John Titus

from EconomicCrisis Website













Part 1

Obama and the Criminal International Banking Cartel

April 1, 2013



In Bailout, we showed over and over how criminal frauds perpetrated by huge banks victimized Main Street on a colossal scale. One theme throughout the movie is that bailouts are, in their essence, a perversion of the Rule of Law that can only grow like a cancer.


It now appears that the bailout cancer has metastasized with the renunciation of the Rule of Law by the United States Attorney General, without objection or much of a ruckus, before the Senate Judiciary Committee:


I am 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.

Eric Holder, March 6, 2013.


As an initial observation, is that not a strange way for any law enforcer, much less the top cop in the world's powerful nation, to speak - in the passive voice, of being “hit,” in an effort to rationalize his own failure to enforce the law?  


And who’s issuing “indications” that make the head of the DOJ shrink in fear of discharging his duties anyhow?  We’ll answer the latter question with a list of names in Part Two.


For now, let’s be clear about what’s on the table when the U.S. Attorney General comes before Congress to testify: it includes the status of the U.S. as a sovereign nation.


And that’s simply because the enforcement of criminal law falls within the exclusive province of a state’s authority.

“Sovereignty is the power of a state to govern itself, such as making, executing, and applying laws; imposing and collecting taxes; making war and peace; and forming treaties or engaging in commerce with foreign nations.”

Private citizens cannot bring criminal actions.


States bring them, often even when private victims do not wish to press charges, as retribution for harms to the public. That prerogative is inherent in a state's sovereign power to protect itself from criminals.


In the U.S., executing federal criminal law is the duty of the U.S. Attorney General,

the head of the Department of Justice and chief law enforcement officer of the Federal Government.”

Above him in the executive branch org chart, there is but one entry: President Barack Obama.


Execution of the law was squarely in the crosshairs when Eric Holder testified before the Senate. Specifically at issue was the DOJ’s wholesale failure to prosecute any large banks or any of their executives despite seemingly endless waves of uncontested evidence of criminal behavior (not to mention the disappearance of at least $13 trillion in a financial crisis driven by fraud).


We’re not talking about a few slip-ups here and there by the DOJ, or a couple of favors done with a nudge and a wink.  


We’re talking about what looks very much like a green light for big banks to commit crimes with wild abandon while pretending that fines levied in lieu of prosecution,

  1. are something other than a small tax paid by the banks doing business as criminal enterprises

  2. cannot simply be paid for from the fruit of additional crimes in the future

  3. do not guarantee more crime

Eric Holder did not materialize before the Senate out of the blue.


Rather, his testimony followed an unbroken pattern of prosecutorial inaction and deference by the DOJ towards big bailed out banks, a sample of which includes:

  • In April 2010, Richard Bowen, a former Citigroup risk officer, told the Financial Crisis Inquiry Commission, among other things, that Citi sold MBS products despite knowing - based on information that Bowen provided to the top ranks of the company, including ex-CEO Robert Rubin - that huge swaths of mortgages owned by Citi were defective to the tune of between 60 and 80%.


    Citi continued its multi-billion-dollar sales of defective MBS products that it knew to be falsely rated. The DOJ filed no criminal referrals and prosecuted no one at Citigroup.


  • In June 2010, it emerged that Wells Fargo (nee: Wachovia),

    • “had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers - including the cash used to buy four planes that shipped a total of 22 tons of cocaine.”

    The DOJ filed no criminal referrals and prosecuted no one at either Wells Fargo or Wachovia.


  • In September 2012, Lanny Breuer, then the head of criminal enforcement at the DOJ, traveled from Washington, D.C. to give a speech to the New York City Bar Association.


    Breuer's house call to the corporate defense bar included statements that he would “not always” be convinced not to prosecute large institutions that made “compelling presentations” to Breuer, in “his conference room,” concerning the negative economic ramifications of such prosecutions.


  • In December 2012, Lanny Breuer admitted that HSBC,

    • “permit[ted] narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries and to facilitate hundreds of millions more in transactions with sanctioned countries."

    What is more,

    • “senior bank officials were complicit in the illegal activity" and indeed one HSBC executive “argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda."

    The DOJ filed no criminal referrals and prosecuted no one at HSBC - despite the fact that,

    • “most of HSBC's senior management has been replaced since the conduct at issue, which stretched from the mid-1990s to 2010.”


  • On January 22, 2013, Lanny Breuer appeared in PBS Frontline’s “The Untouchables,” which investigated fraudulent mortgages originated and sold by Bank of America (nee: Countrywide).


    Breuer stated that for large financial institutions,

    • “pursuing justice… in any given case” meant that he “should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there’s some huge economic effect - if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly - it’s a factor we need to know and understand.”

As a result of the latter,

“[l]ess than 24 hours after 'The Untouchables' aired on PBS, its main target, Justice Department criminal-division head Lanny Breuer, abruptly resigned.”

Breuer’s disclosure - made with no hint of irony or shame, nor with any legal authority for support - that the DOJ was deferring to unnamed experts whenever large financial institutions were involved was not the only such admission by the Justice Department.


In yet another criminal case that saw no prosecutions, namely, Libor manipulation by UBS, a Swiss Bank, Eric Holder used language essentially identical to that which led to Breuer’s resignation:

“We reach out to experts outside of the Justice Department to talk about what are the consequences of actions that we might take, what would be the impact of those actions if we want to make particular prosecutive decisions or determinations with regard to a particular institution.”

Finally, on January 29 of this year, Congress seemed to connect this untrammeled crime spree with the DOJ's docility when Senators Sherrod Brown (D-OH) and Charles Grassley (R-IA, the ranking member of the Judiciary Committee) fired off a letter to Eric Holder.


Among other things, they demanded,

“the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.”

They also demanded to know how the,

“DOJ ensure[d] that these experts provided unconflicted and unbiased advice to DOJ.”

The importance of the latter point is impossible to overstate given the DOJ's responsibility for bringing criminal cases at the federal level.


By demanding to know what measures the Justice Department was taking to insure against self-dealing by experts, the senators touch on something far deeper than a garden variety conflict of interest.


The real question they are posing is whether the DOJ’s “outside experts” are in reality the large financial institutions themselves, because if they are, their “opinion” that prosecution should be foregone - which the DOJ has followed without exception - is a bald assertion of sovereign immunity: huge banks are claiming their own exemption from criminal prosecution based on their identities as huge banks, and Eric Holder's DOJ has never disagreed.


And here we run up against that word again: sovereign.


Before considering the IMPLICATIONS should it turn out that the international cartel of bailed out banks is exempting itself from the reach of the law by "advising" the DOJ on prosecutions of its members, it is worth examining the claim, articulated by Holder, that "negative economic consequences" would attend the criminal prosecution of any cartel members.


In different contexts and guises, we have heard that claim of "systemic failure" before, and its public failure on the merits is so impressively robust that to see the DOJ so much as entertain the discredited claim at this point - much less fall for it hook, line, and sinker - is so breathtaking that it begs the question:

What's really behind the DOJ's capitulation to the banks?

  1. In September 2008, Treasury Secretary Henry Paulson told Congress that the nation would descend into martial law unless TARP was passed. Paulson's urgency was driven by toxic assets on the banks' books. Unless $700 billion of these toxic assets were removed immediately through a massive Treasury purchase, Paulson said, Armageddon would quickly follow.


    Immediately after Congress passed TARP, however, Paulson changed his mind without batting an eye and used the $700 billion to directly recapitalize the bailed out banking cartel, toxic assets be damned. Whether Paulson intentionally deceived the public when he made his initial claim is beside the point.


    What matters is that his threat - buy the toxic assets or plunge into Depression - proved toothless as a matter of fact: none of the TARP money was used to purchase toxic assets, and yet the country avoided the cliff dive Paulson had sworn would result.


    Did Eric Holder simply sleep through this episode?



  2. Less than a year later, the cartel floated a miniature version of its Armageddon claim in federal district court.


    In Bloomberg v. the Federal Reserve Board of Governors, the Federal Reserve argued that disclosing, in response to FOIA requests, the names of (and amounts borrowed by) bailed out banks using the Fed’s Primary Dealer Credit Facility (PDCF) would result in “competitive harm” to the institutions involved. In support, the Fed submitted a rash of expert affidavits from bankers explaining how competitive harm would come to the banks that used the Fed's PDCF facility if the FOIA disclosures were made.


    The Chief Judge of the Federal District Court for the Southern District of New York, Loretta Preska, dismissed the bankers' argument:

    At best, the proffered affidavits suggest that the borrowers' competitors may use the knowledge that a borrower participated in a Federal Reserve lending program in order to determine when the borrower is “in a weakened condition" and spread that information to the borrowers' shareholders or the market in general.


    But the risk of looking weak to competitors and shareholders is an inherent risk of market participation; information tending to increase that risk does not make the information privileged or confidential under Exemption 4.

    In other words, tough shit: bankers must cope with the real world just like the rest of us no matter how big or important they think they are.


    Know what happened next? The FOIA disclosures went forward without so much as a ripple in the financial markets.


    More fundamentally, though, if the cartel's narrow argument that mere competitive harm would afflict a group of banks is legally flawed, then its far broader claim that Armageddon would befall the earth if a single bank (or banker, for that matter) were prosecuted is dead on arrival as a matter of law.


    So why does Eric Holder accept the absurdly overbroad claim at face value as a legal proposition each and every time it is made?



  3. From 2008-11, Neil Barofsky was the Special Inspector General of the Troubled Asset Relief Program (SIGTARP), in charge of ensuring that TARP funds were distributed to the bailed out banks with a minimum of fraud.


    He wrote about his day-to-day battles with banking apologists, including Treasury Secretary Tim Geithner, in Bailout, published last year.


    At the end of the book, Barofsky relays a stunning admission by Geithner: the claim that an institution is "systemic" is in all actuality a conclusory label rather than a meaningful analytical tool for assessing what might happen in the future.


    Says Geithner:

    • “You won’t be able to make a judgment about what’s systemic and what’s not until you know the nature of the shock.” (See p. 222)


    If Tim "Bailouter-in-Chief" Geithner, a man with no formal education in either law or economics, is able to see that claims of systemic importance are intellectually bankrupt, why can't the U.S. Attorney General?


    This brings up another clue about who the anonymous DOJ experts are through the process of elimination: they aren't from the U.S. Treasury, which we know from the Senate Banking Committee hearing in February 2013.


    There we learned that “Treasury told the Department of Justice it was not in a position to assess whether HSBC should be prosecuted.”






If the DOJ's anonymous experts turn out to be the international cartel of bailed out banks, the implications are grave for at least three reasons.



The entire legal doctrine of sovereign immunity is very likely unconstitutional in the first place, premised as it is on the notion that "the King can do no wrong."


Duke Law Professor Erwin Chemerinsky, the author of a leading treatise on constitutional law, makes this very point when he demonstrates, in his Stanford Law Review article “Against Sovereign Immunity,” that,

“sovereign immunity is inconsistent with three fundamental constitutional principles: the supremacy of the Constitution and federal laws; the accountability of government; and due process of law.”

(p. 1210)




The doctrine of systemic importance, even aside from being thoroughly meritless for the reasons explained above, is impossibly vague in scope. That became clear in the HSBC case.


There, the bank had,

"already sacked all the senior staff involved in the scandal, and agreed to stringent monitoring - the first time a foreign bank has agreed to such oversight."

Thus, even fully crediting the theory that prosecuting HSBC would have posed systemic risk, that same theory does not and cannot explain why prosecuting criminals outside of the bank would have posed any risk at all, much less "systemic" risk.


Lanny Breuer must have been grateful for the mainstream media's failure to ask him why systemic immunity extends to ex-employees outside the system, or where such immunity ends.


It sure looks as if the international bailed out banking cartel claims immunity for individual bankers based on a calculation that extends protection to anyone in a position to name names. Whatever the case, it is the whim of a cartel, and not any Rule of Law, that determines who is prosecuted and who isn't - a system that democracies have sought to avoid since the Magna Carta was signed 800 years ago.


How's that for regressive?



And most seriously, criminal sovereign immunity is legally limited to the President of the United States.


That should tell you something about where the international cartel of bailed out banks stands if it turns out to be the entity asserting governmental immunity from the consequences of its own crimes.

While sovereign immunity is considered a civil law doctrine, that's merely a practical reality rather than a legal limitation. Criminal cases are brought in the names of sovereign authorities themselves, either by the United States or by individual states, and sovereign immunity is a doctrine asserted as a defense.


A case in which a sovereign asserted a sovereign immunity defense in response to criminal charges brought by a sovereign would be a rarity indeed.


Nevertheless, there is legal authority that directly addresses the scope of criminal sovereign immunity.


The issue arose and was addressed during Watergate:

“the Office of Legal Counsel ('OLC') prepared a comprehensive memorandum in the fall of 1973 that analyzed whether all federal civil officers are immune from indictment or criminal prosecution while in office, and, if not, whether the President and Vice President in particular are immune from indictment or criminal prosecution while in office.”

Criminal immunity was found to extend only to the President:

“The OLC memorandum concluded that all federal civil officers except the President are subject to indictment and criminal prosecution while still in office; the President is uniquely immune from such process.”

That same year, in a different case (the grand jury investigation of Vice President Spiro Agnew), Robert Bork, then the Solicitor General of the U.S., reached precisely the same conclusion as the OLC:

the President, unlike the Vice President, could not constitutionally be subject to such criminal process while in office."

That ought to make the dead seriousness of criminal immunity for the cartel of bailed out banks crystal clear.


If these financial institutions and the anonymous experts relied on by the DOJ are one and the same, then they have arrogated to themselves sovereign legal power that's available under the law to the Chief Executive of the United States and no one else. As things stand now, people who've been fired from a bank in Hong Kong are on the same legal footing as the President of the United States.


But let's get down to brass tacks. Since there can't be two kings in a kingdom, it’s the international criminal banking cartel - not President Obama - who’s the real sovereign authority here.


Obama's top law enforcer, Eric Holder, admits - fully in practice and nearly so in his own words - to being trumped.


Obama's announcement that bailed out banks have not committed any crimes, in the face of overwhelming and undisputed evidence to the contrary, quite accurately summarizes the system of sovereign immunity that is in effect: the real King - banks - can do no wrong.


The President is merely their messenger...











Part 2

Inside The Criminal Banking Cartel

April 14, 2013



The U.S. government openly conceded that its sovereign authority to enforce its own laws is gone when Attorney General Eric Holder testified that the Justice Department’s failure to prosecute any big banks is based on anonymous “expert” opinions that prosecutions would destabilize the financial system.


This notion of “systemic importance” has been thoroughly discredited.


According to Tim Geithner, it’s an intellectually bankrupt phrase. What’s more, it’s been debunked both legally and empirically, which is likely one reason the DOJ’s “experts” wish to remain anonymous.


If it turns out that these “experts” are in fact agents of the big banks whose crimes are being immunized by the very entities whose discredited opinions the DOJ is relying on, then those “opinions” are nothing more than assertions of criminal sovereign immunity - a privilege that is legally limited to the President of the United States.


Since “the King can do no wrong” - the legal foundation of sovereign immunity - the real King here is the criminally immune cartel of banks, not the President, since real sovereigns don’t surrender the right to enforce their laws.


And following the long series of unprosecuted crimes by the cartel, in which the President’s own constituents are the undisputed victims, “surrender” is the most charitable description of the Obama’s acts before the banking cartel.


There are two very big and related clues as to the identity of the anonymous experts behind whose opinions U.S. Attorney General Eric Holder hides whenever explaining away his failure to prosecute big banks on the basis of their “systemic importance.”


The first, noted in an article last week by Golem XIV, is a list of international banks that parade under the rather obvious label of “Globally Systemically Important Financial Institutions,” or G-SIFIs.


There are 28 banks in total, 9 of them headquartered in the U.S.:

  • Citigroup

  • Deustsche Bank

  • HSBC

  • JP Morgan Chase

  • Barclays

  • BNP Paribas

  • Bank of America

  • Bank of New York Mellon

  • Credit Suisse

  • Goldman Sachs

  • Mitsubishi UFJ FG

  • Morgan Stanley

  • Royal Bank of Scotland

  • UBS

  • Bank of China

  • BBVA

  • Group BPCE

  • Group Credit Agricole

  • ING Bank

  • Mizuho FG

  • Nordea

  • Santander

  • Societe Generale

  • Standard Chartered

  • State Street

  • Sumitomo Mitsui FG

  • Unicredit Group

  • Wells Fargo


This list of cartel members is updated annually by the Financial Stability Board, a collection of international organizations.


The FSB is a global meta-body of bankers.


But the formal edifice, whether called the FSB or the NWO, really doesn’t matter, because, as Golem XIV states:

“Guess which institutions provide the membership for all of the above international bodies? Yes, you got it - the big banks.”

These are the banks that are above the law in the U.S.


In Part One above, we mentioned four banks - Citigroup, Wells Fargo, HSBC, and UBS - whose massive crimes had been taxed at a de minimis rate by the Department of Justice rather than prosecuted. All four are on the list of G-SIFIs above.


So what, you may ask, that’s just a list compiled by some international convention of cokehead bankers, how do they make sure a rogue federal prosecutor doesn’t break ranks and haul a cartel member or two off to criminal trial?


Enter clue no. 2: Covington & Burling, the law firm from which both the head of the DOJ (Eric Holder) and the DOJ’s head of criminal enforcement (Lanny Breuer) were recruited.


Actually, Breuer is no longer with the DOJ. Following a four-year stint in which “the enforcer” failed to prosecute a single big bank, Breuer has returned to Covington & Burling, where he will earn be rewarded with $4 million in annual compensation.


The significance of Covington & Burling lies in its list of current clients, which looks remarkably like the list of criminally immune cartel members above (particularly the more recognizable names): Citigroup, Deutsche Bank, JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, UBS, Wells Fargo, and ING Bank.


Not to put too fine a point on it, but Eric Holder and Lanny Breuer have the financial motivation not to prosecute their firm’s clients. In Breuer’s case, it turned out to be $4 million of motivation. Per year.


Under any functioning system of law, of course, both Holder and Breuer would submit to screening procedures at the DOJ to insulate them from prosecutorial decisions involving their former clients. We're sure they did the same thing under our impotent system as well.


But so what? When laws against crimes are a dead letter, who in his right mind would put any trust in a conflict screen?









As Cheyenne told Jill in Once Upon a Time in the West,

“when you’ve killed four, it’s easy to make it five.”

Now commentators are starting to point out where the slippery slope of sovereign immunity for criminal banks will lead.


Jim Chanos, who detected the fraud at Enron well before it destroyed the company and its shareholders, notes that not only are criminal cartel members now motivated to continue cheating and stealing, they have a fiduciary duty to do so.


(Speaking of the Enron-ization of the U.S., Eric Holder is working to release CEO Jeff Skilling from prison early in yet another act of prostrate submission before his real masters, the criminal banks.)


As Golem XIV points out, immunity extends not only to criminal behavior, but to assets that a cartel member bank acquires through crime:

“if by doing those illegal things [the bank] makes out-sized profits for its shareholders and staff, that money, those profits are also above the law.”




Cyprus Vs. MF Global - The Rule Of Law Is Dead


Thus, anyone who thinks account confiscation a la Cyprus can’t happen in the U.S. is dreaming of a bygone republic.


Not only is account seizure possible in the U.S., or even likely, it is guaranteed. Just ask MF Global’s segregated account holders or GM senior bondholders if you have any doubts.


In the MF Global case, Jon Corzine,

“brazenly took liquid assets like Treasuries and warehouse receipts, but not cash which would have been more quickly missed, from customer accounts to post as illegal collateral for emergency funding with a lender who must have known that they were receiving stolen goods.”

The lender, of course, turned out to be JP Morgan - a prominent international cartel member.


Jon Corzine was of course one of Obama's top fundraisers and an alumnus of Goldman Sachs - a cartel member.


In the GM bankruptcy, the age-old pecking order of creditor priority was turned upside down, literally “rewriting law,” when senior unsubordinated secured creditors' claims were trumped by payouts to junior unsecured creditors in a patently political sop to Obama's perceived union supporters.


In both cases, the black letter law that's supposed to gird markets with trust and predictability was trampled in favor of Obama's political allies.


Now that Obama has altogether surrendered the DOJ's law enforcement functionality to the criminal international banking cartel, those dangerous precedents turn out to have been short-sighted in the extreme: there is nothing left to stop the plunder of customer accounts in Cyprus from crashing like a tidal wave across U.S. shores. The timing depends only on the restraint that the banking cartel elects to show.


There is no remedy in sight, only more financial crime as Americans are robbed deeper into serfdom. The Executive Branch is merely an agent of the criminal banking cartel for the reasons given. That fact, in turn, has cut the Judiciary out of the equation altogether: a court cannot try criminals who are never brought before it to face charges.


That leaves Congress, which in theory could initiate impeachment proceedings. But how likely is success when the Senate, which would try any impeachment cases, couldn’t even obtain the names of the DOJ’s so-called experts in the first place?


As noted in Part One above, Senator Grassley asked the DOJ for the experts’ names in a letter on January 29, 2013. Eric Holder testified on March 6, more than a month later.


The issue of the experts’ identities was thus as ripe as could be, but rather than obtaining the names, the ranking member of the Judiciary Committee put on a clinic in how to conduct an incompetent examination:

Q. On January 29, Senator Sherrod Brown and I requested details on who these so-called 'experts' are. So far we have not received any information. Maybe you're going to but why have we not yet been provided the names of experts the DOJ consults as we requested on January 29? We continue to find out why we aren't having these high-profile cases.


A: We will endeavor to answer your letter, Senator. We did not, as I understand it, endeavor to obtain experts outside of the government in making determinations with regard to HSBC.

Just putting that aside for a minute though, the concern that you have raised is one that I, frankly, share.


I'm not talking about HSBC here, that would be inappropriate. But I am 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 we do prosecute - if we do bring a criminal charge - it will have a negative impact on the national economy, perhaps even the world economy.


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


Again, I'm not talking about HSBC, this is more of a general comment. I think it has an inhibiting influence, impact on our ability to bring resolutions that I think would be more appropriate. I think that's something that we - you all [Congress] - need to consider. The concern that you raised is actually one that I share.


Note that Senator Grassley asked one question: why haven’t you answered our letter? Holder doesn’t answer it. Instead, he promises to supply the names later. At that point, Grassley should have put two questions to Holder. First, answer my question by explaining why you ignored our letter. Second, when will you supply the names of the “so-called experts”?


A mediocre first-year litigation associate would’ve gotten this information within seconds. But not Senator Grassley, who earned his masters degree during the Eisenhower Administration.


Here is his completely irrelevant follow-up question:

Q: Do you believe that the investment bankers that were repackaging bad mortgages that were AAA-rated are guilty of fraud or is it a case of just not being aggressive or effective enough to prove that they did something fraudulent and criminal?

Huh? Not surprisingly, Eric Holder has been in no hurry to disclose the names of the “experts” retained by Covington & Burling’s clients since dancing around Grassley like a cigar store Indian. Holder has completely blown off the Senate, which has done nothing to follow up the issue.


Frankly this disgusting charade has surprised no one who’s paying any attention, coming, as it does, from the same august body that exempted itself from insider trading laws and has failed to pass any meaningful reform legislation since the 2008 meltdown, an even worse repeat of which is on its way.


On the contrary, both Congress and the Executive Branch are now just tools of fraud used by the criminal international banking cartel against the people, who for their part are drooling iDope dreams oblivious to their own last act, proving Edward Murrow right, a nation of sheep having begotten a government of wolves.