Is this investigation for real?

The Feds are apparently preparing a very big Wall Street prosecution:
U.S. in Vast Insider Trading Probe

It’s interesting that this was not revealed until after the election, because the Justice Department cracking down on financial crooks would have been a good thing to leak, politically. It also appears that Goldman Sachs is a target, which is long overdue, but it’s hard for me to believe they won’t slip out of the net again as they always do.

Unfortunately, all of the details appear to indicate the classic old-fashioned leak-info-about-upcoming-acquisitions type of insider trading, while the criminality which killed the economy, involving fraudulent borrowing and lending and bond-rating, will go unpunished. I’ll have a post tomorrow about the “math abuse” behind the financial collapse.

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About Polymath

Discoverable with effort
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8 Responses to Is this investigation for real?

  1. What? You’d want all fraudsters to go to jail? I mean, everybody who lied on their loan application committed fraud. Not going to do that well with the voters.

  2. I want them all to go to jail with consecutive sentences, 1 week for each of the fraudulent mortgages they were involved with. So the homeowners get a week, or 3 or 4 weekends, similar to the punishment for a DWI. The local bankers get a year or two. The mortgage aggregators who created the toxic bonds will get about 20 years, and the bigwigs at the heads of the companies involved will get sentences measured in centuries or millennia. Sound fair?

  3. FortitudineVincimus says:

    Sounds great!

    Having worked in day-trading, I don’t quite know what to say about it. It’s just bets made on bets made on bets.

    Somewhere along the line, liquidity is being moved to where it’s needed, but the idea of buying an option that the stock price of company A will drop 20 points sounds ridiculous. But if the money is there to be played with, someone will play with it, as long as it’s possible to make several percentage points return in a single day.

    In reality, there is no reason why bank customers can’t demand that their money NOT be used to gamble on the stock market. It just requires more information to know what you doing, a requirement most people seem unwilling to have to deal with. But with freedom, comes responsibility, and if you have a problem with money being thrown around in crazy bets, invest your money in long-term mutual funds where the funds will provide businesses with the capital they need to grow.

    I can easily see responsible and ethical money management becoming a key component of branding.

  4. FortitudineVincimus, why the heck would I invest in mutual funds? They’re horrible for preserving your wealth, considering that the managers have a bigger interest in meeting their benchmarks rather than doing what’s good on the long run. A mutual fund manager would rather be down 18% if the market is down 20% than be up 8% if the market is up 10%. Anybody who is willing to trust such an institution deserves to lose their money.

    Polymath, why would the local banking people go to jail for the frauds of the people borrowing money? If the people getting mortgages lied to them and they took their words for it, the bankers are innocent. If they did what Paulson did though, for instance, they deserve to rot in jail. If I promise to pay $20,000 to you and you sell my obligation to someone to who you owe $20,000, you didn’t commit fraud if I lied to you.

  5. Because the local bankers were very often in on the fraud. They were the ones looking the other way or telling the applicants what kinds of lies they needed to tell to get their loans approved, because they knew that once they could sell the loans off to be repackaged, their previous underwriting standards were obsolete.

  6. FortitudineVincimus says:

    That is, of course, at your discretion as the customer.

  7. rebelliousvanilla says:

    Polymath, if you can prove that a banker told applicants to lie, then I agree. They need to go to jail for each instruction they gave.

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