A Tale Of Two Standards


A Tale Of Two Standards

Posted by Karl Denninger

It’s not often that we get this sort of divergence on the front page of an electronic publication….  First, BP:

May 26 (Bloomberg) — At least one federal crime had indisputably been committed when oil started spewing into the Gulf of Mexico and approached land. Another criminal act became clear when the first oil-covered sea bird died.

Ann goes on to outline the essence of the argument that I’ve been making on this point as well – that there appears to be, at least, criminal negligence here.  There’s a decent chance that a felony is embedded in there somewhere as well.

She finishes with:

And yet, even the misdemeanor crimes we know were committed led to a calamitous result. They could also lead to ruinous penalties to those responsible.

Ok, now contrast with:

“In undertaking financial reforms, it is important that we maintain and protect the aspects of central banking that proved to be strengths during the crisis and that will remain essential to the future stability and prosperity of the global economy,” Bernanke said today in a speech at the Bank of Japan in Tokyo.

This, when we have hard evidence – indeed, bald admissions – that The Federal Reserve (and others, including bank regulatory agencies) have engaged in intentional circumvention and violation of the laws governing banking and The Fed’s operation.

The Fed has no authority to buy anything that does not carry a full faith and credit guarantee.  Yet it has.

The FDIC, OCC and OTS have a black letter mandate to employ “prompt corrective action” against all regulated banks.  Yet they did not.  We even know that in one case the Inspector General of the OTS reported that actual raw balance sheet fraud occurred (back-dating of deposits) and an OTS employee colluded – that is, conspired, with bank executives to commit it.

Sarbanes-Oxley makes uttering a false balance sheet a criminal offense and imposes a duty to know.  That is, “I didn’t know that it was false” isn’t a valid excuse; public company executives are required to know the truth before issuing these reports.

So while we all circle around “hang ’em high” with regard to BP and the incident in the gulf, which clearly has and will have many billions of impact on our economy and nation, I would like to ask where’s the store of boiled rope for the banksters and so-called “regulators” that collectively imposed several trillion of damage on our economy and nation – and who clearly violated in the law in doing so.