred as a psychopath.

Shorter Jamie Dimon: “I am not a psychopath”

As business professor Clive Boddy describes it, banksters like Jamie Dimon succeed–and cause great catastrophe–because they are able to exploit the chaos of today’s business environment while ignoring the consequences of their ruthlessness.

Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”

[snip]

They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”

Boddy doesn’t name names, but the type of personality he describes is recognizable to all from the financial crisis.

He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done.

Meanwhile, a Reuters article offers a possible explanation for how millions of MF Global funds disappeared: because its clearing firm, JP Morgan Chase, dawdled while clearing hundreds of millions of dollars in securities MF Global sold to Goldman Sachs as an effort to stay afloat.

MF Global unloaded hundreds of millions of dollars’ worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co , one of the sources said.

The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.

[snip]

JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global’s assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan’s interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.

As it turns out, a week before JPMC was stalling on clearing MF Global’s sales, Jamie Dimon sent out an email to JPMC employees boasting about the firm’s expansion at a time of strife for the industry.

“2011 was another year of challenges, both for JPMorgan Chase and for countries around the world,” Dimon wrote in a year-end e-mail to staff. “There is a lot of frustration out there and more than a little hostility toward our industry.”

[snip]

JPMorgan hired 16,000 people in the U.S. in 2011, Dimon said in the letter, expanding its total workforce to more than 260,000 in a year when financial companies announced more than 200,000 job cuts and protests against Wall Street firms spread worldwide. The New York-based lender is adding about 175 branches a year in the U.S., he said.

“In the face of challenges, JPMorgan Chase is doing its part,” Dimon wrote. “We have not shrunk back.”

I tell you, indefinite detention looks better and better for Jamie Dimon.

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