Thus far, nine major banks or financial institutions have bought into (or rather sold out to) the hybrid bailout feature of accepting Uncle $ugar as an equity investor – they had no choice. The tab on these is looking like a further $250 BILLION of emergency infusion capital. This is unheard of in our nation’s history! Will Uncle do the same for the auto makers, the airlines, the insurance industry, the telecom industry, the fast food industry, or…? Once the public purse is opened, where does it stop?

In all this brouhaha, the snips and snippets of media coverage summarily have one significant omission. Where is the hue and cry for justice? Where is the outrage over the wanton disregard for accountability? We did not get into this abyss accidentally because of random honest mistakes and bungling! This crisis did not blossom from a series of isolated incidents! Criminal actions were made consistently over a long period of time - driven by a pervasive greed and profit motivation. Who was minding the store? Who will seek recovery from the culpable parties? Why only ding the taxpayers?

Fraud is not an easy case to pursue. It involves direct misrepresentation of material facts (knowing done) upon which reliance is placed and a loss incurred. All “points” must be proven by the prosecution. Last week we learned in only ONE US news article how the FBI had all but liquidated their white collar crime investigative unit. They had channeled their investigative efforts on counterterrorism. The primary investigative arm of the US Government had virtually no one watching the “domestic financial hen house.” Now they must struggle to re-build (after the fact) a white collar crime unit.

Civil actions are an alternative legal route. Some shareholder/ class action cases are now only surfacing in the courts. At the RTC working as a forensic accountant on the Savings and Loan debacle, I helped develop major civil cases seeking recoveries from insurance underwriters on fidelity bond, errors and missions, and professional liability claims. Could the apparent absence of any such cases now have to do with Uncle $ugar not wanting to put any added (financial) stress on the insurance industry? I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

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