Derivative Fraud? Where Are OUR Cops?

Amazing, when you consider the implications....

Feb. 3 (Bloomberg) -- Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.

Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor’s office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.

Remember that we've had a few of these here, right?  Jefferson County Alabama anyone?   They're not alone either, as I've pointed out repeatedly.

Once is an accident - or a rogue employee.  Twice is a curious event.  A pattern of conduct is racketeering.

Which do we have here?  I don't know, but the refusal of our "regulators" to take this issue seriously, and they have refused, while foreign regulators are seizing assets is rather telling.

Then there's the FSA over in Britain, who recently put their foot down: Either stop cheating on bonus and tax rules or lose your banking license.

I have long written about The Bezzle in the financial system and that we must get it out of the system if we are to have something approaching real, verifiable and sustainable economic growth.

So far we have seen no interest in that from the regulators in this country, probably because they're well-aware that this would mean revoking some banking licenses and putting a lot of very well-connected people out of "business."

Where does it end in this country folks?  There's more than enough evidence that "a river (of corruption) runs through it" - "it", of course, being our economic and banking system. Look at the update this morning out of "Biggovernment" related to the story I discussed yesterday with the AIG "takeunder" by The NY Fed:

The FRBNY wanted more than just a standard debt deal; it wanted absolute control and ownership of AIG. But, it was illegal for the FRBNY to hold equity and the Treasury Dept. did not yet have the legislative authority, later granted under EESA, to do so. But this didn’t stop then-President Geithner or his general counsel Thomas Baxter. They crafted the AIG Trust to accomplish the same goal. But the Trust was transparently invalid and illegal for two fundamental reasons: One, the FED maintained absolute control over the Trust’s existence, its terms, and the Trustees through Section 1.03 of the Trust Agreement. This, as we explain in our Response papers attached, invalidates the trust; yet the government continues to speak about this as an “independent” Trust.

That's a raw allegation of unlawful conduct, coming from a bar-admitted attorney. 

WHERE ARE THE DAMN COPS AND WHY AM I HEARING HANDCUFFS CLANK SHUT IN THE UK AND EUROPE GENERALLY, WHILE HERE ALL THE COPS ARE IN THE DONUT SHOP SWILLING THEIR COFFEE?

Do I have respect for Barofsky?  Yes.  He has been like a breath of fresh air looking into these matters since he was appointed, despite what appears to be intentional and strong interference from Treasury and others.

But Barofsky is not enough and a few show trials to appease the proletariat won't solve the problem.  The issues are structural and must be fixed, not papered over nor will offering up a few sacrificial lambs resolve a thing.  Indeed such appeasement simply adds more instability to an already dangerous situation.

We have 50 State Attorney Generals and we allegedly have a federal Attorney General as well.  There are more than enough cops to investigate the edifices and artifices that have been put forward by the so-called "financial system" in the name of "innovation" that, I believe, have in fact been nothing more than sophisticated equity and wealth-stripping schemes.

The housing market implosion laid bare upon the table The Bezzle, since there was simply not enough "slop" left in the system to hide it any more.  As the layers of the onion have been peeled back we have found more and more instances where "products" were not structured for any reasonable economic benefit of the person or entity that was supposedly "helped", but rather as a means of stripping off funds through concealment of material facts either intentionally or through impenetrable complexity.  So-called "CDOs" and "CDO^2s" were sold with thousands of pages of documentation "behind" them - a literal impossibility to read and understand before the "investor" plopped down his or her money.  When these blew up it became apparent that the so-called "credit quality" contained in these securities not only didn't exist in the present it never existed - yet those little letters "AAA" were relied upon as representing credit quality equivalent to that of the United States Federal Government.

It's all BS folks and that we do not currently have literal dozens of Grand Juries empaneled to investigate and hand up indictments against the "titans of financial industry" on downward is an outrage.

We will not see true economic progress or recovery until we rid the system of the parasitic vampires that are literally draining the blood from our economic system.  While some degree of embezzlement and fraud is always present in an economy when you reach the point that so-called "lending" has turned into a Ponzi-style circus with everyone looking for a greater sucker to offload their latest piece of trash upon at a profit (for them) you've also reached the stage where that nation's economy becomes subject to outright collapse.

We stared into that abyss in 2008 and early 2009, but rather than learn from it, revoking the business and banking licenses of the worst offenders, breaking up the monolithic businesses that threatened to blow up the world unless their demands for (even more) money were met, banning the opaque products and jailing the principals we have instead coddled them and saddled our children and grandchildren with the costs of bailing out the (proper and appropriate) detonation of these bogus transactions.

We have fixed exactly nothing that led to the implosion.  Instead we erected a wall around the burning building claiming that the building inside the wall is not really on fire and then piled up barrels of nitroglycerine around the outside!  Unless we get off our duffs and address the actual underlying cause of the mess - the rampant and outrageous scams throughout corporate America we will have not just another collapse as we witnessed in 2008 but a worse one, and it will come sooner rather than later.

Choose America.