January 27, 2009
The horror stories just seem to never end about those people who are responsible for the financial crisis and those that continue to abuse their position and misusing taxpayer money. Yesterday, the New York Times published a story about how Citigroup knowingly conned the New York Metropolitan Transportation Authority (MTA), as well as others, into investing in auction-rate securities after Citigroup was warned of the impending disaster. In addition, Goldman Sachs advised the MTA to take the deal Citigroup was offering. The results were that Citigroup made a half-million dollars, Goldman Sachs made almost $1 million, and the MTA lost their butts on the deal.
Two days ago the New York Times published an article on how Richard Fuld Jr., former chairman & CEO of Lehman Brothers, sold his $13.75 million home to his wife for $10. The sale took place on November 10, 2008.
On the 22nd of this month The Washington Post published an article on how banks skirted supervision by switching their charters. Many of these banks switched just before or just as investigations were about to begin or the supervising agency had told them they were going to be investigated. As the Post article said “the moves, known as charter conversions, highlight the tremendous leverage that banks hold in their relationships with government supervisors”.
On January 24th of this year The Washington Post also published an article about how executives paid out billions of dollars in bonuses even after they received taxpayer money just to stay in business. In this same article, the Post reported that Merrill Lynch is being investigated for secretly paying out bonuses just days before they merged with Bank of America. The New York Times confirmed today in an article that Merrill Lynch, with the help of Bank of America, paid out $4 billion in bonuses (yes, that’s 4 billion) just three days before the government supported sale of Merrill Lynch to BofA.
Yesterday the New York Post published an article on how Citigroup just spent $50 million on a new corporate jet. Naturally Citigroup used some of the $45 billion they received from the American taxpayers to buy their latest toy. But today, caught with their pants down, Citigroup announced they were not going to take delivery of the new jet. Wonder what made them do that and what the cancelation fee will be.
CNBC’s Maria Bartiroma recently interview John Thain. Thain was Chairman and CEO of Merrill Lynch before their merger with Bank of America. CNBC played a clip of that interview today where Thain was apologizing for spending over $1 million remodeling his office at Merrill Lynch around December 2007. In his interview Thain tried to justify the expenditure by saying it was “a year ago in a different environment”, as if that somehow made it ok that he spent that kind of investor money on himself. As a side note to this, those anchors and reporters at CNBC was absolutely horrified at the story as they listened to the interview. But a year ago those same anchors and reporters were all smiles & dripping with envy when they were reporting how “successful” John Thain and Merrill Lynch was; it never occurred to them at the time to question just how could Merrill Lynch be making such astronomical profits.
The answer to the title question is “No”; no criminal nor any other kind of action will ever be brought against these thieves and crooks for two reasons. First, they are “gold” collar criminals; a few steps above the white collar criminal, and we know white collar criminals are very rarely punished. Second, they have too many powerful friends. Oh, one or two may be singled out for a little hand slapping and a few dollars in fines in order to make us blue collar boys and girls feel better. But other than that, don’t hold your breath for anything more. Nothing will be done to these gold collar, respectable “salt of the earth” folks. They will just take our billions of tax dollars and ride off into the sunset.