FRONTLINE investigates why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages.
http://www.pbs.org/wgbh/pages/frontline/untouchables/
WHY HAVE WALL STREET’S LEADERS ESCAPED PROSECUTION
FOR FRAUD RELATED TO THE SALE OF TOXIC MORTGAGES?
FRONTLINE Presents
The Untouchables
Tuesday, January 22, 2013, at 10 P.M. EST on PBS
www.pbs.org/frontline/untouchables
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Twitter: @frontlinepbs #frontline
More than four years since the financial crisis, not one senior Wall Street executive has faced criminal prosecution for fraud. Are Wall Street executives “too big to jail”?
In The Untouchables, premiering Jan. 22, 2013, at 10 P.M. on PBS (check local listings), FRONTLINE producer and correspondent Martin Smith investigates why the U.S. Department of Justice (DOJ) has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse.
Through interviews with top prosecutors, government officials and industry whistleblowers, FRONTLINE reports allegations that Wall Street bankers ignored pervasive fraud when buying pools of mortgage loans. Tom Leonard, a supervisor who examined the quality of loans for major investment banks like Bear Stearns, said bankers instructed him to disregard clear evidence of fraud. “Fraud was the F-word, or the F-bomb. You didn’t use that word,” says Leonard. “By your terms and my terms, yes, it was fraud. By the [industry's] terms, it was something else.”
Former Sen. Ted Kaufman (D-Del.), who was appointed to fill Joe Biden’s long-held Senate seat when he was sworn in as vice president in January 2009, was determined to see bankers in handcuffs. “I was really upset about what went on on Wall Street that brought about the financial crisis,” Kaufman recalls. “That doesn’t happen if there isn’t something bad going on.”
Yet Kaufman left office in late 2010 frustrated by the lack of criminal prosecutions. Jeff Connaughton, Kaufman’s chief of staff, remains convinced that the DOJ failed to make prosecuting Wall Street a top priority. “You’re telling me that not one banker, not one executive on Wall Street, not one player in this entire financial crisis committed provable fraud?” asks Connaughton. “I mean, I just don’t believe that.”
Smith asks Lanny Breuer, assistant attorney general for the DOJ’s Criminal Division, about his failure to criminally indict Wall Street executives. “I think there was a level of greed, a level of excessive risk taking in this situation that I find abominable and very upsetting,” says Breuer. “But that is not what makes a criminal case.”
Critics, including two high-level sources within Breuer’s own division and former New York Attorney General Eliot Spitzer, disagree. “They have not done what needed to be done,” Spitzer says. “The greater risk is that corrupt behavior that is damaging to our economy, that leads to something as enormously painful as the cataclysm of ’08, goes unaddressed.”
New York Attorney General Eric Schneiderman finally filed a major lawsuit against JPMorgan Chase and Bear Stearns in 2012. It closely mirrors claims first made by private plaintiffs almost two years earlier. Despite strong evidence of fraud, the government again decided not to pursue criminal charges. Meanwhile, banking scandals continue to surface almost weekly.
The Untouchables is written and produced by Martin Smith. Co-producers are Linda Hirsch and Ben Gold. The deputy executive producer of FRONTLINE is Raney Aronson-Rath. The executive producer of FRONTLINE is David Fanning.
FRONTLINE is produced by WGBH Boston and is broadcast nationwide on PBS. Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation. Additional funding is provided by the Park Foundation and the FRONTLINE Journalism Fund. FRONTLINE is closed-captioned for deaf and hard-of-hearing viewers by the Media Access Group at WGBH. FRONTLINE is a registered trademark of WGBH Educational Foundation.
Press contact for FRONTLINE:
Diane Hebert-Farrell, (617) 300-5366, diane_hebert_farrell@wgbh.org
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I am the George Hartzman Rolling Stone’s Matt Taibbi wrote of the other week, and it appears that I am aware of a name/story that has not passed the Statute of Limitations.
Wachovia CEO Robert Steel bought Wachovia’s stock in a breach of trust, confidence and his fiduciary duty to my clients and shareholders while in possession of material, nonpublic information.
On July 9, 2008, Robert Steel became president and CEO of Wachovia after working for Goldman Sachs from 1976 to 2004 and the US Treasury under former Goldman Sachs CEO Henry Paulson from October 10, 2006 until July 9, 2008. Mr. Steel was “the principal adviser to the secretary on matters of domestic finance and led the department’s activities regarding the U.S. financial system, fiscal policy and operations, governmental assets and liabilities, and related economic matters,” according to Wikipedia’s biography. Mr. Steel most likely knew about other firm’s borrowings via his time spent at the U.S. Treasury Department.
On July 22, 2008, Mr. Steel personally purchased 1,000,000 shares of Wachovia’s stock as the company’s TAF borrowing reached $12.5 billion, which appears not to have been disclosed in securities filings audited by KPMG.
In an interview with CNBC’s Jim Cramer On Monday, September 15, 2008, Robert Steel said “I think it’s really about…transparency. People have to understand the assets and really be able to say, this is what I own… Complete disclosure. …we can work through this with transparency, liquidity and capital. …Our strategy was to give you all the data so you could make your own model. We tell you what we’re doing… …we’re raising capital ourselves by basically shrinking the balance sheet, cutting the dividend, cutting expenses. We can create more capital ourselves that way… for now, we feel like we can work through this…” After Jim Cramer asked “Should there be any sort of quick regulatory relief from the SEC that would make life easier to be able to make your bank much stronger?”, Mr. Steel responded “I don’t think it’s about my bank.”
After not reporting TAF loans, Wachovia’s CEO wrote “I, Robert K. Steel, certify that: I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 of Wachovia Corporation; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report” on October 30, 2008.
Mr. Steel was at least aware of Wachovia’s Federal Reserve loans since July, 2012, if not the undisclosed loans to multiples of other financial institutions.
If Mr. Steel was “the principal adviser…on matters of domestic finance and led the department’s activities regarding the U.S. financial system, fiscal policy and operations”, how could he not have known and acted on undisclosed material information?
On June 22, 2010, Robert Steel was appointed Deputy Mayor for Economic Development by New York City Mayor Michael Bloomberg, after which, Steel resigned his seat on the Wells Fargo board. According to Morningstar data, Mr. Steel owned 601,903 shares of Wells Fargo in 2010, which would be worth $20,446,644.91 as of October 26, 2012.
George Hartzman
Greensboro , North Carolina
George, thanks for sharing this info. It seems to me, however, that it needs to be presented to the authorities – an Attorney General for instance, with the proper ‘proof’, etc. I wish there were something I felt I could do about it, but I don’t see this as my ‘job’ here. I wish you the best, and I’m suggesting that if you can you go for it! Hugs, ~Jean
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