Once again, Senator Elizabeth Warren asks the most obvious question -- why aren't banks prosecuted? -- only to get the same incredulous responses. What? Prosecute the banks? No way!

Warren took bank regulators to task on Thursday about the fact that British bank HSBC is still doing business in the U.S., with no criminal charges filed against it, despite confessing to what one regulator called "egregious" money laundering violations.

The Justice Department’s record $1.9 billion settlement with HSBC exposed the continuing ability of drug cartels, rogue nations and terrorist financiers to move billions of dollars through the international and U.S. banking systems.

Money laundering was a major focus of U.S. counterterrorism policy after the Sept. 11, 2001, attacks. The Patriot Act of 2002 included provisions that required the Treasury Department to identify banks and individuals suspected of links to terrorism. And the law instructed banks to strictly monitor and report potentially illegal transactions.

"They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it," Warren said of HSBC. "How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?"

The regulator she was questioning, David Cohen, the Treasury Department's undersecretary for terrorism and financial intelligence, repeatedly refused to answer the question. Like other regulators at the hearing, he said that his department has no authority to shut down a bank unless the Justice Department convicts the bank of a crime.

Warren said: “If you’re caught with an ounce of cocaine, chances are good you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life. But evidentially, if you laundered nearly a billion dollars for drug cartels and violated our international sanctions, your company pays a fine and you go home and sleep in your own bed at night -- every single individual associated with this. And I just -- I think that’s fundamentally wrong.”

The issue is part of a broader debate over large financial institutions and whether they are too big to be broken up. The Massachusetts senator’s comments come after U.S. Attorney General Eric Holder acknowledged Wednesday that some of the largest banks are too big to prosecute and that prosecution could have a negative impact on the U.S. and global economies.

Speaking before a Senate Judiciary Committee hearing, Holder said he is concerned that the size of some of these institutions “becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”

Holder added that “I think that is a function of the fact that some of these institutions have become too large.”

It is far past time for someone to "indicate" to Mr. Holder that he needs to prosecute the criminal banks, or someone will show him to the door.

Short sales end with the homeowner out of the home. This is the most common "penalty" on banks in the mortgage settlement.

Bloomberg News:

While the banks are stepping up efforts to help borrowers stay in their homes, they are still spending most of the settlement on short sales and forgiveness of home-equity loans that allow them to take bad loans off their books. Profits from new lending are increasing even as regulators enforce penalties for modification missteps and foreclosures pursued with fraudulent or missing documents. Last year, mortgage revenue at the four largest lenders -- Bank of America, JPMorgan, Wells Fargo & Co. (WFC), and U.S. Bancorp --surpassed the amount they spent on consumer settlements and investor demands they buy back faulty loans.

“The banks have shown a knack for sidestepping government attempts to have them redress their role in the foreclosure crisis and keep people in their homes,” said Arthur Wilmarth, a law professor at George Washington University in the nation’s capital. “A lot of these efforts end up helping the banks, not the homeowners.”

Lets recap: The Big Banks pay a small (Small in Banker dollars, anyways) "penalty" *cough* to the DOJ for fraudulent foreclosure practices, and agree to review their own foreclosures and decide which homeowners will receive aid from the "penalty" funds paid to the DOJ that are allotted to homeowner aid. Then typically, the Banks are going to punish the homeowner with a short sale of their home that A) Results in the homeowner losing their home, and destroys their credit. B)Helps the Bank complete their obligation to the DOJ. and C)Allows the Bank further forgiveness by erasing home equity loans from their books.

The Big Banks have struck a Trifecta with Eric Holder's Department of in-Justice. For troubled homeowners, there is homelessness and despair, and just a small glimmer of hope.

[Artwork by Victor Juhasz, Rolling Stone]

In the latest issue of Rolling Stone, Matt Taibbi takes the Justice Department to task over settling with HSBC late last year in the “largest drug-and-terrorism money-laundering case ever.”

"The HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­ with Wall Street," Taibbi writes. "In this case the bank literally got away with murder – well, aiding and abetting it, anyway."

Three-time losers doing life in California prisons for street felonies might be surprised to learn that the no-jail settlement Lanny Breuer worked out for HSBC was already the bank's third strike. In fact, as a mortifying 334-page report issued by the Senate Permanent Subcommittee on Investigations last summer made plain, HSBC ignored a truly awesome quantity of official warnings.

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The Big Banks accused of abusing homeowners will now help to decide who gets foreclosure aid dollars. What could possibly go wrong?

Via:

Washington is seeking help from an unlikely group in its effort to distribute billions of dollars to struggling homeowners in foreclosure: the same banks accused of abusing homeowners with shoddy foreclosure practices.

In doing so, the regulators are trying to speed the process after a flawed, independent foreclosure review delayed relief for millions of borrowers, according to people briefed on the matter. But housing advocates worry that the banks, eager to end the costly process, could take shortcuts as they comb through loan files for potential errors, in some cases diverting aid from the neediest homeowners.

Regulators say they will check the work. And banks have already agreed to pay a fixed amount to troubled homeowners, creating another backstop.

According to officials involved in the process, who spoke anonymously because the matter is not public, the regulators had few alternatives.

These are the same regulators who just a month ago didn't trust the banks.

Here's how this is supposed to work, the Big Banks will now have to assess each loan for potential errors -- errors they never admitted to in the slap-on-the-wrist settlements with the Justice Department -- which will then help the Big Banks determine how much money each homeowner will receive.

Wow. How about just sending bankers door-to-door and have them slap the 4 million homeowners who lost their homes to foreclosure in the face?

Hacktivists claiming to be from the group Anonymous threatened early Saturday to release sensitive information about the U.S. Department of Justice as a response to the prosecution and death of Aaron Swartz.

They claimed to have one such file on multiple servers ready for immediate release.

The hacktivist collective had previously knocked the DOJ and MIT's websites offline as a form of "tribute" to Aaron.

The website of the U.S. government agency responsible for federal sentencing guidelines was hijacked, and a message demanding the United States reform its justice system or face incriminating leaks to select news outlets:

Two weeks ago today, a line was crossed. Two weeks ago today, Aaron Swartz was killed. Killed because he faced an impossible choice. Killed because he was forced into playing a game he could not win — a twisted and distorted perversion of justice — a game where the only winning move was not to play.

Anonymous immediately convened an emergency council to discuss our response to this tragedy. After much heavy-hearted discussion, the decision was upheld to engage the United States Department of Justice and its associated executive branches in a game of a similar nature, a game in which the only winning move is not to play.

The "game" mentioned in the video involves releasing a file ("warhead") containing sensitive information about the Justice Department. Anonymous isn't saying just what the information is:

The contents are various and we won't ruin the speculation by revealing them. Suffice it to say, everyone has secrets, and some things are not meant to be public. At a regular interval commencing today, we will choose one media outlet and supply them with heavily redacted partial contents of the file. Any media outlets wishing to be eligible for this program must include within their reporting a means of secure communications.

The hacked site also contained links to "warheads" each named after one of the Supreme Court justices, and each linked to a website containing a "503 service unavailable" error message.

The U.S. Sentencing Commission took its website down for several hours before restoring it later Saturday, although it still didn't seem to be quite fully functional at last check.

A full transcript of Anonymous' message after the jump.

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Some new information on the prosecution of Aaron Swartz...

CNET News:

State prosecutors who investigated the late Aaron Swartz had planned to let him off with a stern warning, but federal prosecutor Carmen Ortiz took over and chose to make an example of the Internet activist, according to a report in Massachusetts Lawyers Weekly.

Middlesex County's district attorney had planned no jail time, "with Swartz duly admonished and then returned to civil society to continue his pioneering electronic work in a less legally questionable manner," the report (alternate link) said. "Tragedy intervened when Ortiz's office took over the case to send 'a message.'"
...
The Massachusetts Lawyers Weekly report was written by Harvey Silverglate, a prominent Cambridge criminal defense lawyer whose clients have included Michael Milken and Leona Helmsley. Silverglate, the author of Three Felonies A Day: How the Feds Target the Innocent, is of counsel to the firm that initially represented Swartz in his attempts to defend himself against 13 felony charges brought by Ortiz's office. Those charges carried a maximum penalty of 50 years in prison.

Silverglate told CNET today that:

"Continuance without a finding" was the anticipated disposition of the case were the charge to remain in state court, with the Middlesex County District Attorney to prosecute it. Under such a disposition, the charge is held in abeyance ("continued") without any verdict ("without a finding"). The defendant is on probation for a period of a few months up to maybe a couple of years at the most; if the defendant does not get into further legal trouble, the charge is dismissed, and the defendant has no criminal record. This is what the lawyers expected to happen when Swartz was arrested for "trespassing at MIT." But then the feds took over the case, and the rest is tragic history.

Be sure to also read the mention of the efforts by Ortiz to seize a family-owned motel, that failed -- thankfully -- and the stinging rebuke she received from the judge in the case. The case screams "Abuse of power!"

Up with Chris Hayes talked about the ongoing legacy of Aaron Swartz on Saturday:

Well, you've watched Frontline's investigative report "The Untouchables," here or at PBS's website, or on your local PBS station.

The report cast a sharp glare on the lack of even a single arrest or prosecution of any senior Wall Street banker for the systemic fraud that precipitated the 2008 financial crisis: a crisis from which millions of people around the world are still suffering. What this program particularly demonstrated was that Eric Holder's justice department, in particular the Chief of its Criminal Division, Lanny Breuer, never even tried to hold the high-level criminals accountable. It revealed Breuer to be an arrogant twit who insisted the DOJ couldn’t prosecute despite a plethora of evidence of crimes presented in the show.

From Frontline's interview with Breuer:

NARRATOR: FRONTLINE spoke to two former high-level Justice Department prosecutors who served in the Criminal Division under Lanny Breuer. In their opinion, Breuer was overly fearful of losing.

MARTIN SMITH: We spoke to a couple of sources from within the Criminal Division, and they reported that when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.

LANNY BREUER: Well, I don’t know who you spoke with because we have looked hard at the very types of matters that you’re talking about.

MARTIN SMITH: These sources said that at the weekly indictment approval meetings that there was no case ever mentioned that was even close to indicting Wall Street for financial crimes.

LANNY BREUER: Well, Martin, if you look at what we and the U.S. attorney community did, I think you have to take a step back. Over the last couple of years, we have convicted Raj Rajaratnam. Now, you’ll say that’s an insider trading case, but it’s clearly going after Wall Street. We—

MARTIN SMITH: But it has nothing to do with the financial crisis, the meltdown, the packaging of bad mortgages that led to the collapse, that led to the recession.

LANNY BREUER: Well, first of all, I think that the financial crisis, Martin, is multi-faceted. And what we’ve had is a multi-pronged, multi-faceted response. And it’s simply a fiction to say that where crimes were committed, we didn’t pursue the cases. And that’s why, where crimes were committed, you have more people in jail today for securities fraud, bank fraud and the like than ever before.

MARTIN SMITH: But no Wall Street executives.

LANNY BREUER: No Wall Street executives.

"More people in jail today for securities fraud, bank fraud and the like than ever before," not true, Mr. Breurer.

In the wake of the savings and loan debacle in the 1980s, special government task forces referred 1,100 cases to prosecutors, resulting in more than 800 bank officials going to jail. Among the best-known: Charles H. Keating Jr., of Lincoln Savings and Loan in Arizona, and David Paul, of Centrust Bank in Florida.

Then, the DOJ threatened Frontline that they would take their cookies and go home, never to cooperate with them again, see the tweets below:

Via Twitter.

Next, this ridiculous piece appeared in the Washington Post announcing Breuer’s imminent departure that paints him as some sort of persecuted white knight:

"A former prosecutor in the Manhattan district attorney’s office, Breuer came to the Justice Department well versed in white-collar crime. He has been a driving force behind the prosecution of banks involved in rigging the global interest rate known as Libor. His efforts helped produce a $1.5 billion settlement with UBS and led to criminal indictments against two of the bank’s former traders in December."

In all, not a bad day's work for Martin Smith. But no doubt Breuer's replacement will be another balding guy in a suit just like him.

The Department of Justice announced on Monday that they had dropped the charges against Reddit cofounder Aaron Swartz after he died from an apparent suicide on Friday. Swartz, 26, had been accused of breaking into a computer at MIT and downloading 4.8 million documents from JSTOR, an academic-articles subscription service. He faced up to 35 years in prison and a $1 million fine if convicted to punish an alleged crime that had no victims. His trial was set to start in April.

Aaron Swartz keynote - "How we stopped SOPA" at F2C:Freedom to Connect 2012, Washington DC on May 21 2012.

The websites of the U.S. Department of Justice and the Massachusetts Institute of Technology (MIT) were knocked offline on Sunday, and the work is being attributed to the hacktivist collective, Anonymous.

DOJ.gov and MIT.edu were both back online Monday morning.

The action was taken as a tribute to the late Aaron Swartz, a co-founder of the site Reddit.com and at the age of 14, co-developed the RSS web protocol that is the key component of much of the internet's publishing infrastructure.

In another tribute, hundreds of academics worldwide have begun tweeting links to their copyright-protected research in Swartz's honor, using the hastag #pdftribute. Links from Twitter posts with the hashtag are being collected at Pdftribute.net. The links appear to be to academic papers.

In a statement about his death, Aaron’s family and partner wrote in part:

"Aaron’s insatiable curiosity, creativity, and brilliance; his reflexive empathy and capacity for selfless, boundless love; his refusal to accept injustice as inevitable—these gifts made the world, and our lives, far brighter. We’re grateful for our time with him, to those who loved him and stood with him, and to all of those who continue his work for a better world..."

"Aaron’s death is not simply a personal tragedy. It is the product of a criminal justice system rife with intimidation and prosecutorial overreach. Decisions made by officials in the Massachusetts U.S. Attorney’s office and at MIT contributed to his death...Today, we grieve for the extraordinary and irreplaceable man that we have lost.”

Aaron’s funeral will be held at 10 a.m. on Tuesday, January 15th at Central Avenue Synagogue, 874 Central Avenue, Highland Park, Illinois 60035. Announcements about memorial services in other cities will be posted here in coming weeks.

If you ever have thoughts of suicide please speak to someone, in the USA call 1-800-273-8255 or find numbers for your country here.

The banking giant HSBC has escaped indictment for laundering billions of dollars for Mexican drug cartels and groups linked to al-Qaeda. Despite evidence of wrongdoing, the U.S. Department of Justice has allowed the bank to avoid prosecution and pay a $1.9 billion fine. No top HSBC officials will face charges, either.

Rolling Stone contributing editor Matt Taibbi, author of "Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History," joins Democracy Now! to discuss how the bankers escaped criminal prosecution for their actions.

"You can do real time in jail in America for all kinds of ridiculous offenses," Taibbi says. "Here we have a bank that laundered $800 million of drug money, and they can’t find a way to put anybody in jail for that. That sends an incredible message, not just to the financial sector but to everybody. It’s an obvious, clear double standard, where one set of people gets to break the rules as much as they want and another set of people can’t break any rules at all without going to jail."

"Now, how did Forbes put it, Matt," asks Amy Goodman. "What’s a bank got to do to get into some real trouble around here?"

"Exactly, exactly," begins Taibbi. "And what’s amazing about that is that’s Forbes saying that. I mean, universally, the reaction, even in—among the financial press, which is normally very bank-friendly and gives all these guys the benefit of the doubt, the reaction is, is "What do you have to do to get a criminal indictment?" What HSBC has now admitted to is, more or less, the worst behavior that a bank can possibly be guilty of. You know, they violated the Trading with the Enemy Act, the Bank Secrecy Act. And we’re talking about massive amounts of money. It was $9 billion that they failed to supervise properly. These crimes were so obvious that apparently the cartels in Mexico specifically designed boxes to put cash in so that they would fit through the windows of HSBC teller windows. So, it was so out in the open, these crimes, and there’s going to be no criminal prosecution whatsoever, which is incredible."

A full transcript of the discussion below the fold.

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