Indicting the Wrong Target in US Financial Capital
Note from TCBH: Manhattan island hosts the headquarters of four of the nation's five biggest "too-big-to-fail" banks: Goldman Sachs, Morgan Stanley Smith Barney, JP MorganChase, and Citi Group. US Attorney General Eric Holder has stated publicly in Congress that he has no intention of seeking criminal indictments of these banks or their top executives -- or even their middle-ranking executives for that matter -- despite the myriad frauds, scams and schemes they've all engaged in, like robo-signing mortgage documents and touting derivatives that they were privately calling "sh*t," all of which led to the crashing of the US and global economies.
Holder may be feeling pressure from the White House not to prosecute the big banks, but what about District Attorney Cyrus Vance, Jr.? As Manhattan DA, he has at his disposal New York state's powerful banking laws, as well as the state's anti-fraud and conspiracy statutes. But incredibly, he has not filed a single criminal case against the giant mega-banks under his jurisdiction. Instead, as I write in a cover story in the current edition of the New York city business publication Crain's New York Business, he has brought the full power of his office down on one of the tiniest banks in the Big Apple: Chinatown's Abacus Bank.
The thing is, Abacus is a bank that has made no sub-prime loans, doesn't trade in derivatives, and has a default rate on its loans that is close to zero. At 0.5%, in fact, its default rate is less than one-tenth of the national average default rate of 6.0% for the nation's banks! Unlike the powerful, predatory "too-big-to-indict" banks located just a few blocks further downtown, Abacus is also a bank that actually reported to federal regulators on its own the problem that led to Vance's indictment. It was even commended by the Office of Thrift Supervision for being so forthcoming. In contrast, reporting fraud by their own executives is not something that the biggest banks have been particularly known for. No matter, Vance, a politically ambitious politician, went after not the big banks, but Abacus. Go figure. To read this incredible tale of misplaced prosecutorial priorities and epic political gutlessness, go to: Crain's New York Business (Warning: reading the article is free, but you will have to register to access it.)