As was noted in yesterday’s blog, Wall Street Boys collect fat bonuses for moving money around the world at the speed of light, creating nothing of real value, while still continuing to intentionally deceive the government and shareholders about their business transactions with no substantive consequences.  Even Federal District Court Judge Jed A. Rakoff obviously wondered why the SEC was not investigating and prosecuting apparent criminally fraudulent behavior?  A $33 million fine is meaningless for Bank of America – especially if it’s executives who committed the fraud are not going to pay for it, either financially or by criminal punishment (as usual, the shareholders, bank customers, and tax payers are all going to “take it in the shorts” on this one). 

Now today it is reported that the major financial credit rating agencies – Standard and Poor, Moody’s, etc. – are still intentionally inflating the ratings of the securities of the Wall Street firms who pay them fees.   Anyone familiar with the term “Conflict of Interest”?  While testifying yesterday before the House Committee on Oversight and Government Reform, former Moody’s managing director, Eric Kolchinsky, asserted that his firm was criminally deceiving investors.   This was one of the principle underlying causes of last years financial meltdown, and yet they are they are doing it again? 

MEMO TO: Attorney General Eric Holder . . .

Where is the deterrence?!?!?

Meanwhile, honest, hardworking small business people try to fund retirement plans for themselves and their employees through the trusting hands of financial advisers, insurance companies, and former IRS agents.  Thanks to Congress, and even the IRS in some cases, that trust was sorely misplaced by a number of small business owners.  The mere fact that a business or individual may have inadvertantly failed to file one form, or even IF the existence of the retirement plan was reported in a business tax return, but not a personal return - any violation triggers enormous penalties and fines.   Some of these honest business people even relied upon IRS “determination letters”  that tacitly give initial approval to their plans. 

Guess What?  WRONG!  According to a complex set of tax rules and formulas established by Congress, if the IRS later determines that the plan was not in compliance, you are subject to penalties and fines for any number of “violations”.   One would think it reasonable that if you’re intentions are honest, that your reliance on expertise is reasonably placed, and there is obviously no intention to commit fraud, you will not be driven to bankruptcy.  You would be WRONG AGAIN!

What is most galling is the fact that the fines and penalties are not even commensurate with the violations.   It’s like giving the Death Penalty for speeding on the highway.  Congress takes the view that Wall Street is TBTF (To Big To Fail) even if they fraudulently screw things up, but your small business can be allowed to go bankrupt if you make an honest mistake.

The powerful Wall Street firms and financial institutions, their executive management, their rating agencies, and the minions who do their bidding (lawyers, lobbyists and politicians) suffer insignificant consequences for their criminally fraudulent  behavior, primarily by pouring millions of dollars into the political campaigns of the most powerful Democrats and Republicans sitting on Congressional Committees overseeing Banking, Finance and Business Regulation.

Meanwhile small businesses, which generate approximately 50% of the business income in this country, are treated like step-children.