It's no secret that what Washington does affects the stock markets, given how gamed and absurdly not free they are. One look at the bogus tweet saying the White House was bombed, and BOOM! Down goes the market into the tank.

What goes down can also go up, especially if you've hired Jack Abramoff's old firm Greenberg Traurig to glean bits of 'political intelligence' to feed to high-rolling investors.

Washington Post:

The Securities and Exchange Commission has issued subpoenas to a firm and individuals in connection with the leak last month of a federal funding decision that appeared to cause a surge in stock trading of several major health companies.

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Wow, what a week. Anyone who wants to try and tell a clear, uncomplicated picture of President Obama and his party this week has to end the week a little befuddled. The picture is murkier than ever in terms of the course Obama is trying to chart, his and his party's boldness, and their willingness to stand up to the biggest, wealthiest, and most powerful special interests on behalf of the hard-pressed middle class and poor.

The week started with an inaugural address that was a clarion call for progressive policies, a speech that made progressive hearts sing by laying a strong clear vision of our movement’s historic values. As I argued on Monday, whatever else Obama does or doesn’t do policy-wise, a speech like this matters: it has the weight of history behind it, and it makes the case in an important moment why Americans should move in the forward rather than backward direction.

The speech was not complicated, it was as clear as a bell. Other than the speech, though, the rest of the week was pretty damn messy:

• Harry Reid waved the white flag and surrendered on Senate reformers attempt to make the body less dysfunctional. In what was a massive disappointment, especially after much macho talk about how this time was really going to be different, Reid once again agreed to a package of very modest reforms signed off on by McConnell. This is exactly what he did 2 years ago, and within days things were moving just as slowly as before. In these dysfunctional days of our government’s impairment, I think some Senators have decided they would rather have the power to block things rather than accomplish anything positive. That is a very bad sign for our democracy - and a very bad deal.

• A staffer for another of the Democratic party’s leadership, Chuck Schumer, confidently predicted that Democrats would agree to cuts in Medicare and in the “chained CPI”, DC speak for cutting Social Security benefits. This trial balloon was quickly and vehemently shot down by members of the Congressional Progressive Caucus and other progressive forces, and by the end of the day, Schumer’s office had formally recanted, issuing a statement that he didn’t support such cuts. While it was good to see such a quick backtrack on the trial balloon being floated, no one I have talked to is the least bit reassured that Democratic leadership won’t continue to dangle that option to Republicans who want a scalp on Social Security (and who want to unleash their super PACs to attack Democrats for cutting Social Security).

• On the Wall Street accountability agenda, the signals are all over the map. Yesterday, 2 big things happened, both of them good signs but not conclusive. A woman with a reputation as a tough prosecutor, Mary Jo White, was nominated by Obama to chair the SEC, signaling to both Wall Street and progressives who want them held accountable for their dirty deeds that Obama wants to be tougher on Wall Street fraud. The fact that she also been a lawyer for some very bad bankers mitigates my happiness over this, though-- I’m just not certain how good she will end up being. But I’m willing to take it as a good sign that Obama appoints someone with a rep for toughness to the SEC spot.

• And in other very good news, two days after a devastating piece from Frontline which was scathing in its reporting on how DOJ was choosing not to prosecute bankers, Lanny Breuer announced his resignation. According to all of my sources inside the administration who I have talked to about this, Breuer has been the biggest roadblock at DOJ in terms of holding Wall Street bankers accountable, particularly in the last year in terms of slowing down the Residential Mortgage-Backed Securities Task Force. A former Wall Street lawyer, Breuer’s leaving is an unqualified good thing. What we don’t know, of course, is who will replace him, so we will see who gets put in that key DOJ slot next.

The big question now is what happens next on the task force. Although I know NY AG Eric Schneiderman is pushing hard on the cases he has brought and is exploring other avenues, he is getting little help right now from the rest of the task force. Breuer seems to be doing everything in his power to slow things to a crawl; Housing Secretary Shaun Donovan is completely focused on Hurricane Sandy relief; the White House has no one focused on making sure the task force is working, leaving that to DOJ which seems focused instead in making sure it doesn’t work. Now the DOJ point person for the task force, Breuer, is leaving- which is a good thing overall but it doesn’t exactly make things move faster. In the meantime, the task force’s work keeps being undercut by the terrible settlements that have been announced by other agencies, like the OCC and Federal Reserve’s overwhelmingly pro-bank settlement with a bunch of the biggest banks over wrongful foreclosures.

So we’ve got little progress on the ability of Republicans to block any decent legislation in the Senate; powerful Democrats who keep saying they are open to a deal that cuts Social Security; a complete muddle over being tough on Wall Street, some good news and some bad; and a clear, confident progressive clarion call of an inauguration speech.

There is no narrative to all this. Wealthy special interests, especially the big boys on Wall Street, and the opponents of progress continue to win out over middle and low income folks most of the time, even inside the Democratic party. Yet, the President clearly wants to be seen as a progressive champion. It’s a mix and a muddle. I hope we finally get to the point when this President finally and fully decides which side he wants to be on, and doesn’t hesitate to take on the wealthy and powerful on behalf of the middle class and poor. If his administration stops being a mix and a muddle, and starts consistently in word and deed fighting for us regular folk, he will go down in history as a great President.

In a salacious 77-page complaint that reads like Penthouse Forum meets The Insider meets the Keystone Kops, one David Weber, the former chief investigator for the SEC Inspector General's office, accuses the SEC of retaliating against Weber for coming forward as a whistleblower. According to this lawsuit, Weber was made a target of intramural intrigues at the agency (which has a history of such retaliation) after he came forward with concerns that his bosses may have been spending more time copulating than they were investigating the SEC.

I spent some time reading the complaint and it's as bad as Taibbi describes. Unfair firing aside, this allegation was particularly frightening:

145. In the OIG inquiry into the alleged misuse of computer equipment, Weber and his investigators found that the laptops which were used by SEC examiners during these examinations, and on which all the information from the examinations were stored, neither contained virus protection, encryption programs, or firewalls, nor were they ever wiped clean after testing. Some of the computers at issue were used in every stock exchange in the United States, and therefore exposed exchanges to infections or compromises that could be brought from exchange to exchange. This was in complete violation of SEC and government-wide IT security standards for governmental computer equipment, and in direct contradictions to the oral and written representations the SEC made to regulated exchanges in accessing exchange computer and IT systems.

146. Much to his dismay, Weber then discovered that some of these laptops were brought to foreign countries by SEC management, and by certain SEC management and employees to the “Black Hat” Conference in Las Vegas, Nevada. The “Black Hat” Conference is an annual convention for computer hackers and security experts. Attendees to these conferences have included hackers, representatives from corporations, federal agencies, and foreign intelligence agencies

But they weren't paying attention to what data infections they might be courting, because they were too busy engaging in extracurricular activities. Like, for example, this incident which appears to have begun the ball rolling toward Weber's termination:

36. Maloney asked Weber to close the door to her office. Maloney told Weber that she would deny the following conversation if Weber were to repeat it.

37. Maloney then said that, “David [Kotz] was f*cking that lady.” Weber expressed shock and dismay. Maloney told Weber to “watch out” for Kachroo and to be careful when he met with her.

38. Maloney stated that Kachroo had received special treatment. Maloney even questioned whether the OIG would have ever opened an investigation into the SEC’s oversight over the Court-Appointed Receivership in SEC v. Stanford.

Awesome. There's much, much more, like the text messages being sent in the middle of legal proceedings.

40. Weber suggested to Maloney that Kotz was possibly “pulling her leg.” Maloney then stated that Kotz had shown her text messages he had received from Kachroo. Maloney said that Kotz had even shown her text messages that Kachroo had sent to him during Kachroo’s oral testimony to the OIG, as part of the Stanford Receivership Investigation, on December 11, 2011. Maloney said that one of the text messages she saw had said something to the effect that Kachroo could not bear to be giving testimony from across the table without being able to touch and kiss Kotz during her testimony.

I sure would like to see the looks on Matt Taibbi's and Max Keiser's faces when they hear this, because it's not even close to reality:

After a yearlong investigation, the Justice Department said Thursday that it won't bring charges against Goldman Sachs Group Inc. or any of its employees for financial fraud related to the mortgage crisis.

In a statement, the Justice Department said "the burden of proof" couldn't be met to prosecute Goldman criminally based on claims made in an extensive report prepared by a U.S. Senate panel that investigated the financial crisis.

"Based on the law and evidence as they exist at this time, there is not a viable basis to bring a criminal prosecution with respect to Goldman Sachs or its employees in regard to the allegations set forth in the report," the statement read.

The Justice Department reserved the right to bring charges in the future if new evidence emerges.

In a statement Thursday, Goldman said: "We are pleased that this matter is behind us."

In April 2011, the U.S. Senate's Permanent Subcommittee on Investigations published a scathing report on the financial crisis, highlighting Goldman as a culprit. Lawmakers accused the firm of breeding a greedy culture and running conflict-ridden businesses, and they said Goldman put its own interest ahead of clients.

Sen. Carl Levin, D., Mich., chairman of the Senate's subcommittee, said Goldman executives lied to Congress about the firm's bets against the housing market. The accusation triggered a Justice Department probe of possible perjury.

A spokeswoman for Mr. Levin's office didn't respond to a request for comment Thursday.

The report concluded that even as securities firms flooded the market with securitized mortgages and advised clients to buy them, firms privately used words like "crap" and "flying pig" to describe the financial instruments. The department's probe was launched when Goldman's reputation already had been battered by civil-fraud charges filed against the New York company by the Securities and Exchange Commission. The SEC accused Goldman of fraud related to a mortgage-bond deal called Abacus 2007-AC1.

Goldman was accused of failing to inform investors that hedge-fund firm Paulson & Co. had helped choose underlying securities in the deal and was betting against it.

Goldman agreed to pay $550 million to end the SEC's civil-fraud suit. The company said marketing materials for the Abacus deal contained "incomplete information."

David Dayen says:

I swear that “if the Justice Department saw crimes committed, they would have done something” and “it’s a higher bar” are macros on the keyboards of defenders of the lack of prosecutions. But it’s pretty simple to come up with ways to prosecute on this conduct if you really wanted. Just take the Sarbanes-Oxley Act alone.

Oh, and in other great news about the special protective bubble that surrounds the great vampire squid:

The U.S. Securities and Exchange Commission has dropped an investigation into Goldman Sachs Group Inc's role in selling $1.3 billion worth of subprime mortgage securities, the investment bank said in a regulatory filing on Thursday.

In February, Goldman received a so-called Wells notice from SEC staff related to disclosures in the deal's offering documents. Such notices typically indicate the agency plans to take some kind of enforcement action, and gives firms a chance to respond.

On Monday, the SEC notified Goldman that the investigation had been closed and that it did not intend to recommend any enforcement action against the bank related to the offering, Goldman said in its quarterly 10-Q filing with the SEC.

The investment bank also lifted its estimate of "reasonably possible" legal losses to $3.4 billion from a previous estimate of $2.7 billion three months earlier. The estimate does not include potential losses from legal matters that are at an early stage or that are too difficult to predict.

P.S. to Eric Holder: Don't confuse "activity" with "productivity." We all know how to shuffle papers to look busy.

You can understand why the U.S. government was so unhappy with Bradley Manning when we get to connect the dots on information like this:

Days after the Deepwater Horizon blow-out, a message came in to our offices in New York from an industry insider floating on a ship in the Caspian Sea. He stated there had been a blow-out, just like the one in the Gulf, and BP had covered it up.To confirm this shocking accusation, I flew with my team to the Islamic republic of Azerbaijan.

Outside the capital, Baku, near the giant BP terminal, we found workers, though too frightened to give their names, who did confirm that they were evacuated from the BP offshore platform as it filled with explosive methane gas.

Before we could get them on camera, my crew and I were arrested and the witnesses disappeared.

Expelled from Azerbaijan, we still obtained the ultimate corroboration: a secret cable from the U.S. Embassy to the State Department in Washington laying out the whole story of the 2008 Caspian blow-out.

The source of the cable, classified “SECRET,” was a disaffected U.S. soldier, Private Bradley Manning who, throughWikiLeaks.org, provided hot smoking guns to The Guardian.The information found in the U.S. embassy cables is a block-buster. The cables confirmed what BP will not admit to this day: there was a serious blow-out and its cause was the same as in the Gulf disaster two years later—the cement (“mud”) used to cap the well had failed.

Bill Schrader, President of BP-Azerbaijan, revealed the truth to our embassy about the Caspian disaster:

“Schrader said that the September 17shutdown of the Central Azeri (CA) platform…was the largest such emergency evacuation in BP’s history. Given the explosive potential, BP was quite fortunate to have been able to evacuate everyone safely and to prevent any gas ignition. … Due to the blowout of a gas-injection well there was ‘a lot of mud’ on the platform.”

From other sources, we discovered the cement which failed had been mixed with nitrogen as a way to speed up drying, a risky process that was repeated on the Deepwater Horizon.

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If there was ever any doubt that the recently announced JPMorgan Chase "probe" was merely an early summer's entertainment to keep the masses distracted, I'd say their hire of this former SEC chief to help them has cleared up that question. The SEC is notorious for its incestuous ties with Wall Street and their all-too-forgiving ways toward their former (and possibly future) employers. (For instance, JPMorgan’s general counsel Stephen Cutler was previously head of enforcement at the SEC.) Why, it's almost like Capitol Hill!

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, has hired former U.S. Securities and Exchange Commission enforcement chief William McLucas to help respond to regulatory probes of the firm’s $2 billion trading loss.

The lender retained law firm Wilmer Cutler Pickering Hale & Dorr LLP, where McLucas is a partner, shortly after the bank disclosed the loss on May 10, said Kristin Lemkau, a spokeswoman for New York-based JPMorgan.

The probes began after JPMorgan traders in London built up positions in illiquid credit derivatives that were so large they distorted market prices and eventually led to what Chief Executive Officer Jamie Dimon called “self-inflicted” losses that may grow. That spurred reviews by the SEC, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and Federal Bureau of Investigation.

“Our focus right now is on whether the company’s public disclosure and financial reporting is accurate,” SEC Chairman Mary Schapiro said today in congressional testimony. “The agencies collectively, including the criminal authorities, are working very hard to untangle what happened at the firm.”

The SEC is reviewing the accuracy and timing of JPMorgan’s disclosure of changes in how it calculates value-at-risk, or VaR, which shows how much it could lose from trading most days, Schapiro said. The bank changed its VaR model for the chief investment office during the first quarter without telling investors. The new model, which has since been scrapped, had cut the risk estimation almost in half, Dimon told investors May 10.

If you blinked, you probably missed this. The SEC announced Friday that GE Funding would pay a mere $70.4 million (chump change to these people) to settle charges of bid-rigging.

When I was a reporter, the scale of fraud involved in this kind of thing drove me crazy, because no matter how carefully I'd report it, it was too complicated for most readers (and some politicians) to grasp. Yet it costs them real money.

I remember that during the Carter administration, the Department of Justice published a report called "Corruption: The Hidden Tax". They estimated that government spending on all levels - federal, state, municipal - was inflated by 30 percent due to fraud. (That was in the 70s. Imagine how bad it is now.)

Now, think about that. Your tax bills are much higher than they need to be, because so many people are taking a cut off the top. Municipal bonds are a particularly scummy pond of corruption, and the practice that's described here is widespread. There are "safeguards" built into the bidding system that requires the issuing company to get their bid certified by another "competing" bank - but as we've all learned over the past few years, there's no real competition. They're all in bed together. It's common practice for them to rubber stamp each other's deals, safe in the knowledge that soon they'll have their own turn at the trough:

Dec. 23 (Bloomberg) -- General Electric Co. agreed to pay $70.4 million to settle a criminal probe and civil claims for conspiring to rig bids on U.S. municipal-bond deals, overcharging state and local governments on investments.

GE Funding Capital Market Services, a former unit, is the fifth company to settle in a more than five-year federal investigation. The deal will resolve probes by the Justice Department, the Securities and Exchange Commission and the Internal Revenue Service as well as attorneys general in 25 states, the Justice Department said today in a statement.

“GE Funding's former traders entered into illegal agreements to manipulate the bidding process on municipal investment contracts,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department's antitrust division. “This anticompetitive conduct harmed municipalities as well as taxpayers.”

The settlement will bring to $743 million the amount that banks have paid to end the case, some of which is being returned to localities that were overcharged, the SEC said in a news release. Bank of America Corp., JPMorgan Chase & Co., UBS AG and Wells Fargo & Co. previously settled similar cases.

As long as there are no consequences that fit their crimes, the crimes will continue.

No financial executives have gone to jail, despite an overwhelming body of evidence indicating that a group of organized "banker gangs" conducted a widespread Wall Street crime wave that made them rich and while throwing millions into poverty. The Justice Department's failure to act against these bankers is matched only by its declining credibility -- a problem it only makes worse whenever it tries to defend itself.

An interview with an outgoing Justice official in today's Wall Street Journal is merely the latest in a sad parade of weak excuses and implausible arguments, and it comes on the heels of Justice Department official Lanny Breuer's poor 60 Minutes showing this week on the same topic.

Stop. Just stop. If nobody at Justice can get the job done, it's time for the Administration to bring in a whole new team and start again. Did everybody in the banking business break the law? No. Very few did. But some of the ones that did appear to be very well-placed, and if they're not punished they'll do it again and again.

Broken Trust

The credibility problem with Holder's (and Obama's) Justice Department doesn't just stem from its failure to act, or even from its inability to offer a plausible explanation for its inaction. The real problem comes from its history of misleading, misdirecting, and deceiving the public about its efforts.

Its "Interagency Task Force" against lending fraud with a lot of fanfare, for example, turned out to be vaporware, a small-time operation that targeted two-bit grifters and petty crime rings but avoided any investigation of big-bank systemic fraud. Not that the operation was a total failure: The SEC charged a psychic with fraud! (I say the psychic shoulda seen it coming.)

The Justice Department boasted about another operation, too, one with the all-too-ironic name "Operation Broken Trust." As with the "Interagency Task Force," we were told that "Broken Trust" was a coordinated Justice Department effort to track down bad guys. And like the Task Force, "Trust" ignored the real crimes on Wall Street while triumphantly listing enough colorful small-time crooks to mount a summer-stock production of Oliver.

But, while both operations were deceptively packaged, Broken Trust was worse. How much worse? The fair-minded Columbia Journalism Review called its roundup of articles on the topic "Obama Administration's Financial Fraud Stunt Backfires." The laundry list of cases named as "Broken Trust" successes included some that were initiated before it was even created. Some were underway before Barack Obama even became President.

"Trust" was a brazen attempt to hoodwink the public -- nothing more.

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Although when it comes to the specific date of our mass death, Harold Camping might as well be talking Chinese nuclear development with Herman Cain, it seems a little bit harder to doubt his general prognostication of doom in the weeks after 56 exotic animals were released into the countryside by the owner of a "private zoo" in Ohio.

Just before he shot himself to death.

If you don't know the whole story by now, to quickly summarize: In a scene that Director Emeritus of the Columbus, Ohio Zoo and television personality Jack Hanna compared to "Noah's Ark", endangered Bengal tigers, grizzly bears, monkeys, and a variety of other animals - 49 in all - were killed en masse by law enforcement.

Make no mistake - this happened because Ohio is one of a handful of states that does not regulate the sale and ownership of exotic animals, and it has been purposefully made that way. Tea Party-sympathiser-cum-Governor John Kasich, upon his election to that office, began his assault on government by letting an executive order expire that had provided actual restrictions concerning who could own and sell these animals in the Buckeye State.

To Kasich, this kind of crazy Hobbesianism would "hurt small business", which presumably includes the particular lunatic who had done jail time for illegal possession of firearms and was cited multiple times for animal abuse - but still had his Animal Farm up and running in Ohio - until he granted his boarders amnesty. Because of the anti-regulation zealots who have taken control of our political culture and institutions, this was the profile of someone still fit to continue to lord over a coterie of dangerous and endangered species, in his own little Jurassic Park.

As Darth Vader would say, "Impressive. Most impressive."

Now if you were to ask the Don King of pizza, Herman Cain, I'm sure he'd have a simple plan to solve this problem, which would probably include a number of 9s and the assumption that Zanesville, Ohio is somewhere in the vicinity of Chiang Mai. But for those of us with a beyond-Perry intellect, the story is as simple as it is sadly quotidian. What led to the death of these exotic animals is the same insanity that crashed Wall Street and allows drug companies to lie to people while killing them: the mass deregulation of America.

If you think the animals have run wild in eastern Ohio, then take a look at what a-not-quite-as-evolved species did on Wall Street, resulting in thousands of zookeepers finally showing up to occupy this land those on "The Street" thought was theirs to defile and despoil.

From the 1980s onward, when we started to "get government of our backs", as Ronnie liked to say, we created a mess that now has awoken 99 per cent of the people who generally can't spare the pocket change for a $10,000 Tiffany towel rod. The apogee of this idiocy was the Gramm-Leach-Bliley Act, which in 1999 repealed one of the great accomplishments of the New Deal, the Glass-Steagall legislation separating commercial and investment banks.

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So $150 million of our money is going to a government facility in lower Manhattan where representatives of Wall Street firms get to sit alongside the New York Police Department and spy on your basic law-abiding citizens. Written by Pam Martens on Counter Punch:

According to newly unearthed documents, the planning for this high tech facility on lower Broadway dates back six years. In correspondence from 2005 that rests quietly in the Securities and Exchange Commission’s archives, NYPD Commissioner Raymond Kelly promised Edward Forst, a Goldman Sachs’ Executive Vice President at the time, that the NYPD “is committed to the development and implementation of a comprehensive security plan for Lower Manhattan . . . One component of the plan will be a centralized coordination center that will provide space for full-time, on-site representation from Goldman Sachs and other stakeholders.”

At the time, Goldman Sachs was in the process of extracting concessions from New York City just short of the Mayor’s firstborn in exchange for constructing its new headquarters building at 200 West Street, adjacent to the World Financial Center and in the general area of where the new World Trade Center complex would be built. According to the 2005 documents, Goldman’s deal included $1.65 billion in Liberty Bonds, up to $160 million in sales tax abatements for construction materials and tenant furnishings, and the deal-breaker requirement that a security plan that gave it a seat at the NYPD’s Coordination Center would be in place by no later than December 31, 2009.

The surveillance plan became known as the Lower Manhattan Security Initiative and the facility was eventually dubbed the Lower Manhattan Security Coordination Center. It operates round-the-clock. Under the imprimatur of the largest police department in the United States, 2,000 private spy cameras owned by Wall Street firms, together with approximately 1,000 more owned by the NYPD, are relaying live video feeds of people on the streets in lower Manhattan to the center. Once at the center, they can be integrated for analysis. At least 700 cameras scour the midtown area and also relay their live feeds into the downtown center where low-wage NYPD, MTA and Port Authority crime stoppers sit alongside high-wage personnel from Wall Street firms that are currently under at least 51 Federal and state corruption probes for mortgage securitization fraud and other matters.

In addition to video analytics which can, for example, track a person based on the color of their hat or jacket, insiders say the NYPD either has or is working on face recognition software which could track individuals based on facial features. The center is also equipped with live feeds from license plate readers...read on