Probes of Wall Street Now Need to Go Criminal

April 29, 2010 (LPAC) — 62 members of Congress thus far, led by Ohio Democrat Marcy Kaptur, are demanding that the SEC charges and Congressional hearings on Wall Street investment banks, turn into criminal prosecution of those financial institutions which created and then collapsed the bubble economy. And Goldman Sachs is not the only target on Wall Street in a letter which Rep. Kaptur delivered to Attorney General Eric Holder today.

The letter, also backed by 140,000 petition signatures, summarizes the civil securities fraud case initiated by the Securities and Exchange Commission against Goldman Sachs (the bank known more recently as "Goldman Sucks"). It says such practices as Goldman's "contributed to the recent financial crisis — which cost American taxpayers hundreds of billions of dollars" in bail-outs. In addition, $10 trillion in household wealth was destroyed. The Congressmen say the DOJ "has the power to file criminal actions against those who commit financial fraud," and demands, "If the DOJ is not currently looking into this particular case, we respectfully ask you to ensure that the U.S. Department of Justice immediately open a case on this matter and investigate it with the full authority and power that your agency holds. The American people both demand and deserve justice in the matter of Wall Street banks whom the American taxpayers bailed out, only to see unemployment and housing foreclosures rise."

The letter specifies that they want the DOJ to look into "this case and similar cases to further investigate and prosecute the criminals involved in this, and other financially fraudulent act[s]." [emphasis added]

The hearings this week by Sen. Carl Levin in his Senate Permanent Subcommittee on Investigations, demonstrated in graphic, documented detail that Goldman — Wall Street's current epitome — drew investors all over the world into the monstrous 2003-2007 financial bubble in hyperinflated mortgage securities and parasitical "financial derivatives." And that it made many billions, using other derivatives, by making early bets for its own account against the same securities and investors, as that bubble imploded and took away their wealth and their jobs.

Sen. Claire McCaskill introduced evidence suggesting additional, clear, criminal securities fraud by Goldman. These internal Goldman emails concerned the bank's own analysis of large "bundles" of mortgages issued by the long-since-exploded Century Financial Corp. and Long Beach Mortgage Corp. Despite these companies' known toxic mortgage-lending practices, Goldman was much in the business of "slicing and dicing" piles of their mortgages into debt securities, and selling those around the world. The internal analysis described in the emails, indicated that Goldman had already found 38% of Century Financial's mortgages, and 20% of Long Beach's, to be frauds — "ID theft, broker misrepresentation, straw buyer, falsification of information, false origination documents," etc. — not to mention borrowers' inability to pay the mortgage debts. McCaskill's evidence was in Exhibit 77 of the Senate PSI Committee's volume.

Confronted with this, Goldman CEO Lloyd Blankfein professed ignorance, although Century Financial and Long Beach were two of its biggest providers of mortgages to securitize; he had to agree to document for the Committee that the bank did, or did not sell securities worldwide based on mortgages and brokers already shown by its own "due diligence" to be committing fraud.

"How is President Obama going to handle this one?" asked Lyndon LaRouche. "Knowing him, he'll play the role of Louis XVI."