The entire nation was taken for a ride by the banks in 2008. They were selling junk mortgage bonds to investors, claiming they were AAA rated and then betting that those junk mortgage bonds would fail, in the process making millions while you and I went broke. No one has been held accountable, not one prosecution in those mortgage frauds. Instead, the SEC has been "making deals" with the banks. The SEC accuse the banks of wrongdoing, the bank Citigroup in this case, admits to nothing, admits no wrongdoing, but agrees to pay a fine and everything is washed under the carpet. But not this time. US District Judge Jed Rakoff rejected the deal between Citigroup and the SEC. Credit for this ruling belongs to the Judge of course, but also to Occupy Wall Street. Occupy Wall Street, has changed our national consciousness and spotlighted the impunity with which the big banks have comported themselves. Millions of Americans want to see criminal prosecutions for the big banks selling worthless mortgage bundles that they were betting would fail. No more immunity at the top, and we are tired of sweeping these scandals under the carpet. Today, we learn that 10 financial institutions have illegally foreclosed on 5,000 active duty servicemembers homes. These banks are illegally foreclosing on the soldiers actively defending our country. Give me one good reason, why every one of those banks shouldn't be broken up into a hundred small pieces, and I'll give you 5000 good reasons why they should be broken up.
USDJ Jed Rakoff's full ruling here:
USDJ Jed Rakoff's full ruling here:
the Court is forced to conclude that a proposed Consent Judgment that asks the Court to impose substantial injunctive relief, enforced by the Court's own contempt power, on the basis of allegations unsupported by any proven or acknowledged facts whatsoever, is
neither reasonable, nor fair, nor adequate, nor in the public interest.
It is not reasonable, because how can it ever be reasonable to impose substantial relief on the basis of mere allegations? It is not fair, because, despite Citigroup's nominal consent, the potential for abuse in imposing penalties on the basis of facts that are neither proven nor acknowledged is patent. It is not adequate, because, in the absence of any facts, the Court lacks a framework for determining adequacy. And, most obviously, the proposed Consent Judgment does not serve the public interest, because it asks the Court to employ its power and assert its authority when it does not know the facts.
An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated. If its deployment does not rest on facts, cold, hard,solid facts, established ei by admissions or by trials -it serves no lawful or moral purpose and is simply an engine of oppression.
Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances.
Accordingly, the Court refuses to approve the proposed Consent...