Tag: Wall Street

Annals Of Corporate Oligarchy: Burying Wall Street Fraud

This isn’t my usual bailiwick. But the appalling, frustrating, and ultimately dispiriting story Matt Taibbi tells about the fate of key Wall Street whistleblowerAlayne Fleischmann reveals (yet again) the essential corruption of our democracy, and the degree to which corporate power and influence dominate public policy. And that is arguably one of the biggest hurdles to getting anything sensible done on everything from climate change to income inequality.

Here’s the set-up:

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”

Read the whole thing. Here’s how one watchdog describes the problem to Taibbi:

“The kid-gloves approach that the DOJ and the SEC take with Wall Street is as inexplicable as it is indefensible,” says Dennis Kelleher of the financial reform group Better Markets, which would later file suit challenging the Chase settlement. “They typically charge only one offense when there are dozens. It would be like charging a serial murderer with a single assault and giving them probation.”

Like Edward Snowden, Fleischmann tried to do the right thing by working within the system to report the fraud she witnessed. As with Edward Snowden, the system failed, chewing her up and trying to bury her instead of addressing the crimes she reported. So, to her credit, she went outside the system despite the consequences to her life and career, in the desperate hope that justice will be done.

That is an act of bravery. Hopefully, that will turn out to mean something.

The New Wall Street Dream

The determined face of Jason Trigg, Wall Street revolutionary.

Just when you are convinced that Wall Street is eviscerating our future by sucking up the best talent in the country with the lure of mega-wealth, along comes a small movement of whiz-kids who are not going to Wall Street simply because they want to live like the 1 %:

Jason Trigg went into finance because he is after money — as much as he can earn.

The 25-year-old certainly had other career options. An MIT computer science graduate, he could be writing software for the next tech giant. Or he might have gone into academia in computing or applied math or even biology. He could literally be working to cure cancer.

Instead, he goes to work each morning for a high-frequency trading firm. It’s a hedge fund on steroids. He writes software that turns a lot of money into even more money. For his labors, he reaps an uptown salary — and over time his earning potential is unbounded. It’s all part of the plan.

Why this compulsion? It’s not for fast cars or fancy houses. Trigg makes money just to give it away. His logic is simple: The more he makes, the more good he can do.

He’s figured out just how to take measure of his contribution. His outlet of choice is the Against Malaria Foundation, considered one of the world’s most effective charities. It estimates that a $2,500 donation can save one life. A quantitative analyst at Trigg’s hedge fund can earn well more than $100,000 a year. By giving away half of a high finance salary, Trigg says, he can save many more lives than he could on an academic’s salary.

In another generation, giving something back might have more commonly led to a missionary stint digging wells in Kenya. This generation, perhaps more comfortable with data than labor, is leveraging its wealth for a better end. Instead of digging wells, it’s paying so that more wells are dug….[snip]

…While some of his peers have shunned Wall Street as the land of the morally bankrupt, Trigg’s moral code steered him there. And he’s not alone. To an emerging class of young professionals in America and Britain, making gobs of money is the surest way to save the world. When you ask Trigg where he got the idea, his answer is a common refrain among this crowd: “I feel like I’d read stuff by Peter Singer.”

It’s sort of like Bill Gates and his Giving Pledge, except these guys aren’t bothering to stockpile billions, or live rich, before giving most of it away. So you gotta love Peter Singer (and hope that the money rolling in doesn’t corrupt the idealism of the enterprise). Because if every young trader and hedgie played the Wall Street game like this, it would be an excellent mechanism for transferring wealth from the richest among us to the neediest among us. Though it wouldn’t be entirely sustainable because Wall Street would no longer be gushing 1 percenters (because they would be giving all their money away first). Not that Trigg (or many others) would mind.

Ben Bernanke might have been channeling Trigg and his cohort in his address to the Princeton commencement. Among other things, he said:  “A career decision based only on money and not on love of the work or a desire to make a difference is a recipe for unhappiness.”

If that insight becomes conventional wisdom, and future generations start to live by that code rather than the code of wealth and celebrity that currently dominates our culture, maybe there is hope.

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