Barry Turns On The Light
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2014-09-12 07:30 by Karl Denninger
in Editorial , 111 references Ignore this thread
Barry Turns On The Light

And what does he see?  Why, half an answer.  But the rest, well, we'll get to that.

Yesterday, we looked at why bankers weren't busted for crimes committed during the financial crisis. Political corruption, prosecutorial malfeasance, rewritten legislation and cowardice on the part of government officials were among the many reasons.

But I saved the biggest reason so many financial felons escaped justice for today: They dumped the cost of their criminal activities on you, the shareholder (never mind the taxpayer).

Corporate executives theoretically work for the owners of the company, namely, the shareholders. But there is an agency problem in that owners can't closely manage and object to the actions of these executives. Collective owners, such as mutual funds, seem to have no interest in doing so.

Ever wonder why?  That's not hard to figure out -- if you're a mutual fund and you start clamoring for prosecutions what happens to the value of the shares in the firms you hold?  Well, duh!  So, you see, the more they steal (the companies you hold stock in) the more money you make.  Since we can't prosecute (or sue) the mutual fund manager as he has no responsibility, fiduciary or otherwise, to stop theft (unless it's happening to his shares) what do you think is going to happen?

What we end up with is a management class that works for itself instead of on behalf of the owners of the publicly traded banks. Many of these executives committed crimes; got big bonuses for doing so; and paid huge fines using shareholder assets (i.e., company cash), helping them avoid prosecution.

As for claims like those of white-collar crime defense attorney Mark F. Pomerantz, that “the executives running companies like Bank of America, Citigroup and JP Morgan were not committing criminal acts,” they simply are implausible if not laughable.

Oh, it's laughable.  And outrageous.

But have you ever wondered why?

Well, let's think about it for a minute.  Where are the biggest swindles?  They're in health care and deficit spending.  Lawless behavior of that sort of course begets more of it, and so now you have a problem -- I swindle you, you swindle Joe, Joe swindles Steve and Steve, who has nothing to start with, gets buttfucked.

Who wants to see it stop?

Not I or Joe.  Steve, on the other hand, would probably like to shoot Joe, but he doesn't even know that I ripped both Steve and Joe off.  That's because we don't teach that in school, or anywhere else.  In fact, Barry doesn't talk about that either.

So who's going to call "BS!" on the entire charade?  Good question.

I know where that hasn't come from yet -- Washington DC, Wall Street or the various punditry and media channels.

It's long past time for that to change.