This ran on Frontline tonight and to me listening to the DOJ and the man running it was pretty scary. I read a lot of body language or I try too and what came out stronger than anything was a lack of confidence. Now you have to remember that none of this would have happened without the use of technology and loans all have data attached whether it be credit or other sectors of processing. Eliot Spitzer was right on when he said you start in the credit department. Watching the people they hired and how this all took place was very interesting indeed.
Again all of this works on huge IT infrastructures and granted there were the boxes of paperwork for the loans but the DOJ said they could not prove a fraud case beyond a shadow of a doubt. They also had not spoken to any of the whistle blowers who had been writing to the government either. This was sad and again what I took away was a complete lack of confidence in having some technology knowledge on how to find areas to where they could prove a case. If they would have had had some decent computer scientists on the case I could almost guarantee you they would find the fraud one way or another be it the sale of the securities, flawed data on the transmission or sale or a number of other areas. Now when you find that kind of evidence, you are getting closer to black and white here. Sadly this just goes to show that relying on a couple wiretaps and little of much else just won’t make a case for you.
So what do we do, keep putting attorneys in charge where high levels of technology and algorithmic models are used to commit such crimes. We have the same issue at the SEC and HHS and these folks do not have the talent to recognize and identify how to investigate such high tech crimes. This is really a very sad showing and this is why the banks run us over and use their algorithms to shift the money. PBS did a great job with documenting this and again showing that without knowledge we are not going to put a dent into any of this. In a day where we all want our doctors to use the latest technology the DOJ couldn’t use technology to find the fraud!! It’s there or was there.
Let’s go back and look at the case where a developer supposedly stole some of Goldman’s code. This was a rip and I don’t know if he was innocent or guilty but they ran a sham and there was no jury that could have understood the complexity of this crime. Eventually a judge saw this and had his case overturned, and now we have another “dumb” prosecutor from the state of New York trying it again..geez…folks with no computer science or IT in their background..attorneys at work again where they shouldn’t be and that’s what runs most of our executive departments…time to rethink such choices. Obviously for the Supreme Court, they belong there but not for running the SEC and the government is so unprepared at the types of cases they are working, what a huge disappointment.
Goldman Sachs Programmer Who Went to Jail for Stealing Code Has His Conviction Overturned–You Can’t Get A Jury of Peers Off the Street for Crimes With High Tech Algos
We go back to this study and there’s more out there afraid of math other than just consumers…this is why Wall Street wins and why they are winning here. Watch another PBS interview and hear it from someone who did risk management at a Hedge fund and they ignored her work and took big risks anyway.
We can’t get real trials nor now can we get decent investigations…it’s that fear of math:) They are afraid of those corporate algorithm balls too.
“Algo Duping” – PLOS One Journal Publication Explains Why The Fear of Math Plays a Big Role As One Underlying Reason We All Get Duped And Those Who Don’t Fear Math Take All the Money, Gradually, Using “Mathematical Formulas & Algorithms”
Now that you have read this far watch this video at the link below or it’s on the left hand side of my blog and listen to the developer, Mike Orsinski who wrote the software that all the banks used in the mortgage models and bought and used in models. You can find old articles on the New York Times with papers interviewing Mr. Orsinski as the one who broke Wall Street and he’s really not as he didn’t have control at all as far as how the banks modeled it. This is where the DOJ missed their calling. Remember this is like buying a copy of Word, the software designers have no control of how it gets used in business models, and that’s what happened here.
Quants: The Alchemists of Wall Street Video Documentary - Why It Needs to Matter What Companies Do and Not Focus Only On the Price of Stock With So Called Value - Attack of the Killer Algorithms Chapter 44
Don’t forget or overlook this image below..it’s true and made trillions for the banks and as he says “you can do anything with software, but not so in real life”.
”I’m a genius” the mentality Mike says and yes any developer gets a bit of this…he left in 2000 so that’s how far back this goes…making a lot of money is like a drug he says. So why didn’t the DOJ investigate here for goodness sakes and inquire about the business models that make this work for the banks? Are they lacking in the intelligence needed to put on such a case? BD