“Phil Angelides, former Chairman of the Financial Crisis Inquiry Commission, is at it again. He sent me a second email on April 18, 2016, calling for individual crisis-era bankers/Wall Street to be prosecuted…

…His main line of reasoning is as follows: “The great commission I chaired found significant numbers of defective mortgage loans and the Department of Justice (DOJ) used this evidence to obtain $40 billion in fines from major financial institutions, so there has to be bankers who committed crimes. There just has to be and I don’t understand how they haven’t been prosecuted. I want them prosecuted!”

Think about this point: If Mr. Angelides had chaired an independent and unbiased financial crisis commission, why would he five years later still be calling for the heads of banking and Wall Street executives? Wouldn’t that ruin any claims you could make about being objective and independent? I think so. So why is he doing it?  I think it’s because the truth is emerging about his highly partisan committee and the real root-causes of the crisis, and the truth isn’t making him look very good. (I also think he might be looking for a job in a Clinton or Bernie administration.)

Read my two blog postings today, from two of Mr. Angelides fellow commissioners: Mr. Douglas Holtz-Eakin (April 27, 2016 – Statement 1165) and Mr. Peter J. Wallison (April 27, 2016 – Statement 1164). They both make clear that Mr. Angelides was a terrible and politically-biased Chairman and that the majority report was nothing more than a liberal Democrat-white wash. That’s why EVERY Republican (four of the ten commissioners) dissented to the majority report and why they wrote two dissenting and far more accurate reports on the crisis. Here is what Mr. Holtz-Eakin said about the FCIC Mr. Angelides chaired:

“After all, taken at face value, it (The Financial Crisis Inquiry Commission) utterly failed in its mission to provide the American public with a clear consensus explanation for what caused the crisis…The real agenda was to deal with the politics of the financial crisis. The Democrats wanted the narrative for the cause of the financial crisis to be that greedy bankers rigged the game in Washington and imposed this crisis on the American people for their own benefit. It remains the prevailing view to this day. It is completely wrong, but it still has a phenomenal amount of resonance with the American people.”

In regards to the $40 billion in settlements, I would note that the government has the awesome power to coerce the Too Big to Fail Banks/Wall Street, whose liabilities and mortgages are mostly guaranteed by the government, to say almost anything they want. That doesn’t make it true. Truth is determined in a court of law, where the facts in dispute are determined and applied to the law. The government settled because they didn’t want the truth to come out in court, where they likely would have lost. In regards to Mr. Angelides claims about defective mortgages, I have blogged a lot about that subject, about it being a false, Red Herring. Here is one blog posting you should read that I believe powerfully refutes this claim:

October 7, 2014 – Statement 410: “Again, the truth is finally emerging. FHA’s audit of mortgage loans insured by them in Q1 2014 apparently has uncovered huge, “material” underwriting error rates. If this is true, it goes a long way to disprove the mainstream view that pre-crisis mortgage underwriting deficiencies were a material cause of mortgage (and mortgage securities) losses during the financial crisis…

Finally, it’s a little nasty, but I have come to believe that Mr. Angelides is really a nasty man, whose sole goal is to further is liberal political career (at the expense of his fellow Americans knowing the truth about the financial crisis) so here goes…it’s true. California’s public pension programs are causing an emerging financial catastrophe for our state and local governments and will result in massively higher taxes for its citizens and/or reduced public services and Mr. Angelides as a former State Treasurer sat on CalPERS board for years and did nothing. Even today, one of his cronies runs CalPERS. When I read the online Sacrament Bee article Mr. Angelides wrote below, I confess that I loved this readers comment: “Phil Angelides should count his blessings that the FBI didn’t put him in jail for the way he mismanaged CalPERS.”, Rick LaBonte”, Mike Perry, former Chairman and CEO, IndyMac Bank, and fifth-generation Californian

I thought you might be interested in my recent op-ed “No Consequences, No Justice in Goldman Sachs Settlement” which appeared in The Sacramento Bee and other McClatchy newspapers this weekend.

More than five years ago, the Financial Crisis Inquiry Commission, of which I served as Chairman, released key evidence it had obtained that showed that major financial institutions, including Goldman Sachs, included significant numbers of clearly defective loans in mortgage securities they were peddling to investors and then misled investors about the quality of loans in those securities. The commission referred this matter to the Department of Justice (DOJ) for further investigation and, if warranted, prosecution. Yet, while the DOJ has obtained more than $40 billion in fines from major financial institutions related to this misconduct, it has not named one single executive in any civil or criminal action or otherwise held any individuals accountable for the conduct that led to those fines. The Goldman Sachs settlement announced last week – like the previous deals between the DOJ and big financial institutions – contained no consequences for the individuals who drove or condoned wrongdoing. 

Here is a link to the article, which also appears below: 

http://www.sacbee.com/opinion/california-forum/article71877727.html 

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No consequences, no justice in Goldman Sachs settlement

BY PHIL ANGELIDES

Special to The Bee

The U.S. Department of Justice last week announced with great fanfare a settlement under which Goldman Sachs would ostensibly pay out more than $5 billion for misconduct related to its sales of mortgage securities to investors in the run up to the 2008 financial crisis.

It’s now clear from a review of the settlement that Goldman Sachs likely will pay much less in penalties than the Justice Department claims, due to special credits included in the deal and, unbelievably, tax deductions Goldman Sachs will receive for payments it makes under the settlement.

Disturbing as this may be, what’s most troubling is that this settlement agreement – like previous deals between the Justice Department and big financial institutions – contains no consequences for the executives who drove or condoned wrongdoing. As a result, it will not deter future financial lawbreaking and will further undermine the public’s faith in the fairness of our legal system.

In September 2010, at a public hearing held in Sacramento, the Financial Crisis Inquiry Commission released key evidence it had obtained that showed that major financial institutions, including Goldman Sachs, included significant numbers of clearly defective loans in mortgage securities they were peddling to investors and then misled investors about the quality of loans in those securities.

The commission referred this matter to the Justice Department for further investigation and, if warranted, prosecution. In its final report to the president and Congress, the commission noted that the conduct engaged in by these financial firms raised serious questions about violations of federal securities laws.

Citing the commission’s evidence, the government obtained more than $40 billion in fines from 18 major financial institutions, including Goldman Sachs – fines that will be paid by shareholders (read: your pension fund or mutual fund). Yet, stunningly, more than five years after the commission’s evidence was made public, the Justice Department has not named one single executive in any civil or criminal action or otherwise held any individuals accountable for the conduct that led to those fines. The Goldman Sachs settlement continues this shameful practice.

How is it possible that banks engaged in such massive misconduct, but no banker was involved? Is it possible that we have witnessed an immaculate corruption? It defies common sense.

The Justice Department’s failure to punish wrongdoing at major financial institutions stands in stark contrast to its vigorous prosecution of more than 2,700 individuals at the local level – mortgage brokers, borrowers, appraisers – who were small cogs in the corrupt mortgage machine.

The U.S. Attorney’s Office for the Eastern District of California has prosecuted more than 300 mortgage fraud cases, but at the news conference announcing the settlement, U.S. Attorney Benjamin Wagner reportedly indicated that his office is not conducting a criminal probe of Goldman Sachs – even though more than five years have passed since evidence of malfeasance was first made available to the Justice Department and the 10-year statute of limitations will soon expire.

Apparently, if someone lies about 10 mortgage loans, they will face the full force of the law. If someone lies about hundreds of thousands of loans, then they can count on the shareholders of their company to pay their way to exoneration.

Goldman Sachs’ stock closed up the day the settlement was announced. That says it all. Our financial system, our legal system and our democracy deserve better.

Phil Angelides, former California state treasurer, served as chairman of the Financial Crisis Inquiry Commission, which conducted the nation’s official inquiry into the financial crisis. Contact Angelides at pa@angelides.com.

Phil Angelides, 3301 C Street, Suite 1000 2nd Floor, Sacramento, CA 95816

Sent by pa@angelides.com in collaboration with Constant Contact

Posted on April 27, 2016, in Postings. Bookmark the permalink. Leave a comment.

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