Liz Swain 4:24 p.m., May 24
Gary Aguirre Major Source in Taibbi Blockbuster
Matt Taibbi, who writes for Rolling Stone, has become one of the most outspoken critics of Wall Street -- and also one of the most incisive writers on the topic. His blistering article dated Feb. 16 is titled "Why Isn't Wall Street in Jail? Financial crooks brought down the world economy -- but the feds are doing more to protect them than to prosecute them." That has been a theme of San Diego's Gary Aguirre for some time. Taibbi's article, in fact, tells the story of how Aguirre, an investigator for the Securities and Exchange Commission, tried to pursue an insider trading case, but the person he wanted to interview was one of Wall Street's biggest honchos. Aguirre got fired. Two Congressional committees and the SEC's own in-house investigator studied the matter, vindicating Aguirre and slamming the SEC. Finally, the SEC paid Aguirre $755,000, but its own people weren't even reprimanded to their slimy roles in protecting the honcho. I have been reporting this story for the Reader since mid-2006.
Taibbi then taps Aguirre for an even more shocking tale of the cozy relationship among the SEC, Department of Justice, Wall Street law firms, and the crooks the law firms represent. As Aguirre has always said, the SEC was set up to protect the public from Wall Street, and it now protects Wall Street from the public. Taibbi, quoting Aguirre, tells about a conference in New York Nov. 12 attended by 1500 leading securities lawyers as well as the top brass from the SEC and the Justice Department. Taibbi quotes Aguirre on how an SEC official told the attorneys that the SEC would be a middleman between firms like AIG and Lehman Brothers and the Justice Department. Essentially, the SEC would help the law firms negotiate fines so that the crooks could buy their way out of serving time in jail.
A big securities crook paying a $100,000 fine, or even $5 million fine for participation in a swindle is a bit like you paying a 50 cent fine for killing three people with your car after you careened down the road in a drunken stupor. Here's how Aguirre sums it up in Taibbi's article: "First, the SEC and Wall Street player make an agreement on a fine that the player will pay the SEC. Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC -- and fourth, the player gets a pass from the Justice Department."
Great country, isn't it?