Wall Street crime

The "Banker Gangs" Are Still On the Loose and the Justice Department Still Won't Come Clean

Richard Eskow — Wed, 07 Dec 2011 23:26:08 -0500

No financial executives have gone to jail, despite an overwhelming body of evidence indicating that a group of organized "banker gangs" conducted a widespread Wall Street crime wave that made them rich and while throwing millions into poverty. The Justice Department's failure to act against these bankers is matched only by its declining credibility -- a problem it only makes worse whenever it tries to defend itself.

An interview with an outgoing Justice official in today's Wall Street Journal is merely the latest in a sad parade of weak excuses and implausible arguments, and it comes on the heels of Justice Department official Lanny Breuer's poor 60 Minutes showing this week on the same topic.

Stop. Just stop. If nobody at Justice can get the job done, it's time for the Administration to bring in a whole new team and start again. Did everybody in the banking business break the law? No. Very few did. But some of the ones that did appear to be very well-placed, and if they're not punished they'll do it again and again.

Broken Trust

The credibility problem with Holder's (and Obama's) Justice Department doesn't just stem from its failure to act, or even from its inability to offer a plausible explanation for its inaction. The real problem comes from its history of misleading, misdirecting, and deceiving the public about its efforts.

Its "Interagency Task Force" against lending fraud with a lot of fanfare, for example, turned out to be vaporware, a small-time operation that targeted two-bit grifters and petty crime rings but avoided any investigation of big-bank systemic fraud. Not that the operation was a total failure: The SEC charged a psychic with fraud! (I say the psychic shoulda seen it coming.)

The Justice Department boasted about another operation, too, one with the all-too-ironic name "Operation Broken Trust." As with the "Interagency Task Force," we were told that "Broken Trust" was a coordinated Justice Department effort to track down bad guys. And like the Task Force, "Trust" ignored the real crimes on Wall Street while triumphantly listing enough colorful small-time crooks to mount a summer-stock production of Oliver.

But, while both operations were deceptively packaged, Broken Trust was worse. How much worse? The fair-minded Columbia Journalism Review called its roundup of articles on the topic "Obama Administration's Financial Fraud Stunt Backfires." The laundry list of cases named as "Broken Trust" successes included some that were initiated before it was even created. Some were underway before Barack Obama even became President.

"Trust" was a brazen attempt to hoodwink the public -- nothing more.

Excuses, Excuses

Today's interview, by ex-Justice Department (now SEC) official David Cardona, trots out the usual excuses to explain his department's record of failure:

It's too hard to educate juries enough to bring bank fraud convictions. And yet earlier, possibly harder-working, Justice Department officials won more than 1,000 convictions under a "left-wing" President named Ronald Reagan.

Investigators were "rattled" by the failure to win convictions in a 2009 case involving Bear Stearns officials. That case may have been ill-chosen; the judge was hostile and suppressed a key piece of evidence; prosecutors were out-lawyered; and financial fraudsters are frequently convicted in subsequent trials (think Tyco International), which the Justice Department never pursued in this case.

Besides, who gives up on investigating crimes that may have brought down the entire financial system because they lost one case?

Bank crimes are "better left to regulators." The SEC is the regulator on this beat, and its cushy deals have created a flood of repeat offenses by serial financial criminals. As Barry Ritholtz noted while posting this chart or serial bank offenders, "Bank of America and Citigroup are tied for the lead (six repeat violations), while Merrill Lynch and UBS share 3rd and 4th place (five apiece)."

There are 51 total repeat offenses on the chart by banks that, thanks to the SEC, "neither admitting nor denied wrongdoing" - before promptly continuing to do the things they neither admitted nor denied doing. It is this record which Mr. Cardona is citing when he says regulators have done a "fine job."

The only excuses Mr. Cardona didn't use were "My dog ate the indictment" and "I left the subpoena in my other pants."

Banker Gangs Gone Wild

Under the Sarbanes-Oxley law, every bank CEO and CFO in the country must certify under penalty of law that her or his corporation's financials are in good shape. They must also state that they personally have put adequate financial controls in place. Why have none of them been prosecuted, despite overwhelming evidence that so many of them broke this law?

Let's take a look at some of the Banker Gangs who got away:

The "Walking Dead" Gang: Eaglesham notes that a mortgage executive named Lee Farkas is the most prominent executive convicted to date (needless to say, Farkas wasn't with a big Wall Street bank). Farkas was convicted of deceiving investors by propping up an already-dead mortgage fund. Think of it as a financial Weekend at Bernie's maneuver.

We're told that convictions like Farkas's are easy, to Wall Street crimes are harder to bring to court. Yet Farkas's actions bear more than a little resemblance to those of JPMorgan Chase, Credit Suisse, and Morgan Stanley when they propped up a similarly "dead" mortgage fund in Pennsylvania. If prosecutors were able to get a criminal conviction for Farkas, why does the Justice Department expect us to believe juries couldn't do the same thing with these banks?

The Light-Bulb Gang: An investigation into GE Capital stock fraud (See "In the Dark") identified specific individuals who had provided misleading information to investors, so investigators and observers were stunned when the company was only hit with a mild SEC fine (paid for by some of the same defrauded investigators) and no criminal charges were filed. The company had already been permitted to reconstitute itself as a bank so it would win TARP funds.

Oh, wait. There was one sentence for a GE executive: CEO Jeffrey Immelt is currently serving a term as the head of President Obama's "Jobs Commission."

The Mortgage Monte Gang: We reviewed more than 200 pages of internal documentation, technical information, and even training videos for MERS, the banks' mortgage database system, and found it well-designed for illegally transferring mortgages and avoiding local taxes and filing requirements.

MERS is an electronic three-card monte system for banks, designed to make sure homeowners and authorities never know which "ball" is hiding the real owner of a loan. Why hasn't there been a criminal investigation of MERS?

The Countrywide/Bank of America Gang: Why wasn't Countrywide's Senior Vice President for fraud investigation ever questioned by investigators, as reported this week on 60 Minutes? Former Senior Vice President Eileen Foster says she uncovered widespread fraud within Countrywide and tried to present that information to investigators. She also says she was discouraged from speaking to investigators by Bank of America, which purchased Countrywide. That suggests even more criminal activity within one of one of the country's largest banks. Yet she was never interviewed. Why?

The Citi Slicker Gang: Why didn't the charges raised by former Citigroup exec Richard Bowen result in a criminal investigation? Bowen demonstrated pretty conclusively that he gave senior Citi execs enough information to know that they were making false representations in Sarbanes-Oxley documents and to investors. (DId it have anything to the fact that former Treasury Secretary Robert Rubin was involved?)

The My-Old-Gang Gang: Why weren't there any indictments stemming from the collapse at AIG, where I worked as a middle-level manager for years? There were at least two promising targets of investigation: The executives who participated in a 2007 call with investors and signed financial statements that were released on December 5 of that year; and the accounting firm which certified that AIG's books were in good shape.

Cardona attempts to paint the picture of a Justice Department filled with enthusiasm, optimism, and energy as it set about investigating Wall Street. As Cardona tells it, the team only came to realize over a three-year period that their hopes were going to be dashed and their task was impossible. Only when this zesty crowd of can-do guys and gals realized that their efforts were all for naught did they decide to turn the job over to somebody with an even more impressive track record than their own.

The "Solution"

What's the solution, according to Cardona? Here's a hint: Judge Jed Rakoff became a national hero by refusing an SEC settlement with Citigroup and demanding a trial last week after what he described as that agency's "contrivances." Judges have been furious about the SEC's cushy deals for a long time (see here and here.)

Now the Justice leadership wants to convince us that it's done everything that anyone could possibly do to catch bank fraudsters, but that it must now sorrowfully and reluctantly quit the field.

So who is the Justice Department suggesting should take the lead on Wall Street criminality? If you guessed "the SEC," go to the head of the line. The Justice Department, we're told, has decided that enforcing the law on Wall Street is "best left to the regulators."

It's true that bankers will continue to go free if the SEC officially takes the lead. But on the plus side: Psychics, beware!

The Messenger

If the Justice Department really believed it had been doing a smart and aggressive job of investigating banker fraud, there are lots of tough but fair and friendly reporters it could have chosen to get the story out. The Journal is where bank-friendly types go for a softball interview.

Jean Eaglesham, who wrote today's story, is an especially telling choice on Justice's part. Eaglesham may be a fine reporter, but she wears her biases on her sleeve.She's already written articles with the premise that it's all but impossible to convict bankers (see "Challenges in Chasing Fraud"), and it couldn't have hurt that she also mocked Dodd/Frank's new requirements, which are the bane of lazy regulators and investigators. Here's a sample:

"What is 20 times taller than the Statue of Liberty, 15 times longer than "Moby Dick" and would take the average reader more than a month to read, even if you hunkered down with it for 40 hours a week? The answer: The growing paper trail formed by the Dodd-Frank law."

It's true that Dodd/Frank regulations can lead to a lot of paperwork for too-big-to-fail banks, but there's an easy solution to that problem: Break 'em up. It's what the law should have done in the first place.

Eaglesham's Dodd/Frank piece also sympathetically conveyed SEC chief Mary Shapiro's complaints about her new responsibilities in the same article - "We're (already) stretched awfully thin"-- so she couldn't have looked like a safer choice for a Justice Department that's afraid of tough questions.

Closing the Books

Has the Justice Department stopped even pretending to investigate banker crime? From today's Journal article: "Mr. Cardona's former position (coordinating national financial fraud investigations for the FBI) hasn't been filled yet, according to a spokesman."

It's great that the President has started to sound like Teddy Roosevelt. But he's going to have to stop handling bank crime like Herbert Hoover to convince voters he means it.

Here are the kinds of questions we should be asking the Justice Department: When you heard about the Pennsylvania "dead mortgage fund" case, did you subpoena email accounts for executives at JPMorgan Chase and Morgan Stanley? When you saw the evidence on AIG, did you put its executives and accountants under oath? When you saw the evidence that people at GE Capital may have cooked the books, did you indict some lower-level employees and start sweating them?

Like those it has failed to pursue, the Justice Department is "neither admitting nor denying wrongdoing." That means it's not likely to change, either. The country deserves action to stop Wall Street crime. If it takes a new team at the Justice Department to make that happen, then the country deserves that too.

One More SEC/Citigroup Sweetheart Deal - Five Reasons to Be Outraged

Richard Eskow — Thu, 20 Oct 2011 23:31:14 -0400

The President says he understands the frustration behind the Occupy Wall Street movement. That's nice. But the anger will keep growing as long as the government keeps handing out free passes instead of perp walks to bankers at serial corporate criminals like Citigroup.

The Administration is finally talking the talk, but without criminal investigations it's not walking the walk. Iit's still not too late. While the SEC's latest deal should outrage you, the Administration can makes things right with two decisive actions.

Get-Out-of-Jail Free Card

The SEC announced yesterday that Citigroup agreed to pay $285 million to settle charges that it misled (synonyms for that word include deceived; lied to; tricked and defrauded) investors in a mortgage securities deal, telling them it was a good investment when it knew otherwise and was secretly betting it would fail.

That's not just slimy. As the Financial Crisis Inquiry Commission found in other instances, that kind of behavior is also illegal.

Here are five reasons you should be outraged. Warning: If you have high blood pressure, you should probably stop reading:

1. Once again, nobody had to confess.

Forgiveness is noble, but it only if the offender asks for it. The Truth and Reconciliation Commissions in South Africa granted amnesty for many terrible crimes, for example - but only after the wrongdoers acknowledged their misdeeds and promised not to repeat them.

Yet once again bank criminals were allowed to walk without admitting anything! Common sense tells us nobody would agree to pay more than a quarter of a billion dollars unless did they'd done something very, very wrong. Yet once again the SEC has negotiated a settlement in which the perpetrator "neither admitted nor denied wrongdoing."

"Neither admitted nor denied"? Citigroup has danced this dance before:

When it was forced to buy back $7.3 billion in bonds in 2008 after deceiving investors into thinking these high-risk investments were low-risk, Citigroup "neither admitted nor denied wrongdoing."

When it was forced to pay $1.66 billion in 2008 over its Enron misdeeds Citigroup "neither admitted nor denied wrongdoing."

When Citigroup agreed to pay $2.6 billion over its "improper relationship" with the CEO of WorldCom during the scandals there, it "neither admitted nor denied wrongdoing."

When it was fined $275,000 in 2004 for recommending high-risk securities without fully disclosing that risk, it "neither admitted nor denied wrongdoing."

That's nearly $12 billion that Citi's agreed to fork over without ever admitting wrongdoing! If this bank's not doing very bad things its executives should be fired, because that means they're the worst negotiators in human history.

Citi's not the only one. Take JPMorgan Chase, which just took Citi's crown as "biggest bank in America":

When JPMorgan Chase paid $153 million in 2011 for deceiving investors it "neither admitted nor denied wrongdoing."

When Chase paid $25 million in 2010 over the sale of illegal unregistered securities in Florida, it "neither admitted nor denied wrongdoing."

When Chase agreed to pay $55 million in 2009 after banks "allegedly" misled investors into pouring money into a venture that had already failed, it "neither admitted nor denied wrongdoing."

Even when JPMorgan Chase agreed to a settlement worth nearly three quarters of a billion (that's "billion," with a "b") over some good old-fashioned, down-and-dirty bribery and corruption charges in Alabama it "neither admitted nor denied wrongdoing.

All the big boys have been allowed to walk away without apologizing, confessing, or doing time: Wells Fargo. Morgan Stanley. Credit Suisse. UBS. Goldman Sachs ... and many, many more. A rogue's gallery of bank crooks paid billions in settlements - "without admitting or denying wrongdoing."

Why else should you be outraged?

2. Once again the criminals won't pay for their crimes - you will.

Crimes don't commit themselves.The perpetrators didn't just escape jail time for these crimes. In most cases they got other people to pay for their sins.

It always happens: Bankers commit their misdeeds and are rewarded with fat salaries and even fatter bonuses. If their crimes come to light the settlements are usually paid by the bank itself. In the very rare cases when bank execs are fined for their misdeeds, they only pay a tiny fraction of what they've made from them. In all the other cases - the ones where millions or billions are paid out - the bill goes to everybody who owns shares in the bank.

Who are those shareholders? Some are high-net-worth investors - including many members of Congress, which helps explain a lot of recent history - but others are so-called "institutional investors" that include pension funds for ordinary working people. You may be one of them.

You're not just paying for their misdeeds because you live in the economy they ruined, or because you bailed them out when they screw up. You may also be paying their fines so the bankers who got rich by doing wrong don't have to pay - with their I'll-gotten money, or with their time.

3. Criminals who aren't punished commit more crimes.

No wonder the recidivism rate is so high among corporate offenders! Economists call it "moral hazard." The rest of us call it "injustice," "a raw deal," "a broken system of government," and "a sure-fire way to guarantee that the crimes keep happening." The modern history of our country's too-big-to-fail banks -- and the people who run them -- is a history of moral hazard. Time and time again they've admitted to criminal misdeeds, only to commit even more of them. That's human nature.

Now, I don't know about you, but all this "neither admit nor deny" business leaves me with the distinct impression that they're guilty as hell. If they're really innocent they should have their day in court - criminal court. A walk in an orange jumpsuit would be a small price to pay for vindication, don't you think?

That is, if they cared about vindication. Apparently they don't - and if there's one thing we should have learned from this long string of deals, it's that bankers who aren't punished keep breaking the law.

We need to hear a whole lot less "Let's reassure the financial sector" and a whole lot more "If you can't do the time don't do the crime."

4. Bank CEOs keep getting rich while misdeeds happen on their watch - and are still treated like respectable people.

The CEOs and other senior managers at these banks are either immoral or incompetent. Dear CEOs: If you colluded with the wrongdoers or looked the other way at their actions, you're immoral. If your employees keep committing crimes and you can't stop it, you're incompetent.

It's astonishing when you think about it: CEOs like Jamie Dimon and GE's Jeffrey Immelt run organizations that have broken the law over and over, yet they're still welcome in polite company and treated like wise elders by reporters and politicians.

Our society seems to have forgotten one emotion that serves a vital social function: Shame. Shame inhibits destructive behavior. It's time for shame to make a comeback.

It's time for criminal law to make a comeback, too. In the meantime, don't whine to me about being criticized, Jamie Dimon! That goes for the rest of you, too. Just tell us which it is, boys: Immoral or incompetent?

5. Citigroup was "conceived in sin" by government officials - some of whom got very rich there afterwards.

Citigroup should never have existed. Regulators and government officials smoothed the way for Citibank's merger with an insurance company, Traveler's, by assuring them that what remained of the Glass-Steagall Act would disappear long before they were required to spin off some assets as that law required. Leading the charge was Robert Rubin, who was Bill Clinton's Treasury Secretary at the time.

Rubin aggressively fought bank regulations of all kinds as Treasury Secretary, even as he was smoothing the way for the formation of Citigroup. Then he joined its Board of Directors as soon as he left office, also serving as "Senior Advisor." He eventually earned at least $50 million in cash and stock grants there. Rubin said nobody could've known things were going wrong. A Citigroup employee stated under oath that he "sent an email to Mr. Robert Rubin and three other members of Corporate Management ... (and) specifically warned about the extreme risks that existed within the Consumer Lending Group."

Rubin kept his money. (See "shame," above.)

In addition to its immoral behavior, Citigroup was incompetently managed. Its failure played a central part in the financial meltdown. Recently Peter Orszag, President Obama's Director of the Office of Management and Budget, joined Citigroup. Like Rubin, he made the move immediately upon leaving public service. Orszag's title is Vice Chairman of Global Banking, although he has no previous banking experience.

And people wonder why the 99% feel "frustrated."
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That's not to say that Republicans are better, of course. They're much worse. They're even determined to undermine even the relatively mild reforms the Democrats passed last year. They keep making the insane argument that regulation is the cause of our problems, after a financial meltdown caused by de-regulation.

Not coincidentally, 24% of Mitt Romney's campaign funding has come from the banking sector.

But neither the President nor his party will be able to tap the public's outrage with words alone, especially after the events of recent history. Fortunately, they can take two steps - steps that should've been taken a long time ago - to earn the respect and loyalty of the frustrated 99-percenters.

First, investigate its crimes: The SEC deal settled civil charges over these securities. That presumably allows the Administration to open a criminal investigation. It should do so promptly. Justice demands it. And when it comes to "moral hazard," nothing sharpens a person's moral instinct like seeing a peer marched off in handcuffs. Start with Citigroup, then move on down the Street until you've bagged all of the wrongdoers.

Then break it up: It's not too late to protect the nation from a bank that is much too big, much too poorly managed, and much too predisposed to criminality to survive. Even a well-run Citigroup would pose a danger to the world's economy, and this one's a catastrophe that could explode at any moment. It's time to break it up. No ifs, no ands, no buts. Do it now.

Mr. President, Mr. Attorney General: The ball is in your court. The good news is there's a lot you can do - for your country, and for your own prospects in 2012. The 99% eagerly await your next move.

Wall Street: Guilty As Charged

Richard Eskow — Mon, 16 May 2011 20:02:14 -0400

In a piece called "Wall Street: Not Guilty," financial columnist Roger Lowenstein attempts to defend Wall Street against allegations that it's a viper's nest of rampant criminality. His mischaracterization, mockery, and vague suggestions of McCarthyism are strident, flat, and fail to get the job done. But Lowenstein's piece is well worth reading, if only as a case study in the moral and cognitive blindness that's reached epidemic proportions in influential Washington and Wall Street circles.

Lowenstein shows us how people who are undoubtedly thoughtful and ethically-minded in their personal lives can lose their way when confronted with complex moral and legal issues, especially ones involving people they know personally. And his misdirection and vituperation suggests how unsettled they become when their worldview is challenged.

It's a shame. The analytical and moral flaws in Lowenstein's piece obscure some of the very sound points he makes about the wrongheadedness of our country's financial culture, a topic that deserves more thoughtful discussion. Without a clear rebuttal, this wrongheaded view is likely to become tomorrow's conventional wisdom.

Hooray for Hollywood

Lowenstein unselfconsciously mocks "armchair prosecutors" even as he appoints himself armchair defense counsel, armchair judge, and armchair granter of blanket amnesty. His basic argument is that "risk-taking and stupidity aren't criminal," as the subheading to his piece puts it; that there may have been crimes committed, but they're minor and incidental to the financial collapse; that no greater purpose is served by a massive investigation of Wall Street; and that people who argue otherwise are angry, misguided, self-righteous persecutors.

Let's start with that last point first. One wonders how much of Lowenstein's extensive use of class-baiting, right-wing symbolism is deliberate and how much is unconscious. I don't know his politics, but reading this piece is like spending an unpleasant holiday dinner listening to your sloshed Tea Party uncle.  He opens with Charles Ferguson's comments at the Academy Awards, where Ferguson noted that nobody has gone to jail since the financial crisis, then adds mockingly: "How many dinner party guests have debated the trillion-dollar question: When will a Wall Street executive be sent to jail?"

Hollywood. Dinner-party guests. Get it? In Lowenstein's world, bank crimes are only of interest to wealthy lefties who sit around judging others while they're sipping frosty cocktails and nibbling on hors d'oeuvres. That will come as a surprise to the seven million people who lost their jobs as a result of the financial crisis.

Straw Men Marching in Formation

Lowenstein then misrepresents the views of people he's already characterized as a dinner-party lynch mob, claiming they believe the following: "that people who take big risks should be subject to a criminal investigation; that executives of large financial firms should be criminal suspects after a crash; that public revulsion indicates likely culpability; that it is inconceivable ... that people could lose so much money absent a conspiracy; and that Wall Street bears collective guilt for which a large part of it should be incarcerated."

Of course, he can't cite anybody except Bernie Madoff who's actually made these claims - because they don't exist. Nobody believes that "people who take big risks should be subject to criminal investigation" - although many believe their banks should be broken up if they're a threat to the system, so we don't have to rescue them again. And nobody believes "executives of large financial firms should be criminal suspects after a crash" - unless there's evidence they've committed crimes, and there's plenty. Joe Nocera, Matt Taibbi, and the others named by Lowenstein simply want to see that evidence used in prosecutions.

"Public revulsion indicates likely culpability"?? Again, who ever said that? If public revulsion suggested culpability,every singer who's ever used Auto-Tune would be under investigation right now.

Perhaps Lowenstein's worst subliminal cue is the phrase "collective guilt," most commonly used when discussing the crimes of Germany under the Nazis. And the historian Richard Hofstadter must be spinning in his grave as Lowenstein distorts his work to slur bank critics with the concept of "The Paranoid Style in American Politics," a term Hofstadter applied to McCarthyism and conspiracy theories in general. Writes Lowenstein:

The paranoid style, as Hofstadter defined it, has as much to do with "style" as paranoia--it's about "the way in which ideas are believed [more] than with the truth or falsity of their content" ... We could follow this strain through the dismal historiography of JFK assassination buffs to the beliefs that Washington was implicated in Pearl Harbor and Sept. 11, to the anti-federalist fantasies of the far right.

Got that? If you think Wall Street crimes should be prosecuted, you're like the people who believe that the United States sank the USS Arizona to start World War II or blew up the World Trade Center on 9/11.

We need a historian in the Bloomberg newsroom ... stat!

Adds Lowenstein: "... (F)inancial history is replete with bubbles and crashes. No person--no criminal, that is--caused the Great Depression."

I don't know which is worse: Lowenstein's ad hominem attacks or his apparent lack of grounding in financial history. While no single person, criminal or otherwise, caused the Great Depression, the fraudulent actions of a number of people contributed to it. As a result of the Pecora Commission hearings that followed those acts were made illegal, a regulatory framework was created, and some of the bankers subpoenad by Pecora were "scared straight" for a long time.

Recessions, bubbles, and crashes aren't acts of God or nature. They're caused by human beings - and often by fraud.

The Fifth Estate Bubble

Of course, it's hard to make an accurate judgement about Wall Street's crimes when our information comes from journalists biased in its favor.

Consider JPMorgan Chase CEO Jamie Dimon. On Dimon's watch JPM conducted a bribery operation in Jefferson County, Alabama and sold unregistered securities in Florida. It was forced to give up three-quarters of a billion dollars to settle the bribery charges, and to set aside another $2.3 billion to settle possible future lawsuits. Reports suggest it ran a foreclosure mill run by "Burger King kids." It's facing multiple lawsuits for allegedly manipulating the price of silver, is reportedly being probed by several Federal agencies for suspicious trading activities in precious metals, and has been accused of covering up Bernie Madoff's crimes.

The kindest interpretation is that Dimon has failed to root out a culture of corruption in his own organization. And yet he was the subject of a fawning profile in the New York Times, one which repeatedly painted him as the talented and noble victim of persecution by unfair and mean-spirited critics. The author of that profile?

You probably guessed it: Roger Lowenstein.

Closing Arguments

As to Lowenstein's key points:

"Risk taking and stupidity aren't criminal": That's true as far as it goes - which isn't very far. Risk-taking and stupidity by the big banks were probably the largest factor leading up to the crisis, undertaken in the almost certain knowledge that they'd be bailed out if things went wrong. That's immoral - and it didn't occur in a vacuum. Bankers spent decades working to repeal Glass-Steagall, allowing the expansion of "too big to fail" banks into riskier business areas. They worked equally hard to lift the regulations which prevented exactly the sorts of actions that led to the collapse of 2008.

What's more, "risk taking and stupidity" can become criminal. Lowenstein's dismissive of Lehman Brothers and "Repo 105," an accounting deception which hid more than $50 million in debt. That may well be a crime. And the public record on executives in AIG's Financial Products Group is staggering. Memos and other materials seem to overwhelmingly suggest that executives knowingly made false statements on investor calls. They had been forced to hire outside auditors to settle previous SEC suits, then refused to allow those auditors to see the books - after which they appeared to tell investors that those auditors had seen the books.

Lowenstein argues that even if Lehman CEO Richard Fuld committed crimes with Repo 105 (his hypothetical, not mine) their effect on the crash was "trivial." Of itself, that's true. But the indictment of Richard Fuld would be anything but trivial: It would send shock waves across Wall Street and have an enormous deterrent effect. In fact, the financial world as we know it would change forever.

When Al Capone was indicted on tax evasion the offense was 'trivial' too. But the effect on the underworld was profound.

"The claim that [the financial crisis] was 'caused by financial fraud' is debatable, but the weight of the evidence is strongly against it. ..." It requires a very narrow definition of 'fraud' to make this claim. Lowenstein's right that the greatest single contributor to the financial collapse was the housing bubble. But America's biggest financial institutions concealed the extent of their risky investment in that bubble, and there's widespread evidence that they fueled that bubble for its own purposes.

What's more, banks across the country encouraged people to borrow more than their houses were worth by providing artificially inflated appraisals of their value. The use of crooked appraisers may constitute consumer fraud. Banks then bundled and sold these inflated loans to investors as mortgage-backed securities, while shorting those securities at the same time, which was fraudulent and may or may not have been illegal.

America's Most Wanted

And the list of crimes doesn't stop there. All of our largest banks have pleaded guilty to a number of criminal acts, for which they were 'punished' with settlements paid by shareholders instead of lawbreaking executives. It's quite a rap sheet: Wells Fargo laundered drug money for the Mexican cartels. GE Capital repeatedly committed investor stock fraud (while its parent bribed overseas governments and defrauded the US government). There's overwhelming evidence that all of our largest banks systematically engaged in the filing of false documents to local courts in foreclosure hearings, which is perjury. And Goldman Sachs ... don't get me started.

And there's Dimon's JPMorgan Chase, of course.

And yet as far as anyone knows, no senior executive's ever been investigated, Even if there's no evidence they were directly involved in crimes, they may still be culpable under the 'Lucky Luciano principle if they systematically told their employees they 'didn't want to know' how a job was done.

But nobody has even asked to see their email records or visitor logs. They still come and go in the highest corridors of Washington, and receive fawning coverage from reporters like Lowenstein, to whom they pour out their bitterness about criticism to reporters with a sympathetic ear. Worse, they're free to engage in risky, stupid, or criminal behavior, secure in the knowledge that they'll never be held responsible for their own actions.

Even if some of these crimes didn't lead to the financial crisis, the fact that they've gone unpunished contributes to Wall Street's pervasive culture of criminality. So do pieces like Lowenstein's. That leaves us all at risk for future crises, great and small. What's more, it's immoral, a perversion of justice.

Lowenstein's apologia changes nothing. Wall Street is still guilty as charged.

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This post was produced as part of the Curbing Wall Street project.