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Bloomberg News reported, on April 8th, that a Securities and Exchange Commission prosecuting attorney, James Kidney, said at his recent retirement party on March 27th, that his prosecutions of Goldman Sachs and other mega-banks had been squelched by top people at the agency, because they "were more focused on getting high-paying jobs after their government service than on bringing difficult cases." He suggested that SEC officials knew that Wall Street would likely hire them after the SEC at much bigger pay than their government remuneration was, so long as the SEC wouldn't prosecute those megabank executives on any criminal charges for helping to cause the mortgage-backed securities scams and resulting 2008 economic crash.
His "remarks drew applause from the crowd of about 70 people," according to the Bloomberg report. This would indicate that other SEC prosecutors feel similarly squelched by their bosses.
Kidney's speech said that his superiors did not "believe in afflicting the comfortable and powerful."
Referring to the agency's public-relations tactic of defending its prosecution-record by use of what he considered to be misleading statistics, Kidney said, "It's a cancer" at the SEC.
Two recent studies have provided additional depth to Kidney's assertions, by showing that Obama and his Administration had lied when they promised to prosecute Wall Street executives who had cheated outside investors, and deceived homebuyers, when creating and selling mortgage-backed securities for sale to investors throughout the world.
President Obama personally led in this lying.
On May 20, 2009, at the signing into law of both the Helping Families Save Their Homes Act and the Fraud Enforcement and Recovery Act, Obama said: "This bill nearly doubles the FBI's mortgage and financial fraud program, allowing it to better target fraud in hard-hit areas. That's why it provides the resources necessary for other law enforcement and federal agencies, from the Department of Justice to the SEC to the Secret Service, to pursue these criminals, bring them to justice, and protect hardworking Americans affected most by these crimes. It's also why it expands DOJ's authority to prosecute fraud that takes place in many of the private institutions not covered under current federal bank fraud criminal statutes -- institutions where more than half of all subprime mortgages came from as recently as four years ago."
Then, in the President's 24 January 2012 State of the Union Address, he said: "Tonight, I'm asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. (Applause.) This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans. Now, a return to the American values of fair play and shared responsibility will help protect our people and our economy."
However, two years later, the Inspector General of the U.S. Department of Justice issued on 13 March 2014 its "Audit of the Department of Justice's Efforts to Address Mortgage Fraud," and reported that Obama's promises to prosecute turned out to be just a lie. DOJ didn't even try; and they lied even about their efforts. The IG found: "DOJ did not uniformly ensure that mortgage fraud was prioritized at a level commensurate with its public statements. For example, the Federal Bureau of Investigation (FBI) Criminal Investigative Division ranked mortgage fraud as the lowest criminal threat in its lowest crime category. Additionally, we found mortgage fraud to be a low priority, or not [even] listed as a priority, for the FBI Field Offices we visited." Not just that, but, "Many Assistant United States Attorneys (AUSA) informed us about underreporting and misclassification of mortgage fraud cases." This was important because, "Capturing such information would allow DOJ to ... better evaluate its performance in targeting high-profile offenders."
Privately, Obama had told Wall Street executives that he would protect them. On 27 March 2009, Obama assembled the top executives of the bailed-out financial firms in a secret meeting at the White House and he assured them that he would cover their backs; he promised "My administration is the only thing between you and the pitchforks". It's not on the White House website; it was leaked out, which is one of the reasons Obama hates leakers. What the DOJ's IG indicated was, in effect, that Obama had kept his secret promise to them.
The CEOs went into their traditional stance. "It's almost impossible to set caps [to their bonuses]; it's never worked, and you lose your best people," said one. "We're competing for talent on an international market," said another. Obama cut them off.
"Be careful how you make those statements, gentlemen. The public isn't buying that," he said. "My administration is the only thing between you and the pitchforks."
It was an attention grabber, no doubt, especially that carefully chosen last word.
But then Obama's flat tone turned to one of support, even sympathy. "You guys have an acute public relations problem that's turning into a political problem," he said. "And I want to help. But you need to show that you get that this is a crisis and that everyone has to make some sacrifices." According to one of the participants, he then said, "I'm not out there to go after you. I'm protecting you. But if I'm going to shield you from public and congressional anger, you have to give me something to work with on these issues of compensation."
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