Courtesy of Pam Martens.
President Obama Nominating Mary Jo White for Chair of the Securities and Exchange Commission,
January 24, 2013
Yesterday, Mary Jo White was in London to address the International Organization of Securities Commissions (IOSCO). While there, she commented on the U.K.’s new plan to hold senior managers in the finance industry responsible for fraud in their departments. Each senior manager will have a specific delegated responsibility and if fraud occurs in their area, he or she can be terminated and banned for life from the industry if the senior manager had knowledge of the fraud. White called the idea “intriguing.”
While White was chatting with her fellow securities regulators in London on this novel idea of actually holding crooked Wall Street bosses accountable, Thomas Hayes was on trial in another section of London over charges that he rigged the benchmark interest rate, Libor, on which interest rates on loans and financial instruments are set around the world. Yesterday, Hayes produced for the jury a “Guide to Publishing Libor Rates,” which his superiors at UBS had crafted for traders, teaching them how to manipulate Libor to benefit trading positions of UBS. Hayes’ bosses are not on trial.
In 2012 when JPMorgan Chase was caught using hundreds of billions of dollars of its depositors’ money inside its commercial bank to make wild, exotic derivative bets (London Whale affair) to benefit its own profits, while losing at least $6.2 billion in the process, neither the head of that unit, Ina Drew, nor the company’s CEO, Jamie Dimon, were charged. Only two low-level traders, Javier Martín-Artajo and Julien Grout, were charged in the matter for hiding losses on the trades. Both of these individuals live abroad and efforts to extradite them for trial in the U.S. have thus far failed, conveniently leaving the public in the dark about how much their bosses knew.
On October 21 of last year, the Inspector General of the Federal Reserve System released a sanitized report on the Federal Reserve Bank of New York’s supervision of JPMorgan Chase during the London Whale debacle. The skimpy report revealed that the staff of the New York Fed, one of JPMorgan’s regulators, had on three occasions – 2008, 2009, and 2010 – recommended an examination of the Chief Investment Office where the $6.2 billion in London Whale derivative losses were eventually discovered in 2012. The recommended examinations mysteriously didn’t happen. Jamie Dimon sat on the Board of Directors of the New York Fed – his own bank’s regulator – from 2007 through 2012.
On November 21 of last year, the President of the New York Fed, William Dudley, was himself hauled before a Senate panel to answer questions swirling around its coziness with the Wall Street firms it regulates. One deal at Goldman Sachs was allowed to proceed because it was “legal but shady” in the opinion of a New York Fed official. Shady is clearly the best one can hope for in the midst of epic corruption on Wall Street today.
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