I suppose reports that the Security and Exchange Commission just extracted a $285 million settlement from Citigroup for mortgage-related fraud ought to come as welcome news. But some part of me suspects this fine is little more than taking back some of the money the federal government gave the bankers to keep them from crashing when their fraud crushed the economy.
Rather than playing footsie with these pinstriped losers, the federal government ought to do what it does when virtually anyone else plays fast and loose with the truth: prosecute them and fit them for a jumpsuit and a bed in a federal facility.
I have defended people on mail fraud and wire fraud charges for overstating their income, making false declarations on a financial statement or otherwise engaging in deception for financial gain. You fight like Hell to keep little people from going to jail over trifling sums. The Justice Department justifies these prosecutions as means of sending a message that integrity matters.
It just doesn’t matter to bankers. They get de facto immunity.
Citigroup got its hand slapped for putting together risky mortgage investment portfolios, selling them to investors, and then betting on the failure of the very product it sold. These scams are worthy of Gordon Gecko. But real-life bankers walk away while their clients are left holding the bag, and while many Americans face foreclosure in court proceedings relying on fraudulent or missing loan notes.
These double standards are enough to make me want to offer pro bono representation to anyone bold enough to set a banker swinging from a lamp post. I would try a defense of justification. I suspect many jurors would go for it.
But not the two-bit cowards in the Justice Department. Citigroup and its executives are too big to fail. No one goes to jail. No one goes broke. They simply get fined their holiday bonus money. Nothing changes.
Citibank’s third quarter profits this year were $3.8 billion; its revenue for the quarter was almost $21 billion. This on the cusp of what some economists call the second round of a double-dip recession. Forgive me if I did not notice our recovery from the first recession. From where my clients are sitting, there was no recovery. Many of them simply disappeared from the radar, giving up hope, homes and any real sense of belonging. These are the people who occupy Wall Street, and now Hartford, New Haven and other towns across the state. I am with them heart and soul.
The SEC fine of Citigroup is what the big boys call the loss of “walking around money.” I call it chump change. We are the chumps.
Goldman Sachs and JPMorgan Chase & Company paid similar tribute to the SEC for fraud. So far as I can tell, no one in these institutions has been prosecuted. These cases are too complicated, I suppose, for the Justice Department.
“We are pleased to put this matter behind us and are focused on contributing to the economic recovery, serving our clients and growing responsibility,” Citigroup said in a statement some clown in its public relations department cooked up. No executive had the anatomy to put his or name on this hypocrisy.
It would be far more pleasing to let those scammed by the bank simply walk away from their bad investments. Want to stimulate the economy? How about a home loan forgiveness program? If bankers got, and remain, fat, sassy, and brazen enough to believe their own propaganda serving up bogus mortgages and over-heating the real estate markets, let them eat the losses. Let ordinary Americans keep their homes.
I know, I know, blame the banker is an old theme in American populist lore. But perhaps it is time worn for a reason: Perhaps bankers really are predatory. If the government is too timid to tangle with them, then they court public scorn and rage. There is no telling where that might lead. I say let’s start by occupying the banks.
Reprinted courtesy of the Connecticut Law Tribune.