econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 10 February 2016

Philip Angelides Wants Top Bank Officials Charged

Written by

Econintersect: Philip Angelides, Chairman of the Financial Crisis Inquiry Commission (FCIC) which issued an official report in January 2011,has written a letter to the U.S. Department of Justice challenging U.S. Attorney General Loretta Lynch to prosecute senior bank executives before the statute of limitations on their crimes expires.

philip.angelides

Angelides, a former Treasurer of California, headed the commission which issued a report which was widely criticized, both by those who felt is didn't go far enough (see references below) and by some commission members who felt it went too far and resulted in conflicting minority reports. The full report and both dissenting views are available here.

Here is what Angelides told the Financial Times this week:

"I ask a simple question: how could the banks have engaged in such massive misconduct and wrongdoing without a single individual being involved? In a sense, it's the immaculate corruption. It defies common sense, and the people of America know this."

At the time the Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States was released (January 2011) there were criticisms that the document made no specific referrals to the Justice Department, made only general reference to possibility that there might be criminal activity to investigate. It may be suggested that to do more would have carried little import in light of the fact that the commission was split, with only six commissioners voting to adopt the official report while four dissented.

The dissention was divided along party lines. The commission members were not operating from the same basic assumptions. The majority expressed the opinion that the source of the crisis stemmed from systemic sources. Here is brief excerpt:

We conclude this financial crisis was avoidable. The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble. While the business cycle cannot be repealed, a crisis of this magnitude need not have occurred.

The two minority reports had a different basis. From the minority report by Keith Hennessey, Douglas Holtz-Eakin and Bill Thomas the thrust was not that there were systemic problems but that the source of the crisis came from specific "defects" in specified corporate functions and government policies. A brief excerpt:

Poorly designed government housing policies distorted market outcomes and contributed to the creation of unsound mortgages as well. Countrywide's irresponsible lending and AIG's failure were in part attributable to ineffective regulation and supervision, while Fannie Mae and Freddie Mac's failures were the result of policymakers using the power of government to blend public purpose with private gains and then socializing the losses.

The minority report by Peter J. Wallison had an even narrower focus - the crisis was caused by government fairness in mortgage lending acts. He wrote:

Three specific government programs were primarily responsible for the growth of subprime and Alt-A mortgages in the U.S. economy between 1992 and 2008, and for the decline in mortgage underwriting standards that ensued.

Reactions to the Three Reports

Yves Smith was one chronicleer of the financial crisis who was outspoken regarding the political basis on which the commissioners were appointed. She published a detailed analysis of criminal activities presented in testimony and data to the commission that were not properly delineated in the final report (or the dissents). She obtained information from non-partisan staff working for the commission who expressed to her their opinion that, because of the political appointments, the FCIC was Set Up to Fail. A more complete post is Insiders: FCIC Was Set Up to Fail. Two other insightful pieces by Yves are

Bank fraud expert William K. Black was another critic. He was especially outraged by the Peter Wallison report. Prof. Black discussed why Wallison's position was in direct conflict with financial system and, most importantly, mortgage default data. See these posts:

Noteworthy Soundbites

Below are two quotes from Angelides. The first refers to the tens of billions of dollars that the mega banks have paid in settlement of charges of wrong doing against them. The second refers to the practice of banks to package mortgages into securities, selling them and then buying derivatives that would pay off if the mortgages went bad.

"If someone robs a 7-11, they took $500 and they were able to settle the next day for $50 and no admission of wrongdoing, they'd knock over that 7-11 again."

"It sounds to me like selling a car with faulty brakes, and then buying an insurance policy on those cars."

Philip Angelides Letter

angelides.letter.p1

angelides.letter.p2

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Energy and Falling Productivity
Reinhard Selten: Pioneering Analyst of Rationality and Human Behaviour
News Blog
Job Employment Tenure Down
Mobile Payments Promise To Improve Financial Accessibility In Mexico
Aging Populations May Mean Lower Economic Growth
Urban Rebound Causes Large Shift In Lower Credit Borrowers To Seek The Outer Suburbs
Infographic Of The Day: How Oil Is Formed
Early Headlines: Japan Needs Fed Hike, Mexico Tanker Ablaze, 1.5C Limit Within 10 Yrs, Africa's Growth Problems, Did US Destroy Syria Truce?, Merkel: No Help For DB And More
Americans Wary Of Drone Delivery
Britain's Wealthiest Households
What Next In The South China Sea
The Dollar - Gold Relationship
Almost Half Of Rape Cases End Without A Conviction
People With 'Obesity Gene' Can Still Lose Weight
The World's Most Generous Countries In 2016
Investing Blog
The Week Ahead: How Will Election News Impact The Market?
How To Protect Your Money Against Negative Interest Rates
Opinion Blog
There's No Wall Between The Fed And Banco De Mexico
The Setting Sun: Japan Faces Monetary Exhaustion
Precious Metals Blog
War On Cash Turns To $20, $50, And $100 Bills
Live Markets
23Sep2016 Market Close: US Indexes Close Lower As Crude Prices Slip, Fed Lowers Economic Growth Prospects, Indicators Melting Into Bearish Territory
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved