The Scam Wall Street Learned From the Mafia

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kalikshama -> The Scam Wall Street Learned From the Mafia (6/30/2012 2:06:41 PM)
How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo. But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street. The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime. In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime. USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordinated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it. More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies. But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America's gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show. 1. THE SCAM Read more: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620#ixzz1zJSo0nhJ

erieangel -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 2:27:47 PM)
And then, of course, there is that uncomfortable similarity between how the mafia does business and venture capitalism. Tony Soprano explains it: http://www.youtube.com/watch?v=reiq4lEvnEw

DarkSteven -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 2:58:41 PM)
Collusion and price-fixing. Let's see if the pols actually can vote their ethics instead of their pocketbooks.

erieangel -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 3:40:04 PM)
quote: ORIGINAL: DarkSteven Collusion and price-fixing. Let's see if the pols actually can vote their ethics instead of their pocketbooks. Do you actually doubt which way those currently in office and many now running would vote?

MasterG2kTR -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 3:59:02 PM)
quote: ORIGINAL: DarkSteven Collusion and price-fixing. Let's see if the pols actually can vote their ethics instead of their pocketbooks. Oh god.....don't say that.....if they vote their ethics we are truly fucked!!

Politesub53 -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 4:14:18 PM)
Kalik........More news in the UK this week on the Libor and Barclays Bank. Word has it that this is the tip of a very big iceberg. http://www.bbc.co.uk/news/uk-politics-18640916

kalikshama -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 4:23:56 PM)
quote: More news in the UK this week on the Libor and Barclays Bank. That's next in my queue.

kalikshama -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 4:25:10 PM)
quote: ORIGINAL: DarkSteven Collusion and price-fixing. Let's see if the pols actually can vote their ethics instead of their pocketbooks. Alas - Senators Grovel, Embarrass Themselves at Dimon Hearing

kalikshama -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 4:38:11 PM)
quote: ORIGINAL: erieangel And then, of course, there is that uncomfortable similarity between how the mafia does business and venture capitalism. Tony Soprano explains it: http://www.youtube.com/watch?v=reiq4lEvnEw Eep! Here's the article that goes with the video: Bain Capital Explained By Tony Soprano The national debate over private equity so far has hinged on the question of whether experience in the field qualifies Mitt Romney, the former Bain Capital executive, for the presidency. But a more vexing, and largely unanswered, question lies just beneath the surface: How is it, exactly, that an investment company can make millions even as the company it's ostensibly trying to turn around goes bust? For that answer, we turned to what may seem like a less-than-reliable source: Tony Soprano. The investors profit, it turns out, not despite the failure of the company, but in fact because of it. In the organized crime world, the business practice is known as a bust out. A group of investors -- in Soprano's case, an entire family -- looks for companies that have a strong underlying business but are in distress thanks to heavy debt burdens. The investors then take over the company. In the mob's case, the family presents the business with a very high-interest loan -- an offer which, under the financial circumstances, is difficult to refuse -- and effectively takes control of the company with the threat of physical violence. Private equity investors, by contrast, buy control of the company's board by purchasing the firm's stock. But for both private equity firms and the mafia, investors use their control of the firm to take on more debt, while at the same time cutting costs by laying off workers. Cash from the loans and cost savings are funneled back to the investors. This looting continues until the company can't pay its debts. When it finally collapses, the company files for bankruptcy to extinguish the debt -- but private equity investors, as well as mobsters, get to keep the gains they've already reaped. Mark Galeotti, one of the leading experts in transnational organized crime, said it's a familiar tactic above ground and below it. "It's one of the classic tactics of organized crime," Galeotti, a New York University professor, told HuffPost. "You exploit it as far as you can and when you have essentially squeezed every possible bit of value out of it, you burn it. In organized crime's case, I mean that literally, whereas with private equity, it's planned bankruptcy. But essentially you dispose of it in as convenient a way as possible, and then you walk away." Read more: http://www.huffingtonpost.com/2012/05/24/bain-capital-tony-soprano_n_1542249.html?ref=politics

Edwynn -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 5:26:25 PM)
My only input here, kali, is that I think the OP title might be backwards. Having read history, then financial and economic history (along with modern econ and banking classes), then 'history' again, I might have titled it; "What the Mafia Have Learned From the Financial Industry." The Mafia don't have nearly the lobbyists (though they do) or nearly the number of 'plants' in the government that finance or bio-chem corporations do. quote: In the organized crime world, the business practice is known as a bust out. A group of investors -- in Soprano's case, an entire family -- looks for companies that have a strong underlying business but are in distress thanks to heavy debt burdens. The investors then take over the company. In the mob's case, the family presents the business with a very high-interest loan -- an offer which, under the financial circumstances, is difficult to refuse -- I just finished two books on international finance, the IMF, and the World Bank, which read almost exactly as the above quote. That is what they do to countries, not just meager little companies. All Mafia is domestic, even though they are branching out nowadays. Financial crockery wrecks the world. (many thanks to various South Asian great thinking economists for enlightening me on so many things, who keep me from putting gun to head when reading Western economics). And don't blame it all on Wall St., Euro-folks. Deutsche Bank, HSBC, RBS, Irish banks, French banks, USB, Spanish banks ... were every bit into the CDO scam, as far as possible. The BOE ain't stupid, neither is the Bundesbank, nor the Fed. All those assholes knew exactly what was going on and fed it, forget stopping it.

Winterapple -> RE: The Scam Wall Street Learned From the Mafia (6/30/2012 5:29:16 PM)
Peter Grimm. I like it when real life villains have names that could have been the name of a villain in a novel by Charles Dickens. Dickens was writing about corrupt moneymen and the like in the 19th century. Old wine in new bottles. Gangsters without Tommy guns.

kalikshama -> RE: The Scam Wall Street Learned From the Mafia (who learned it from Rockefeller) (6/30/2012 6:15:09 PM)
quote: My only input here, kali, is that I think the OP title might be backwards. Having read history, then financial and economic history (along with modern econ and banking classes), then 'history' again, I might have titled it; "What the Mafia Have Learned From the Financial Industry." I meant to add to Taibbi's title: The Scam Wall Street Learned From the Mafia [who learned it from Rockefeller] http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620?page=2 Contracting corruption has been around since the construction of the Appian Way. The difference here is the almost unimaginable scope of the crime – and the fact that it's mobsters from Wall Street who are getting in on the action. Until recently, such activity has traditionally been the almost exclusive domain of the Mafia. "When I think of bid rigging, I think of the convergence of organized crime and the government," says Eliot Spitzer, who prosecuted two bid-rigging cases in his career as a New York prosecutor, one involving garbage collection, the other a Garment District case involving the Gambino family. The Mafia moved into bid rigging, he says, because it observed over time that monopolizing public contracts offers a far more lucrative business model than legbreaking. "Organized crime learned their lessons from John D. Rockefeller," Spitzer explains. "It's much more efficient to control a market and boost the price 10 percent than it is to run a loan-sharking business on the street, where you actually have to use a baseball bat and collect every week." What Spitzer saw was gangsters moving in the direction of big business. When I ask him if he is surprised by the current bid-rigging case, which looks more like big business moving in the direction of gangsters, he laughs. "The urge to become a monopolist," he says, "is as old as capitalism."

Edwynn -> RE: The Scam Wall Street Learned From the Mafia (who learned it from Rockefeller) (6/30/2012 6:51:25 PM)
quote: "The urge to become a monopolist," he says, "is as old as capitalism." As taught in every Industrial Organization and Regulation econ class, sure enough. Nothing new here. I am glad that my professor in that class earns good side money for expert witness testimony in various merger/acquisition court cases, but he had no trouble explaining that the better law firm won, in any event. His R/L Experience was a detraction from what he was supposed to teach sometimes, but we all managed. He liked me alot, I got a B, that's how tough the class was. (got A's in most other like classes, but not always) Too bad that Spitzer didn't realize that the 'liberal' media can make several million bales of hay out of a Democrat's infidelity, while hardly capable of squeezing out even half an ounce from any Republican's infidelity, or even cocaine importing. Live and learn, as they say.

tweakabelle -> RE: The Scam Wall Street Learned From the Mafia (7/2/2012 6:56:00 AM)
quote: ORIGINAL: Politesub53 Kalik........More news in the UK this week on the Libor and Barclays Bank. Word has it that this is the tip of a very big iceberg. http://www.bbc.co.uk/news/uk-politics-1the banks8640916 Big ructions at Barclays Bank, with resignations, huge fines dominating the headlines and a seriously plunging share price ..... Even Sir Mervyn King, the governor of the Bank of England has called for radical reforms of the banks. More banks in the pipeline for similar treatment it seems ....... it takes more than one bank to fiddle with LIBOR one would think. http://www.guardian.co.uk/business/2012/jun/29/mervyn-king-banks?intcmp=239

LookieNoNookie -> RE: The Scam Wall Street Learned From the Mafia (7/2/2012 6:19:21 PM)
quote: ORIGINAL: kalikshama How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo. But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street. The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime. In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime. USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordinated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it. More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies. But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America's gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show. 1. THE SCAM Read more: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620#ixzz1zJSo0nhJ Sweety....I knew about this 5 years ago (and frankly....I knew about it 25 years ago because....shit doesn't change). You think this is news? Wait 12 years....the EXACT SAME story will be reported....and they'll (the public will) say the EXACT same thing they said when THIS story became "news". "Bet they won't try THAT* shit again*". And they won't. But it'll look so much like this story....all you'll need do is insert the names. (And just for the record....Socrates knew this story).

tweakabelle -> RE: The Scam Wall Street Learned From the Mafia (7/3/2012 5:12:52 AM)
Meanwhile, back at Barclay's, another big head is rolling. Barclay's CEO, Bob Diamond announced his resignation today "with immediate effect". Some reports are claiming Diamond's resignation was demanded by Bank of England Governor Sir Mervyn King. More resignations are expected. Diamond is still to face a grilling by a parliamentary committee this week. PM Cameron is said to be considering launching a judicial inquiry into the operations of the UK's biggest banks ..... http://www.guardian.co.uk/business/2012/jul/03/bob-diamond-quits-barclays

PeonForHer -> RE: The Scam Wall Street Learned From the Mafia (7/3/2012 5:40:50 AM)
quote: ORIGINAL: tweakabelle Meanwhile, back at Barclay's, another big head is rolling. Barclay's CEO, Bob Diamond announced his resignation today "with immediate effect". Some reports are claiming Diamond's resignation was demanded by Bank of England Governor Sir Mervyn King. More resignations are expected. Diamond is still to face a grilling by a parliamentary committee this week. Now's the sort of time I keep a close eye on the focus in our media. So often, to date, when something stinky happens at the top, the focus in our 'popular press' has turned on iniquities at the bottom. Watch out for some disgusting new stories of goings-on with immigrants and benefits claimants. Fun!

tweakabelle -> RE: The Scam Wall Street Learned From the Mafia (7/4/2012 12:09:12 AM)
quote: ORIGINAL: PeonForHer quote: ORIGINAL: tweakabelle Meanwhile, back at Barclay's, another big head is rolling. Barclay's CEO, Bob Diamond announced his resignation today "with immediate effect". Some reports are claiming Diamond's resignation was demanded by Bank of England Governor Sir Mervyn King. More resignations are expected. Diamond is still to face a grilling by a parliamentary committee this week. Now's the sort of time I keep a close eye on the focus in our media. So often, to date, when something stinky happens at the top, the focus in our 'popular press' has turned on iniquities at the bottom. Watch out for some disgusting new stories of goings-on with immigrants and benefits claimants. Fun! Why Peon, you cynical cynical thing you! lol Yes in normal times Mr Murdoch's scurrilous tabloids could be relied upon to come to the Establishment's rescue with a little tit'n'bum or a juicy scandal ............though not too long ago, Mr Murdoch got a bit of treatment from the Establishment and he might feel he has a score to settle. A popular crusade against the banks, led by the tabloids might appeal to his ego. I mean you can't get more Establishment than the banks can you? Meanwhile we have had our standard quota of resignations from Barclays today and juicy rumours abound that the freshly sacked ex-CEO of Barclay's is about to dump on the lot of them in his evidence to a parliamentary committee today .... Watch this space as they say .....[:D] http://www.guardian.co.uk/business/2012/jul/03/bob-diamond-quits-barclays-libor-scandal

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