Big Banks: Big Fines: Business As Usual

Last week, the Department of Justice announced that five major global banks had agreed to cop parent-level guilty pleas that rendered them all official corporate felons. The banks will pay more than $2.5 billion of criminal fines on top of a slew of past fines, plus regulatory and other fines of $3.1 billion, on top of a slew of past fines. It doesn't take a genius to see the pattern. Crime. Wrist-slap. Rinse. Repeat.

Here’s the thing. These kinds of penalties cause no financial damage; the profit was booked and releveraged long ago. The costs of the fines were set-aside in tax-deductible reserves awaiting this moment. Pleading guilty to one-count of felony level price rigging yet being allowed to maintain their status also alters nothing. These foreign currency exchange (FX) market manipulators – or “The Cartel” as they call themselves - Citicorp, JPMorgan Chase,  Barclays, The Royal Bank of Scotland, and UBS AG (who also received a $203 million fine for breaching its prior LIBOR manipulation settlement) will feel this punishment like an elephant feels a gnat, maybe even less.

As is customary after these sorts of fines are announced, the Department of Justice, aided in its investigations by a host of international regulatory and judicial bodies that are financed with taxpayer dollars and missed what was going on for years, waxed triumphant.

“Today’s historic resolutions,” remarked newly appointed Attorney General, Loretta Lynch, “serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers.”

She claimed that the penalties levied against these banks were commensurate with the “long-running and egregious nature of their anticompetitive conduct.” She further added that they “should deter competitors in the future from chasing profits without regard to fairness, to the law, or to the public welfare.”

But they won’t deter anything. Of that particular pack and this particular time, UBS was the only firm that agreed to pay extra for repeat crimes, but the rest of the crew are all repeat offenders in their own right who have had no restrictions placed on their might or market share as a result.

On the urban streets, recidivists get thrown behind bars. In the hallowed corridors of banking, financial goliaths only have to say they’re sorry, pay a fine, and promise not to do it again. In the real world, being tarred a felon makes it harder to get a job, a mortgage, and a personal loan. In the financial realm, it means business as usual following mildly unpleasant press releases and tiny fines from proud arbiters of justice and vigilance.

Since the 2008 financial crisis, some $140 billion worth of settlements against major banks have been announced by the Department of Justice, international regulators and class action legal teams. A normal person could be forgiven for losing focus of the details. It gets fuzzy after mortgage fraud and money laundering. By the time we reach manipulating LIBOR (London-Interbank-Offering-Rate) or rigging FX rates, it can seem mind numbing. Consider this, anything that costs you money has been influenced or manipulated by the big banks. Why? Because of their size and ability to use it against, or on the gray line of the law, to their advantage.

For not one, but for more than five years, from December 2007 and January 2013, euro-dollar traders at Citicorp, JPMorgan, Barclays and RBS – “The Cartel” – used an exclusive electronic chat room to coordinate their trading of U.S. dollars and euros so as to manipulate the benchmark rates set at the 1:15 PM European Central Bank and 4:00 PM World Markets/Reuters fixing times in order to maximize their profits. 

They would withhold buying or selling euros or dollars if doing so would hurt open positions held by their co-conspirators. In the global game of profit extraction, these sometimes-competitors protected each other in a manner similar to two mafia families locking arms (or firing shots)  to keep a third away from encroaching on their territory.

Each bank will pay a fine “proportional to its involvement in the conspiracy.” Citicorp, who spent the longest time rigging the FX markets, from as early as December 2007 until at least January 2013, will pay a $925 million fine. Barclays will pay a $650 million fine and a $60 million criminal penalty for violating its 2012 non-prosecution agreement regarding LIBOR rigging. The firms will fire 8 people, though not the CEO.

JPMorgan Chase, involved from at least as early as July 2010 until January 2013, agreed to pay a $550 million fine; and RBS, involved from at least as early as December 2007 until at least April 2010, agreed to pay a $395 million fine. 

Citicorp, Barclays, JPMorgan Chase, RBS and UBS have each agreed to a three-year period of corporate probation and to cease all criminal activity. (I’ll take the under on  when the next set of criminal activity related settlements hits them. )

Adding in the $4.3 billion from their November, 2014 related settlements with US and European regulatory agencies, last week’s FX “resolutions” bring the total fines and penalties paid by these five banks –  just for their FX conduct – to about $10 billion. 

Citicorp settled for the largest criminal fine of $925 million, on top of a $342 million Fed penalty. The other banks were fined relative to the fractional portion of the crime time frame.  No jail sentences were imposed – not even a day of house arrest or ankle monitors.

Size does matter. Sort of. According to the agreements,  “the statutory maximum penalty which may be imposed upon conviction for a violation of Section One of the Sherman Antitrust Act is a fine in an amount equal to the greatest of: $100 million, twice the gross pecuniary gain the conspirators derived from the crime or twice the gross pecuniary loss caused to the victims of the crime by the conspirators.”

But since there’s no way the DOJ totaled all the fractional losses non-Cartel members felt over the five years (which would likely include your by the way), it means that they believe the five banks at most collectively made $5 billion over five years, or $1 billion each (give or take) or $200 million (give or take) each from FX manipulation per year. I’m calling hogwash on that; $200 million per year rigging FX rates would have been such a pocket change game that the Cartel would have lost interest in it quickly.

JPM Chase’s press release didn’t mention the word ‘felony’ instead opting for the more demure term ‘violation.’ In keeping with his normal reaction to the financial crimes of his company, JPM Chase Chairman and CEO Jamie Dimon used the “bad-apple defense.” Calling this latest revelation of felonious activity a “disappointment,” he stated, “The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm. That’s why we’ve redoubled our efforts to fortify our controls and enhance our historically strong culture.”

That’s not quite true. Not only was the supervisor of Foreign Exchange at JPMorgan not fired, but as Wall Street on Parade reported last week, that “individual, Troy Rohrbaugh, who has been head of Foreign Exchange at JPMorgan since 2005, is now serving in the dual role as Chair of the Foreign Exchange Committee at the New York Fed, helping his regulator establish best practices in foreign exchange trading.”

Stock values of the Cartel-Five banks only mildly underperformed the overall market on the day of the announcement, since their chieftains made it clear that money had already been set in reserve for these fines. They rebounded the next day.  In other news, last Tuesday, Jamie Dimon’s annual pay package of $20 million passed a shareholder vote.  

As for Citicorp, the firm’s settlement with the Federal Reserve included the entry of a cease and desist order (for criminal activity) and a civil penalty of $342 million. Citi also reached a separate settlement  in a related private class action suit for $394 million.

Michael Corbat, CEO of Citigroup, said, “The behavior that resulted in the settlements .. is an embarrassment to our firm, and stands in stark contrast to Citi’s values.” He added, “We will learn from this experience and continue building upon the changes that we have already made to our systems, controls, and monitoring processes.”

Investigations of other crimes continue. The EU, for instance, is re-evaluating its [4-year on hold] antitrust probe into whether 13 of the world’s largest banks conspired to shut exchanges out of the credit-default swaps (CDS) market in the years surrounding the financial crisis. Goldman Sachs. Bank of America, Deutsche Bank AG, JPMorgan Chase, Citigroup and HSBC Holdings are among the multiple-offender banks accused of colluding in this game from 2006 to 2009.

The upshot is this. These fines don’t matter. Felony pleas are a nice touch, but none of these punishments impose solid structural change, nor is any being suggested. Putting the fines in perspective, Citicorp's criminal fine of $925 million is equal to 1/20th of 1 percent of its assets. For JPM Chase, the fine of $550 million is equivalent to about 1/50^th of 1 percent of its assets.  Why would that deter anything?

Words of contrition from bank CEOs have repeatedly followed the unearthing of fresh crimes or settlements for correlated criminal or quasi-criminal behavior. Words of triumph from justice officials or regulators have proceeded more manipulations and discoveries. Aside from our tacit support for these banks by keeping our money with them or using them for more humble services, we citizens pay for the people-hours of public officials in a myriad of ways including funding the bodies that are supposed to keep us financially safe from bank shenanigans.

How many more crimes do these banks get to commit before these judicial and regulatory bodies, and the rest of Washington wakes up and breaks them up? Bigger banks, bigger crimes. Smaller banks, smaller crimes. At least, a size reduction would be a step in the right direction.

Hillary Comes to Hollywood for Money-Raising Shindigs

Hillary arrives in Hollywood today, to raise more than $2.5 million. Money and power mesh like peanut butter and jelly in Washington, Wall Street and Hollywood. The path toward influence is lined with the casualties or victories of status, wealth, and ego. Two presidential elections ago, Hollywood created its own underdog when it poured backing into the coffers of Barack Obama, shunning Hillary Clinton. But Hollywood loves a good comeback story in politics or on the silver screen. Enter Democratic presidential hopeful, Hillary and Hollywood money, Part II.

On May 7^th, three private fundraisers kick off the first of many legs of Hillary Clinton’s 2016 election Hollywood campaign. First, there is a breakfast reception at the Westwood home of Public Affairs consultant, Catherine Unger. Then comes a luncheon at the Pacific Palisades abode of Steven and Dayna Bochco. (Steven Bochco Productions contributed $373,000 to Democrats over the last four campaign cycles.) The main evening event takes place at the Beverly Park estate of Chairman and CEO of Saban Capital Group, Haim Saban, and his wife, Cheryl. The couple and the Saban family foundation are listed in the $10-$25 million bracket of the Clinton Foundation contributors. The crème-de-la-crème of Tinsel town will clank their glasses for their ‘Champion’ of inequality far above the inequality rampaging the City of Angels.

Co-hosting will be an assortment of legacy media heavy hitters including the Sabans, Casey Wasserman, a trustee of the William J. Clinton Foundation, and Jeffrey Katzenberg. Event tickets are $2700, the maximum individual limit for primary period contributions. This would put Hillary Clinton’s May 7^th Hollywood haul at about $2.6 million. More important than these initial outlays though, is their promise of solidarity. Hollywood stands ready for Hillary.

Indeed, Hollywood is expected to unite for a chance to spend money on Clinton’s campaign, in contrast to its prior loyalty abscess, which accelerated into cacophonous Barack Obama support early in the 2008 election cycle. The question is – will it spend as much? That answer will depend on the GOP and whether the rest of the Democratic field opens up, as with Senator Bernie Sanders’ April 29^th declaration that he would run for president as a Democrat.

The Bigwig: Jeffrey Katzenberg

According to the Washington-based non-partisan, non-profit research group, Center for Responsive Politics, DreamWorks Animation CEO Jeffrey Katzenberg reigns supreme over Hollywood glitterati in terms of most consistent and varied monetary support for the Democratic Party and its anointed ones.

Most people think of political contributions in terms of individual or aggregated corporate donations. That’s just the tips of the iceberg. Money flows into Capitol Hill in many forms. These include donating directly to candidates and bundling (or tapping all your rich friends and associates to contribute under your name before handing over a mega check). More ways to fork over dough consist of contributing to political action committees (PACs) or super PACs that do the same thing once removed, and ‘other’ avenues like paying $50K a pop to attend the Inaugural Ball, something stars such as Halle Berry, Sharon Stone, Neil Diamond and Jamie Foxx did for Obama’s 2009 victory gala.

Katzenberg was the top Hollywood bundler for Barack Obama’s 2012 campaign. Last year, shifting gears back to prep for the 2016 election, he co-hosted a fundraiser featuring Hillary Clinton that raised $2.1 million for the Democrats.

Hillary's Money and Social Circles

Hillary has been comfortable in these sorts of circles for decades, even before the days when Barbra Streisand serenaded her husband, former President Bill Clinton during his 1996 re-election bid, ensuring enthusiastic media coverage in the process. Then, A-listers like David Geffen and Steven Spielberg corralled Hollywood’s elite to pay up to $12,500 a piece to convene in an opulent Mediterranean-style manor, netting the Democratic Party around $3.5 million. Geffen also hosted intimate dinners, in which President Clinton and a dozen power-guests, such as Steve Jobs, Steve Tisch, and Lew Wasserman, former MCA studio chairman would mingle.

Hillary’s own fortune pales in comparison to some of these players. On a relative scale, she is more like the 99 percent to the 1 percent bracket of the Hollywood billionaires, but at those echelons, such distinctions get blurred in lieu of power.

Her wealth still places her well into the 1/10th of 1 percent territory relative to the rest of the American population. In 2012, Hillary Clinton, as Secretary of State, ranked the third richest person in the executive branch, with a net worth of approximately $15.3 million. Her successor, John Kerry sits comfortably in first place with a net worth of $103 million as of 2013. (Obama ranks 8^th wealthiest with $4.6 million.)

Obama’s Bundlers

Hillary Clinton is hoping to surpass the total of Obama’s contribution figures, including from Hollywood. In 2008, Obama and Senator John McCain posted bundlers by ranges, with the top ranges designated "$500,000 or more." Together, 536 elites directed at least $75.75 million to McCain, and 558 directed at least $76.25 million to Obama. Jeffrey Katzenberg topped Obama’s 2008 bundler list. David Geffen from DreamWorks SKG was also in the $500,000 category.

Money flowed more plentifully for Obama’s 2012 re-election bid against Republican candidate, Mitt Romney, in the most expensive presidential campaign in US history. Again, the distinction between the wealthiest and everyone else was pronounced.

The top 100 individual donors to super PACs (plus their spouses) represented 1.0 percent of all individual donors to super PACs, but raised 67 percent of the super PAC (or ‘Outside Group’) money. All told, 769 elites handed $186.5 million to Obama's re-election efforts or the DNC. The TV/Movies/Music industry coughed up $12.1 million, not quite Wall Street’s levels of $22.85 million, but still commendable.

Jeffrey Katzenberg, who led Obama’s bundler group in general, with a total of $2.12 million to him or the Democrats from 1990-2012, was again in the $500,000 bucket, alongside Barry and Wendy Meyer of Warner Brothers, Colleen Bell of Bell-Phillip TV Productions, Mai Lassiter and Will Smith and Jada Pinkett-Smith of Overbrook Entertainment, and John Emerson from Capital Group Companies.

Katzenberg ranked 18^th in the 2012 composite list across industries of Top Individuals Funding Outside Spending Groups with $3.15 million. Other Hollywood A-listers on that list included Director Steven Spielberg (who ranks in the $1-$5 million contributors group for the Clinton Foundation  with $1.1 million, Actor Morgan Freeman with $1 million, Comedian Bill Maher with $1 million, Haim Saban with $1.16 million, and billionaire Jerold A. Perenchio, CEO of Chartwell Partners with $4.1 million.

By early 2015, DreamWorks Animation announced cuts of 500 employees as part of its “strategic” plan to restructure its feature film business. It's a safe bet that those 500 former employees will not be attending many elite political festivities in Beverly Hills. Jeffrey and Marilyn Katzenberg dropped to 97th of the 100 top individual contributors for 2014, with $793,000. Hillary Clinton may provide grounds for a leap.

Hillary’s Celebrity and Celebrities

If it were up to Twitter and Facebook, Hillary would be running the White House already. She has more Twitter followers and Facebook likes than any Republican candidate that has already announced a bid for the Oval Office, plus Jeb Bush. She scores about 3.46 million Twitter followers and 2.1 million total Facebook likes.

On the GOP side, Ted Cruz tops the social media list with about 844,000 Twitter followers and also about 2.1 million Facebook likes. Rand Paul has 651,000 Twitter followers and 1.9 million Facebook likes. Marco Rubio has 732,000 Twitter followers and 1.1 million Facebook likes. Jeb Bush lags the GOP social media race with just 183,000 Twitter followers and 172,000 Facebook likes.

Aside from Hollywood’s legacy political-donor leaders and established celebrities like Ellen DeGeneres, Hillary is attracting a new more youthful demographic to her side. Lena Dunham offered Twitter support, but no funds as of yet. Kimberly Kardashian West donated $15,000 to the DNC last fall, under her company Kimsa Princess, Inc. and may come out publicly to support Hilary Clinton. America Ferrera backed Clinton in 2008 and will again. Olivia Wilde endorsed her. So did Scandal’s Kerry Washington and singer, Ariana Grande.

In 2008, after raising $229.4 million (about one-tenth the amount her camp claims she will raise this time), Clinton left the 2008 presidential race in early June. Of her top dozen corporate donor sources, Wall Street came through for her over Hollywood. JPM Chase, Goldman Sachs, Citigroup, Morgan Stanley, Lehman Brothers and Merrill Lynch all placed above 21^st Century Fox at 12th place.

According to a customized analysis for Forbes by the Center for Responsive Politics, only 12 people made both Hillary Clinton’s and Barack Obama’s top 50 Hollywood contributors list. And though the majority of those donors gave to both Clinton and Obama, only four of them ranked in both Clinton’s and Obama’s top 20. Those were Jeffrey and Marilyn Katzenberg, Steven Spielberg and Clarence Avant, CEO of Interior Music Corp. It will be Clinton’s hope to raise that crossover rate.

In politics, business and media, bruised egos heal quickly when money is concerned. Big Hollywood players will still back the Democratic candidate they think will win. That’s how the game of money, politics and social status works. The smaller ones will follow.

This piece originally appeared in Forbes on May 4th. 

Decisions: Life and Death on Wall Street by Janet M. Tavakoli: My Review

Janet Tavakoli is a born storyteller with an incredible tale to tell. In her captivating memoir, Decisions: Life and Death on Wall Street, she takes us on a brisk  journey from the depravity of 1980s Wall Street to the ramifications of the systemic recklessness that crushed the global economy. Her compelling narrative sweeps through her warnings about the dangers of certain bank products in her path-breaking books, speeches before the Federal Reserve, and in talks with Jaime Dimon.

She probes the moral complexity behind the lives, suicides and murders of international bankers mired in greed and inner conflict. Some of the people that touched her Wall Street career reflect broken elements of humanity. The burden of choosing money and power over values and humility translates to a loss for us all. 

To truly understand the stakes of the global financial game, you must know its building blocks; the characters, testosterone, and egos, as well as the esoteric products designed to squeeze investors, manipulate rules, and favor power-players. You had to be there, and you had to be paying attention. Janet was. That’s what makes her memoir so scary. In Decisions, she breaks the hard stuff down with humor and requisite anger. As a side note, her international banking life eerily paralleled my own - from New York to London to New York to alerting the public about the risky nature of the political-financial complex.

Her six chapters flow along various decisions, as the title suggests. In Chapter 1 “Decisions, Decisions”, Janet opens with an account of the laddish trading floor mentality of 1980s Wall Street. In 1988, she was Head of Mortgage Backed Securities Marketing for Merrill Lynch.  Those types of securities would be at the epicenter of the financial crisis thirty years later.

Each morning she would broadcast a trade idea over the ‘squawk box.‘ Then came the stripper booked for a “final-on-the-job-stag party.” That incident, one repeated on many trading floors during those days, spurred Janet to squawk, not about mortgage spreads, but about decorum. Merrill ended trading floor nudity and her bosses ended her time in their department. Her bold stand would catapult her to “a front row seat during the biggest financial crisis in world history.” Reading Decisions, you’ll see why this latest financial crisis was decades in the making.

In Chapter 2 “Decision to Escalate”, Janet chronicles her work with Edson Mitchell and Bill Broeksmit, who hired her to run Merrill’s lucrative asset swap desk after the stripper incident. Bill and Janet shared Chicago roots and MBAs from the University of Chicago. Janet became wary of the serious credit problems lurking beneath asset swap deals, many of which involved fraud. The rating agencies were as oblivious then, as they were thirty years later. Transparency was important to Janet. She and Bill “agreed to clearly disclose the risks—including [her] reservations about “phony” ratings.” Many Merrill customers with high-risk appetites didn’t care. They got burned when the underlying bonds defaulted.  Rinse. Repeat.

During that time, Janet penned a thriller, Archangels: Rise of the Jesuits, eventually published in late 2012. It probed the suspicious death of shady Italian banker Roberto Calvi. In June 1982, Calvi was found hanged from scaffolding under London’s Blackfriars Bridge. Ruled a suicide, the case re-merged in 2002 when modern forensics determined Calvi was murdered. Neither Bill nor Janet bought the suicide story; though Bill joked he’d never hang himself.   

Janet and I both moved to London in the 1990s, I left Lehman Brothers in New York for Bear Stearns in London in 1993 to run their financial analytics and structured transactions (F.A.S.T.) group. Those were heady days for young American bankers. We all wanted to be in London where the action was. Edson Mitchell and Bill Broeksmit wound up working for Deutsche Bank in London in the mid 1990s.

In 1997, Edson asked Janet to join him at Deutsche Bank given her expertise in structured trades and credit derivatives. The credit derivatives market was an embryonic $1 trillion. By its 2007 peak, it was $62 trillion. She declined.  Edson died three years later in a plane crash.

In Chapter 3, “A Way of Life”, Janet describes her personal epiphany and public alerts about credit derivatives and the major financial deregulation that would impact us all. In 1998, she wrote the first trade book warning of those risks, Credit Derivatives: Instruments and Applications. A year later, on November 12, 1999, the Clinton Administration passed the Gramm-Leach-Bliley Act that repealed the 1933 Glass-Steagall Act that had separated deposit taking from speculation at banks. In 2000, President Clinton signed the Commodity Futures Modernization Act that prevented over-the-counter derivatives (like credit derivatives) from being regulated as futures or securities. His Working Group included former Treasury Secretary and former co-chair of Goldman Sachs, Robert Rubin, Treasury Secretary Larry Summers, and Federal Reserve Chairman Alan Greenspan,  

With Glass-Steagall gone, banks had the green light to gamble with their customers’ FDIC-insured deposits and enter investment-banking territory through mergers. They “used their massive balance sheets to trade derivatives and take huge risks.” Our money became their seed money to burn.

Once the inevitable fallout from this government subsidized casino unleashed the financial crisis of 2008, bank apologists, turned star financial journalists like Andrew Ross Sorkin would say the repeal of Glass Steagall had nothing to do with the crisis, since the banks that failed, Bear Stearns and Lehman Brothers were investment banks, not commercial banks that acquired investment banks. That argument missed the entire make-up of the post-Glass Steagall financial system. Investment banks like Lehman Brothers, Bear Stearns and Goldman Sachs had to over-leverage their smaller balance sheets to compete with the conglomerate banks like Citigroup and JPM Chase. These mega banks in turn funded their investment bank competitors who concocted and traded toxic assets. They supplied credit lines for Countrywide’s subprime loan issuance. Everyone could bet on the same things in different ways.

While Janet’s 2003 book, Collateralized Debt Obligations & Structured Finance explained the architecture and risks of CDOs and credit derivatives, her 1998 book became an opportunists’ guide. One type of credit derivatives trade, a ‘big short’ that profited when CDOs plummeted in price, gained notoriety when Michael Lewis wrote a book by that name. Michael Burry, the man Lewis chronicled, ultimately testified before the Financial Crisis Inquiry Commission that, among other things, he read Janet’s 1998 book before trading. Lewis wrote of the aftermath, Janet’s analysis contributed to the main event.  Taxpayers took the hit.

As the securitization and CDO markets exploded in the 2000s, credit derivatives linked to CDOs stuffed with subprime-loans became financial time bombs. Janet was one of a few voices with in-depth knowledge of the structured credit markets, sounding alarms. Her voice, and those of other skeptics (myself included) were increasingly “marginalized” by a media and political-financial system promoting the belief that defaulting loans stuffed into highly leveraged, non-transparent, widely-distributed assets wrapped in derivatives were no problem.

In early June 2010, Phil Angelides, Chairman of the Financial Crisis Inquiry Commission (FCIC) questioned former Citigroup CEO Chuck Prince and Robert Rubin (who became Vice-Chairman of Citigroup after leaving the Clinton administration. ) They denied knowing Citigroup had troubles until the fall of 2007. Incredulously, Janet listened as Angelides accepted their denial even though Citigroup was hurting in the first quarter of 2007 due to their $200 million credit line to Bear Stearns whose hedge funds had imploded.

So many lies linger. According to Janet, “One of the most unattractive lies of the 2008 financial crisis was that investment bank Goldman Sachs would not have failed and did not need a bailout.” But then-Treasury Secretary and former Goldman-Sachs Chairman and CEO, Hank Paulson rejected an investment bid in AIG from China Investment Corporation while AIG owed Goldman Sachs and its partners billions of dollars on credit derivatives wrapping defaulting CDOs. That enabled him to arrange an AIG bailout to help Goldman Sachs recoup its money at US taxpayers’ expense. 

Goldman Sachs claimed it was merely an intermediary in those deals. Janet exposed a different story – presenting a list of CDOs against which AIG wrote credit derivatives protection. Underwriters of such deals are legally obligated to perform appropriate due diligence and disclose risks. Goldman Sachs had been underwriter or co-underwriter on the largest chunk of them, an active, not intermediary role. Some deals were inked while Paulson was CEO.

In Chapter 4 “Irreversible Decision,” Janet circles back to Deutsche Bank and her old boss, Bill. The SEC was investigating allegations that Deutsche Bank didn’t disclose $12 billion of credit derivatives losses from 2007-2010. In a 2011 presentation, Bill said the allegations had no merit. Meanwhile, Deutsche Bank faced investigations into frauds including LIBOR manipulation, helping hedge funds dodge taxes, and suspect valuation of credit derivatives.

Janet reveals the dramatic outcome of those investigations in Chapter 5, “Systemic Breakdown.” On January 26, 2014, Bill Broeksmit, 58, hung himself in his home in London’s Evelyn Gardens  (the block where I first lived when I moved to London for Bear Stearns.) She was shocked by the method. Bill had made clear his “aversion to death by hanging.” Those decades in finance had crushed him.  

Six months later, a Senate Subcommittee cited Deutsche Bank and Barclays Bank in a report about structured financial products abuse. Broeksmit’s email on synthetic nonrecourse prime broker facilities was Exhibit 26. Banks had placed a large chunk of their balance sheets at risk, flouting regulations, and enabling a tax scheme. From 2000 to 2013, the subcommittee reported hedge funds may have avoided $6 billion in taxes through structured trades with banks. 

Finally, in Chapter 6, “Washington’s Decision: “A Bargain,”” Janet reminds us that September 2015 marks the seventh anniversary of the financial crisis. She calls Paulson and Rubin  financial wrecking balls for their role in the crisis and cover-up.

She ends Decisions on the ominous note that “the government tried to hide the real beneficiaries of the bailout policies – Wall Street elites – behind a mythical idea of a “crisis of confidence” if we prosecuted, arrested, and imprisoned crooks. “

The real crisis of confidence though, is due to the clique of inculpable political and financial leaders. Alternatively, she writes, “If we indicted fraudsters, raised interest rates, and broke up too-big-to-fail banks, people would have more confidence in our government and in the financial system..” 

Instead, we get Ben Bernanke espousing the "moral courage" it took to use taxpayers’ money and issue debt against our future to subsidize Wall Street over the real economy, allegedly for our benefit. Big banks are bigger. Wealth inequality is greater. Economic stability has declined. The bad guys got away with it. Read Janet’s illuminating book to see how and to grasp the enormity of what we are up against.