WASHINGTON – Federal investigators have opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the subprime mortgage crisis, focusing on accounting fraud, securitization of loans and insider trading, among other areas, the Federal Bureau of Investigation said.This is just Wall Street, right? Uh, well, you know that French bank where a single rogue trader lost over $7 billion last week? Here's the report I expected:
The FBI wouldn't identify the companies under investigation but said that generally the bureau is looking into allegations of fraud in various stages of mortgage securitization, from those who bundled the loans, to the banks that ended up holding them
PARIS - The trader accused of causing about $7 billion in losses at Societe Generale told investigators that he believes his bosses were aware of his massive risk-taking on markets but turned a blind eye as long as he earned money, a judicial official said Tuesday.If you want a stable economy, then you have to have honest, trustworthy bankers.
Societe Generale, which said last week that Kerviel’s actions cost it nearly 5 billion euros, quickly accused Kerviel of lying. In another twist to the multifaceted case, France’s financial markets authority opened an investigation into the bank, France’s second-largest.
Kerviel, a 31-year-old junior trader, told investigators of efforts to mask his massive transactions, but said the bank must nonetheless have noticed something suspicious, according to excerpts of his police testimony published in Le Monde newspaper. Kerviel’s remarks were confirmed by Isabelle Montagne, a spokeswoman for the Paris prosecutor’s office.
“I can’t believe that my superiors were not aware of the amounts I was committing, it is impossible to generate such profits with small positions,” Kerviel said, according to the account confirmed by Montagne.
But Bankers are not honest and trustworth unless there are outsiders carefully watching every move they make. An unwatched banker cannot be trusted. The potential profits in banking are simply too big, the biggest profits come from the greatest risk of loss, and the damage that can be done to the overall economy by such massive bank losses are too big to trust bankers.
Score another failure for the Reagan Revolution and Sen. Phil Gramm's deregulation of banking together with the elimination of the Glass-Stegal act.