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Here's what's happening (IMO): Aside from the obvious conflict of interest resulting from the fact that senior officials at DOJ and financial regulatory agencies are Wall Street insiders, I believe that the main reason the Obama administration has actively participated in the cover up and protection of top banking executives who may have committed crimes is because if serious investigations were to proceed, it would result in the unraveling of a massive and ongoing pyramid (or ponzi) scheme by the too-big-to fail banks.

There is plenty of evidence that this criminal financial cartel is cooking the books.  A good primer on this subject is in the January/February Atlantic Magazine article by Frank Partnoy and Jesse Eisinger: "What's Inside American Banks?"

Some four years after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as “black boxes” that may still be concealing enormous risks—the sort that could again take down the economy. A close investigation of a supposedly conservative bank’s financial records uncovers the reason for these fears—and points the way toward urgent reforms.
If anybody has any doubt about how serious this situation is, one only has to learn about how high ranking industry and government officials feel about it:
“The banks should give a full, fair, and accurate account of their financial positions and they are failing that test.”

-Kevin Warsh, former Federal Reserve Board member

“After serving on the [FASB] board, I no longer trust bank accounting.”

-Don Young,  Financial Accounting Standards Board

“Do I trust Bank Accounting? Absolutely not.”

-Ed Trott, Financial Accounting Standards Board member

Basically, from the reading I've done it looks informed people believe that these criminal financial cartels may be saddled with tens of trillions of dollars of junk investments, derivatives, complex investment products, that could bring them down suddenly and catastrophically.  And they are misrepresenting their actual situation.

That's part of the reason behind the unease shared by many high level industry and government insiders.

Any proper criminal investigation on Wall Street top executives is likely to result in revelations of massive and systemic fraud and expose the actual financial conditions of these cartels.

This in turn could precipitate a run on these institutions, which could then result in the sudden collapse of several big banks, destabilizing not only the U.S., but the world economy.  That's the actual meaning behind the "too-big-too-fail" moniker.  It means that governments will not let these institutions fail, regardless of the level of criminality and fraud, because they could bring down entire economies.

I happen to believe that because the same criminal elements that created the initial problems are still running things (in these banks), it is inevitable that there will be another major financial crisis since the underlying reasons for the previous one were never fully addressed and corrected.

As we learned about the DOJ and States' AG's civil suit against rating agency S&P, and other potential criminal charges against RBS, we are now seeing a major sell off by insiders, as reported by CNBC: "Sucker Alert? Insider Selling Surges After Dow 14,000"

Insiders have been pulling out of stocks just as small investors are getting in.

Selling by corporate executives has surged recently as the Dow Jones Industrial Average hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs.

This stuff happens from time to time, but as the trickling and timid investigations against Wall Street crooks continues apace, and as citizens, communities, and states' AG's continue to push for proper investigations, we may reach a point where banks will not longer be able to hide the actual conditions of their books, precipitating another collapse.

If this happens, people should demand the temporary nationalization of the banking sector to give the country enough time to clean things up, including jailing banksters.

No matter what happens, citizens should reject the imposition of "austerity" measures as a result of a potential banking sector failure.

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To learn more about the financial crisis read: Wall Street And The Financial Crisis: Anatomy of a Financial Collapse (PDF) - United States Senate - 2011

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Originally posted to Ray Pensador on Wed Feb 06, 2013 at 03:46 PM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, American Legislative Transparency Project, and In Support of Labor and Unions.

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