EMC 2.38% 8.2¢ everest metals corporation ltd

Financial institutions too big to prosecute?

  1. 470 Posts.
    On the back of Westpac's profit announcement.... Not suggesting that they have skeletons in the cupboard just that with that much financial muscle governments might be loathe to pressure their inordinate profits at our expense...

    9:11p ET Wednesday, October 30, 2002

    Dear Friend of GATA and Gold:

    Let's not forget to rank the New York
    Post's John Crudele up there with Thom
    Calandra of CBS.MarketWatch.com and
    the few other mainstream journalists
    who dare to tell what is really happening
    in the world economy. Crudele's column
    in yesterday's Post is devastating, in
    three parts, and is appended here.

    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.



    By John Crudele
    New York Post
    Tuesday, October 29, 2002

    Are financial institutions too big to

    Back in the 1980s, investors in struggling
    banks like Continental Illinois had their
    concerns eased by the fact that these
    institutions were considered "too big to

    Translated, that meant Washington had no
    choice but to bail banks out whenever they
    got into trouble.

    Let me now introduce the concept of "too big
    to prosecute." Not only banks this time, but
    also securities firms.

    There have been a lot of investigations and
    legal action recently against wayward
    brokerage outfits. But in case you haven't
    noticed, they are almost all civil suits,
    which at best would result in hefty fines.

    To untrained eyes -- which once included mine
    -- the prosecutors seemed to be trying to hit
    the brokerages where it hurts: in the wallet.
    Merrill Lynch, for instance, paid a big fine,
    looked contrite and went about its business.

    But experts tell me there's another thing at
    work here.

    A former federal prosecutor I know calls the
    latest wave of get-Wall Street actions "trial
    by publicity." It could also be called

    And, oddly enough, both the prosecutors and
    the brokers would probably much rather have
    it this way than face off in criminal court.

    "I'm not at all surprised prosecutors aren't
    going to chase after the big brokerage firms
    anymore," says my prosecutor friend. "The
    idea is that if you indicted someone like
    Citigroup, you could begin a process that
    ends in the unemployment of 100,000 people."

    Just look at Arthur Andersen. Gone, along
    with thousands of jobs.

    And prosecutors probably give no small weight
    to their own ambitions.

    If Eliot Spitzer plans to graduate from being
    New York State Attorney General to some
    higher office he's going to need the support
    of the financial community.

    Being credited with destroying thousands of
    jobs won't enhance his resume.

    Here's how prosecution probably would work.

    If criminal charges were filed against a
    brokerage firm, it would almost certainly be
    shunned by states that need investment
    banking help. A criminal complaint against
    these firms could, in essence, put them out
    of business.

    And while states such as New York may want
    the stock criminals of the 1990s punished, it
    would be politically and economically unwise
    to shut them down altogether.

    So, "too big to criminally prosecute" seems
    to be the order of the day.

    Alas, there is always one party that doesn't
    play. Utah is threatening Goldman Sachs with
    a criminal action.

    If that idea proceeds, the fallout could be

    * * *

    Why is the Federal Reserve already leaking
    the fact that it will cut interest rates? And
    why doesn't the stock market seem to care?

    The answer to the first is that the Fed is
    probably very worried that the U.S. economy
    doesn't seem to be doing much. But even
    worse, consumers - representing 80 percent of
    the economy - are getting tight-fisted at a
    time of year that is crucial to retailers.

    The Fed might not want to wait until next
    week's policy meeting to let its intentions
    be known. So it put the word out yesterday
    through its usual leak to the Washington

    There may be another reason for the leak.

    Because of next week's congressional
    elections, the Fed has pretty much been boxed
    in. An unusual cut between meetings might be
    considered beneficial to the Republicans.

    Typically, no matter which party is in the
    White House, the Fed remains inactive between
    September and Election Day.

    Why didn't the market care about yesterday's

    Because after 11 rate cuts, the magic of
    cheap money has faded.

    Time repairs the damage done by bursting
    bubbles. And enough time hasn't yet passed.

    * * *

    When is the American Association of Retired
    Persons going to support its members by
    poking a hole in the government's cost of
    living figures?

    Washington says inflation was just 1.4
    percent last year, which gives Social
    Security retirees a $14-a-month hike -- the
    lowest increase in four years.

    The government makes shoddy and dishonest
    assumptions and adjustments to its numbers to
    keep its costs to retirees low.

    And the AARP continues to say nothing.


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