Takethe5th Picks and Pans

If the Republicans want a bona fide issue  to tar and feather President Obama on, its his kowtowing to the banks exemplified most recently by the Housing Settlement. Once again, “for the sake of the economy”, banks get away with major white collar financial crime. Anything for a settlement. The $25Billion is peanuts in comparison to the the more than $700 billion in underwater mortgage due to the banks malfeasance that generated the Housing Crisis. The $2000 for each wrongful foreclosure and no right to sue on those deals is a pittance. The delays and stricture on prosecuting the banks for deliberate and widespread foreclosure  misdeeds allows huge amounts of wriggle time to get off Scott Free. This settlement stinks big time.

It is the same old litany. Back in 2008 under Bush the banks were not broken up or allowed to fail. And Goldman Sachs was allowed access to the Federal Reserve’s privileged credit window. None of these actions were reversed under President Obama and Treasury Secretary Geithner.  Could not do that the system would fail because the complex financial inter-indebtedness would cause financial markets to freeze. Under Obama, Geithner, and Attorney General Holder there have been no successful or meaningful prosecution of the banks, the rating agencies and other financial institutions complicit in the Housing and Banking Crisis.

Naked Capitalism, a blog site devoted to showing the interconnection between Washington and Wall street has a blistering 12 point summary of the “Settlement” – The Top Twelve Reasons Why You Should Hate the Mortgage Settlement. Here is President Obama standing up for the Banksters:

The Announcement looks upbeat and bland, the details are anything but
This is indelible proof that lobbying and campaign finance power is very real and pernicious. Look at the NYTimes coverage of a parallel situation in Greece - “proposed rescue package calls for debt payments as the first priority, whatever happens to Greece itself.” And the whatever is not pretty see here and here.

Meanwhile President Obama got in 2008 and again in 2012 tens of $millions in campaign funds from the banks and financial institutions. This is perfect material for the Republican attack ads. Will Newt “FannieMaeMan” Gingrich take on the issue? How about Mitt “Bain Capitalalized” Romney? Or Rick “Born Again” Santorum. The only Republican likely to even dare to raise the issue is Ron Paul – and he will be ignored.

The five major problems facing not just the US but almost all developed countries are the following:
1)Jobs are going to the developing countries with very favorable rates of exchange and wage level relative  to prosperous developed countries. Wages in China, India, Vietnam, Brazil and others  across the board are a fraction of the developed country wages. How can Canadian, Spanish or US lawyers and legal experts  compete with their  Vietnamese, Peruvian, or Indian counterparts when the skills are roughly comparable but the wages and telepresence both are distinctly better than their home country.
2)Jobs are becoming ever scarcer commodity for all nations as smart machines take over ever more sophisticated tasks. In order to earn  even a median wage, a college degree if not graduate level and an ever longer period of  ”free  or open source” volunteering or low wage  apprenticeship is required  for almost all jobs. Pay equity is shot to hell given top executives pay at 9 sigma levels of expected effectivenes  but performance a) not even approaching 4 sigma levels and b)very much dependent on much less adequately compensated staff and workers.
3)Action on Climate Change and 5 other impending  environmental disasters: 1)energy independence from monopoly sources, 2)ever more expensive  water supplies worldwide, 3) countermeasures to instantly spread communicable disease, 4)species eradication including fish, bees, and biodiversity, 5)air pollution across a broad spectrum of airborne is tripping of ever-increasing allergies, asthma, cancers and other debilitating diseases is at a standstill. Ame  is subject rabid and calculatedly self-serving  anti-science denials. Only overwhelming catastrophes putting vast regions at the edge of disater can  elicit concerted emergency  action.
4)The rate of change across societies both rich and poor is accelerating. There is constant multitasking, rushed decision-making, and action in situations where the  slack in time and resources is at a minimum. Yet asymmetric terrorism, nuclear ambition, and despotic tyrants rule the roost across the world.
5)There is a breakdown in problem solving due to  a)the wicked nature of many problems, b)the anti-rational denials, and  c)the preying on fear, confusion, and short-term memory and often limited understanding  for ulterior ends that dominates the scene. Clearly, the 1% want to retain their privileges and basically unfair equations of income and wealth at everybody else’s expense [see the 2007-2009 Financial Meltdown].

Into the this Wicked Problem Space now place a no longer functioning legislative government. The 1%  of US”Job Creators” have managed to construct and buy over 30 years a mass of political controls  of a profoundly  unfair nature:
1)A Senate in which 40 votes can overturn any bill, action, or appointment. The Senate is one of the deadly  sources of  venomous political partisanship.
2)A House of  which nearly  40% percent  of the members have taken a pledge of no new taxes at a time when the overall taxes as % of GDP are the lowest in 40 years and the 1-percenters  tax paymentsas a % of income  are the lowest in 30 years. This pledge is to a traitor, Grover Norquist,  who advocated the Starve the Beast policies which spend grossly more than you paid for in taxes and thus created the huge deficits that he wants to manage with no new taxes. Norquist has been instrumental in a)sabotaging any Pay As You Go policies that might reduce the debt and b)encouraging massive deficit spending up until 2 years ago.
3)A Us Supreme Court that has allowed corporations and any organization to spend unlimited funds for lobbying and campaign financing but with limited disclosure of who is funding those groups.
4)A system of  too-big-to fail financial rescue that bails out the financial community to the tune $3.3 trillion at tax payers expense. Efforts to limit that exposure in the Dood-Frank and other legislation have been watered down such that they are inoperable in preventing another bank bailout by taxpayers.
5)A system of white collar financial prosecution that with the lone exception of Ponzi Schems [think Madoff and Stafford] and Insider Trading, constantly uses token “biggest fines ever” with no admission of guilt, no prison time or restrictions on the  perpetrators.This is in stark contrast to the Graham Oxley on accounting fraud – which cut off some  gross accounting misconduct during the financial crisis – but left major exceptions.

Given this as a setting, the US Presidential election seems to be heading for a debate betweenMitt  Romney accusing President Obama as being the worst President since George W. Bush and President Obama attacking the Republican Congress for being the perpetrators of  the demise of his Promises of Change.

Oh my goodness gracious – such a disappointment.

Nicholas Kristoff at the NYTimes, has a very telling piece about the Bankers who brought about the 2007-2008 Financial meltdown. Recent disclosures by Bloomberg and others have made it clear that the $0.70 Trillion TARP bailout was just the tip of the iceberg as 10 time the TARP, or $7.0trillion has been spent to bailout the banks, hedge funds, and other “financial institutions”. And that bailout continue to be funneled to the banks. And the banks quid-pro has been declines in small business loans, increased fees for services, and stonewalling on foreclosures and prime mortgage [only homeowner accommodation]. So Kristoff’s arguments carry impact:

In 2007, his team wrote $2 billion in mortgages, he says. Sometimes those were “no documentation” mortgages…
Theckston says that borrowers made harebrained decisions and exaggerated their resources but that bankers were far more culpable — and that all this was driven by pressure from the top.Especially when mortgages were securitized and sold off to investors, he said, senior bankers turned a blind eye to shortcuts.One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.
These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.Theckston, who has a shelf full of awards that he won from Chase, such as “sales manager of the year,” showed me his 2006 performance review. It indicates that 60 percent of his evaluation depended on him increasing high-risk loans.In late 2008, when the mortgage market collapsed, Theckston and most of his colleagues were laid off….
Still, 28 percent of all American mortgages are “underwater,” according to Zillow, a real estate Web site. That means that more is owed than the home is worth, and the figure is up from 23 percent a year ago. That overhang stifles the economy, for it’s difficult to nurture a broad recovery unless real estate and construction revive.All this came into sharper focus this week as Bloomberg Markets magazine published a terrific exposé based on lending records it pried out of the Federal Reserve in a lawsuit. It turns out that the Fed provided an astonishing sum to keep banks afloat — $7.8 trillion, equivalent to more than $25,000 per American.

The article estimated that banks earned up to $13 billion in profits by relending that money to businesses and consumers at higher rates.The Federal Reserve action isn’t a scandal, and arguably it’s a triumph. The Fed did everything imaginable to avert a financial catastrophe — and succeeded. The money was repaid.Yet what is scandalous is the basic unfairness of what has transpired. The federal government rescued highly paid bankers from their reckless decisions. It protected bank shareholders and creditors. But it mostly turned a cold shoulder to some of the most vulnerable and least sophisticated people in America. Last year alone, banks seized more than one million homes.

Sure, some programs exist to help borrowers in trouble, but not nearly enough. We still haven’t taken such basic steps as allowing bankruptcy judges to modify the terms of a mortgage on a primary home. Legislation to address that has gotten nowhere.My daughter and I are reading Steinbeck’s “Grapes of Wrath” aloud to each other, and those Depression-era injustices seem so familiar today.

This is the enduring Occupy Wall Street message – people will not forget what was done by ruthless bankers and their paid agents in government.

Harry’s Law, in yesterday’s episode called Head Games, takes up the Occupy Wall Street Message in full form.The episode deals with a woman whose home is foreclosed; so in desperation she goes and robs one of the bank’s branches. The team’s defense for the woman is the so called Outrageous Government Misconduct defense. In the closing arguments, the Harry’s team cites the outrageous misconduct of the US Government in the Mortgage Meltdown.

The arguments are savvy and up to date. Thousands of Bank’s Mortgage instruments were given highest AAA ratings by the bond agencies right up to the moment where turnover transactions revealed them to be junk or worthless. Derivative CDOS that supposedly protected lenders from these bad debt were themselves useless because the carriers had too many and their valuation was risk deficient. And the mortgage companies bamboozled customers in contravention of their fiduciary trust obligations duping them to take on more debt and at high variable rates than they could afford. All of these financial parties then relied on the government to bail them out when the financial system seized up. Yet none of these financial agents of great misfortune were criminally prosecuted, none of them served time, and most are back on the Street. See the episode here for the exact argumentation.

This is the first time I have seen a popular TV show make the case of recent events in so unequivocal terms. Even 9/11 took until the tenth year anniversary to get coverage of the events [CSI/NY this Fall] or following a 9/11 action more than tangentially. Ditto for Iraq and Afghanistan – even NCIS or FlashPoint deal with these war issues peripherally. In contrast, Harrys Law took the Outrageous Government Misconduct defense for all its worth in a most compelling closing arument.

Unfortunately, this episode may have been a last hurrah by Harry’s Law  writers. The rumor that Harrys Law is being cancelled may have some truth to it because despite the Google Search links to You Tube episodes, they end with this message:

Since all the Harrys Law episodes are hard to find, there appears to be no conspiracy to suppress this episode. Nonetheless one can see why the eviction of Occupy’s Peaceful Protests may achieve “out of sight; out of mind” effectiveness. Will Occupy Movement now find an active Web presence to preserve and promote the Occupy message? Take a fifth and admit NO. Harrys Law got too close to the truth – how can ordinary people observe the Rule of Law when it has been so blatantly bypassed in the Law’s treatment of the malefactors in the Financial Meltdown? Literally, just like in voting and access to politicians, there is the 1% class and the other 99% that make up the Hoi Polloi – the portion of the public to be largely and safely ignored – and thus the 1% answer to different Rules of Law.

In options market trading ye Editor has always wondered why Naked Puts are allowed as transactions. Naked Puts mean I don’t own the underlying stock but I am guaranteed being able to sell it at a fixed price up to a fixed date. Why the transaction? If I own the underlying security a Natural Put acts as a hedge or insurance  against taking a big loss if the stock takes a downturn. For a fee I limit my losses on the stock or commodity in question. But if I don’t own the stock or commodity in question, a Naked Put is just gambling. Financial analysts defend the practice by saying the Naked Puts help make the market more liquid and with so many more participants, prices become more accurate/reflective of the underlying worth of commodity or company. Ye Editor thinks of it as bald brazen gambling.

Andrew Ross Sorkin raised this question in the NYTimes regarding DOJ legal action against Goldman Sachs. Andrew asks why are synthetic CDOs , in which neither contracting party has ownership in the underlying securities [they are both naked] – why are these instruments allowed to be traded? What financial or social purpose do they serve? And given the massive derivative betting taking place and the consequences [think AIG's massive bailout] why not prohibit synthetic CDOs and other naked derivative trading?

Again, financial analysts will advance the same “increasing the efficiency of  markets” arguments cited above for the validity of “Naked Puts”. But with derivatives, especially synthetic derivatives there are many flaws to this efficiency argument:
1)First for synthetic derivatives it is a pure bet for both sides. There is no underlying financial instrument for either party. It just like betting on a NFL game with your neighbor – neither you or your neighbour are  financially committed to either team – you are just betting on the score;
2)Access to information on the derivative instruments is not free and open like most stock markets. The bulk of derivative transactions are done on non-open, minimally regulated OTC [Over The Counter] submarkets. Because most derivatives are traded on nearly opaque submarkets [for example reporting requirement are once every 6 months and many of those reports are just summaries with no details of individual bettors and their exposures], it is very difficult to get an overall sense of where the derivative markets are or where and what is the valuation a group of derivative instruments related by conditions or counterparties.In sum, critical info about all the conditions and counterparties associated with any or a group of derivatives may simply not be available to one or both bettors;
3)Derivative instruments can be  quite complex – so both or one “bettor” may be mistaken or not be able to do proper due diligence assessment of the derivatives due to the financial intricacies Also the theory of risk for these instruments is currently under review for possible corrections;
4)Because there is minimal regulation/control of derivatives, bettors can become highly leveraged as in 2007-2009 – so if anything goes wrong a)the bettor and all associated counterparties can be wiped out in a blink and b) the current volatility of markets, with 3-5% swings in a day for the averages and 5-30% movements in individual financial instruments, inherent risk of derivatives go wrong quickly is high and many going massively wrong is not negligible.
5)The size of the the OTC derivative markets[the opaque or hidden ones] is at the last half year report in June 2011 at $707 trillion or nearly 50 times the US Total Annual GDP. It is huge as seen in the chart.
The growth of derivatives was instrumental in the 2007-2009 Financial Crisis. That growth has resumed. See here for a discussion of whether the gross or net nominal value of derivatives is subject to risk

But Andrew Sorkin does not stop here on derivative risk - he also raises fundamental fiduciary trust questions surrounding the Goldman Sachs market making activities in question. Should a market maker be allowed to assemble an investment that is designed to fail? Goldman is currently hiding under the guise that their client investors were sophisticated and should have done due diligence not trusting Goldman to supply them with a fair bet. But as just elaborated, that is a non-trivial task in the case of derivatives. Thus,  Wall Street continues, seemingly  without even trying, to look  uglier and uglier every passing day. In sum, the article is a must read for the clarity of its questions and explanations of what is at stake in financial and particularly derivative reforms ongoing now in Washington.

This underlines the Occupy Wall Street concerns that, if the Too Big to Fail Banks and other Financial Institutions[think AIG]” Oops, do it again” – Main Street, who are still paying now with continued low  interest rates on their savings  without small business loans for jobs  or foreclosure relief – will be saddled with  the infamous Wall Street win-win proposition => “Heads-we-win-big-bonus compensation, tails-you-have-to-pickup-our-too-big-to-fail tab”.

Is it a tenor of the Times that only an American writing for a British paper, the Guardian, could produce a plausible story of why the Occupy Movements, predominately peaceful, non-violent protests, were shutdown? Naomi Wolf writing for the Guardian,has produced a story that shows that Federal Homeland Security officials worked in co-ordination with 18 mayors to dismantle the Occupy Wall Street movements across the country:

US citizens of all political persuasions are still reeling from images of unparallelled police brutality in a coordinated crackdown against peaceful OWS protesters in cities across the nation this past week. An elderly woman was pepper-sprayed in the face; the scene of unresisting, supine students at UC Davis being pepper-sprayed by phalanxes of riot police went viral online; images proliferated of young women – targeted seemingly for their gender – screaming, dragged by the hair by police in riot gear; and the pictures of a young man, stunned and bleeding profusely from the head, emerged in the record of the middle-of-the-night clearing of Zuccotti Park.
But just when Americans thought we had the picture – was this crazy police and mayoral overkill, on a municipal level, in many different cities? – the picture darkened. The National Union of Journalists and the Committee to Protect Journalists issued a Freedom of Information Act request to investigate possible federal involvement with law enforcement practices that appeared to target journalists. The New York Times reported that “New York cops have arrested, punched, whacked, shoved to the ground and tossed a barrier at reporters and photographers” covering protests. Reporters were asked by NYPD to raise their hands to prove they had credentials: when many dutifully did so, they were taken, upon threat of arrest, away from the story they were covering, and penned far from the site in which the news was unfolding. Other reporters wearing press passes were arrested and roughed up by cops, after being – falsely – informed by police that “It is illegal to take pictures on the sidewalk.”

However, the account quickly turns darker, as Naomi sees more than just harried municipal officials at work:

…. The picture darkened still further when Wonkette and Washingtonsblog.com reported that the Mayor of Oakland acknowledged that the Department of Homeland Security had participated in an 18-city mayor conference call advising mayors on “how to suppress” Occupy protests.

To Europeans, the enormity of this breach may not be obvious at first. Our system of government prohibits the creation of a federalised police force, and forbids federal or militarised involvement in municipal peacekeeping.

I noticed that rightwing pundits and politicians on the TV shows on which I was appearing were all on-message against OWS. … As the puzzle pieces fit together, they began to show coordination against OWS at the highest national levels.Why this massive mobilisation against these not-yet-fully-articulated, unarmed, inchoate people? After all, protesters against the war in Iraq, Tea Party rallies and others have all proceeded without this coordinated crackdown. Is it really the camping? As I write, two hundred young people, with sleeping bags, suitcases and even folding chairs, are still camping out all night and day outside of NBC on public sidewalks – under the benevolent eye of an NYPD cop – awaiting Saturday Night Live tickets, so surely the camping is not the issue. I was still deeply puzzled as to why OWS, this hapless, hopeful band, would call out a violent federal response.

That is, until I found out what it was that OWS actually wanted….

The No 1 agenda item: get the money out of politics. Most often cited was legislation to blunt the effect of the Citizens United ruling, which lets boundless sums enter the campaign process. No 2: reform the banking system to prevent fraud and manipulation, with the most frequent item being to restore the Glass-Steagall Act – the Depression-era law, done away with by President Clinton, that separates investment banks from commercial banks. This law would correct the conditions for the recent crisis, as investment banks could not take risks for profit that create kale derivatives out of thin air, and wipe out the commercial and savings banks.

No 3 was the most clarifying: draft laws against the little-known loophole that currently allows members of Congress to pass legislation affecting Delaware-based corporations in which they themselves are investors.

When I saw this list – and especially the last agenda item – the scales fell from my eyes. Of course, these unarmed people would be having the shit kicked out of them.

The crux of Naomi’s argument is that “Occupy has touched the third rail of our political class’s venality” – the ability to deal in insider information on Wall Street by Congress and members of the Executive branch. And the recent 60 Minutes report based on Peter Heizer’s book would lend credence to Naomi’s Congressional indiscretions [as Naomi noted, insider trading by Martha Stewart of a less degree got her 90 days in the Slammer]. Given the 60 Minutes story, ye Editor is of mixed minds as to the motivation for the clearing of the streets. And so also it appears does Dow Jones:
Wall Street Journal – Congress’s Insider-Trading Non-Scandal
Marketwatch – Congressional insider trading: The story sticks
But on whether there is an oligarchy of the top 0.1% of Americans buying their way to unprecedented influence in the Federal Government, of that I have no doubt.

The above 60 Minutes Report on how badly compromised members of Congress are is echoed in this report from the Daily Beast on Obama’s Energy Department graft that extends well beyond Solyndra. Clearly the US is teetering with political graft and scandal that extends across parties and is making Washington a place of Moral Compromise in which both sides, GOP and Democrats, can say truthfully “Shame on You”. Each side can say the other is worse in selling out the American Public. The consequent result is that treasonous “Starve the Beast”, “Scuttle the Economy, Scuttle Obama”, and “Sell Green Energy to our Bundlers Gain” have now become acceptable political strategies. Inevitable conclusion, the American Public can be easily duped and therefore will be duped by many of its political “representatives”.

America, The Great Stupor Power, is reflected in the past and upcoming Federal Budget and Deficit Debates. Just wait a week for more of the same from the Congressional Deficit Super Committee. The Two Political Gangs, The GOPs and The Dems, are playing a deadly Game of Chicken in which the US Economy and Public  will continue to be the ultimate victims.

Three new reports on MF Global’s Bankruptcy and its Impact on Financial Policy are worth noting:
NYTimes - Gretchen Morgenstern, who has been instrumental in exposed recent Financial Follies, describes the damage to the credibility of current financial regulatory reforms and how the current European financial crisis impacts American banks and financial institutions as a consequence.
Marketwatch – David Widener takes a not often repeated Wall Street view - that key Wall Street institutions and players are allowed to fail over and over often at the cost to shareholders and now tax payers too. He blames both political parties that have become beholden to Wall Street billionaires campaign funding and lobby $ muscle. Hmmm, sounds almost identically the same as Occupy Wall Street protesters.
Bloomberg- William Cohan describes how MF Global bankruptcy puts an end to Wall Streets own financing sources as short-term funds have sunk  Bear Sterns, Lehman and now MF Global among others.

The original story:
MF Global is a futures trader and broker that went bankrupt to the tune $44  billion on Monday. MF Global is a repeat of Bear Sterns and Lehman Brothers bankruptcies from 2007-2008. It is slightly smaller in magnitude but  but not quite as much counterparty, interconnected financial instruments. However the implications for Wall Street are broad as Business Week catches the financially filthy facts on this bankruptcy:

In the end, Jon Corzine was little more than an unsupervised rogue trader. His disproportionately reckless $6.3 billion bet on the credit quality of a few European nations bankrupted MF Global Holdings Ltd. over the course of three dramatic days after the short-term credit markets quickly lost confidence in him and his firm. His gamble will cost MF’s shareholders and creditors billions of dollars and, virtually overnight, put the careers of MF’s almost 3,000 employees in jeopardy.
MF Global now has the distinction of being one of the largest bankruptcies in American corporate history, with almost $40 billion in liabilities. There is also the matter of the hundreds of millions of dollars of customers’ money that regulators have reported to be missing from the firm’s coffers.

It is Wall Street once again proving that Fiduciary Trust is a fiction and that self-regulation is non-existent. Financial Self Control let alone Regulation and Reforms have failed again. The Street fails to self-regulate so the Federal Government has to be called in again:
1) First for a bankruptcy filing in the billions of dollars;
2)For criminal charges associated with the fact that clients accounts to the tune of $700 million are unaccounted for;
3)For regulatory review because MF Global had mixed customers accounts and money with their own. Also MF Globals leverage at 40-1 versus Bear Sterns at 30-1 and lehhman at 35-1 once again raises the issue of control of capitalization;
4)Again for regulatory transgressions in mixing own and client accounts.

Increasingly wild bets are again being made on Wall Street as the false culture of “Masters of the Financial Universe” survives. Financial media have been attacking the Occupy Wall Street movement for making a mess – when the real pooper-scoopers are deeply embedded in a Street Culture gone awry with greedy risk taking. The Street is increasingly a gambling den of rogue traders going for the big Paulson-like payoff while handcuffing the agencies trying to temper these extremes. John Corzine and MF Global is is the poster child for the Volker Rule and tougher Financial Reforms as the Financial Communities own self-regulations have proved incapable of reining in misbehaving major players. But of course it is these exact regulations the Financial elites are working overtime to dismantle. Suddenly Occupy Wall Street is making a lot more sense.

Takethe5th has been advancing the idea that the US, in a major departure from its democratic roots, has been in the process of becoming a Bautocracy. This is the process of the very wealthiest replacing one-man-one-vote with bought political access and therefore power. This buying of influence has been accomplished through unprecedented political access and  power due to unlimited campaign financing and lobbying expenditures. This is an old and very new power. Old because its influence in the past had been curtailed; but new because the US Supreme Court in January 2010 in the Citizens United case made it Supreme Court legal to be a Bautocrat.

The Occupy Wall Street movement is protesting the 30 year accretion of power by the Bautocrats who have accumulated particularly on Wall Street in New York and K Street in Washington. It is a protest against the consequences  of a bautocratic take over of power in America. This takeover of power is reflected in the following trends:
1)Wall Street banks and financial institutions were instrumental in creating the Financial Meltdown
2)Wall Street banks and institutions have received the lions share of the $3.3 trillion dollar and  continuing public bailout;
3)Wall Street and Financial Institutions have nonetheless failed to provide either mortgage relief or funding to small businesses;
4)Wall Street banks and financial institutions have almost completely avoided any prosecution and effective regulation;
5)The big banks are now even bigger, have not been broken up, and despite Dodd-Frank regulation bill could yet again draw on public money in the case of any large bank in danger of bankruptcy.

And Wall Street continues to act negligently with Fiduciary Trust not earning an afterthought. Martketwatch’s Brett Arends cites the latest case – How Wall Street Scammed Mom and Pop — Again.

The question isn’t why some people are “occupying Wall Street” in protest right now.
It’s why so many others aren’t.

Among those missing? How about all those investors who got suckered by Wall Street this year in the disastrous initial public offerings of closed-end mutual funds. Their investments have been absolutely massacred by fees and poor performance.

Their total losses — hard to believe — total about $1 billion. Many of these investors are regular Moms and Pops.

Thomas Herzfeld, who’s been following closed-end funds for decades, says the losses are the worst he can ever remember.

Of course this is not the only recent Wall Street negligence  as evidenced by continued small business loan scarcity, forclosure robo-signings,  increasing banking fees to cite only 3 cases.

NYTimes Paul Krugman also catches the tenor of the Occupy Wall Street protests and why the protest has spread to 25 cities across the US. In Panic of the Plutocrats, Krugman argues

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.
Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

This special treatment can’t bear close scrutiny — and therefore, as they see it, there must be no close scrutiny. Anyone who points out the obvious, no matter how calmly and moderately, must be demonized and driven from the stage. In fact, the more reasonable and moderate a critic sounds, the more urgently he or she must be demonized, hence the frantic sliming of Elizabeth Warren.

So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.

And so the Occupy Wall Street movement is focusing national attention on the Bautocray and the resulting growing disparity in annual income, accumulated wealth and now political influence. Now all the Occupy Wall Street group needs is a logical manifesto that the country can embrace.

Reuters has a story on investigation of S&P and Moody’s by  Justice department for their role in the Mortgage meltdown of 2007-2008.  Clearly the question is why is this probe starting up 3 years or more after the fact. Here are 5 possibilities:
1)It takes a long time to do Financial fraud prosecutions. Also GOP has held up appointments and budgets of Justice Dept;
2)It is very hard to get convictions in some financial fraud cases;
3)The evidence is just coming out and makes successful prosecution more attainable;
4) S&P has pissed off the Obama administration;
5)Ooops – cancel the above - we are assured the prosecution efforts started before the USA debt downgrade.

So their you have the story of Financial Justice in Washington. I cant wait until ABC or CBS has a prime time program,  In The Financial Temples starring  Stephen Colbert and Courtney Cox as Justice Department financial  vigilantes… coming to your screens this Fall.