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Since 1928, the market has dropped by 20 percent roughly once every four years on average. Thirty-percent downdrafts have occurred nine times since then or about once every decade. One would think that with the Dodd-Frank financial regulations on their way to enactment, we will soon be able to sleep better at night.

But, as Woody Allen, paraphrasing the Bible, once said, "the lion will lay down with the lamb, but the lamb won't get much sleep."

Indications of more sleepless nights come from the treatment of a Citigroup whistle-blower named Richard M. Bowen III, who, according to a story in a recent New York Times, informed Robert Rubin and a group of senior Citibank executives in 2007 that the company was selling high-risk home mortgages packaged as investment securities. There were no internal controls and the unrecognized financial losses were significant. He was ignored, and then eventually he was fired with a severance package of less than $1 million, which included a confidentiality agreement.

He went on to testify at various committee hearings all over Washington -- first with the Securities and Exchange Commission and later with the Financial Crisis Inquiry Commission. His testimony, however, is sealed and can't be publicly available for five years -- in 2016. Five years, incidentally, is the statute of limitations for fraud. Without going into detail, the gist of the newspaper account is that the government regulators were rolled over by Citigroup's attorneys who did not want the testimony to be made public. Possible violations of the Sarbanes-Oxley laws requiring bank senior officers to sign off on financial statements would have made Citibank's senior executives indictable for fraud -- especially when they had a 2007 email warning them of unreported losses. A reasonable expectation of the law might have demanded a "claw-back" of any portion of the $125 million of compensation that Rubin received after the date of that fortuitous email. Any senior executive apprised of the email's warning should receive similar treatment.

The problem with regulators is that they all see themselves working someday for the companies they are charged with regulating. Anyone reading between the lines of the story about Bowen would see that as a fundamental cause of why regulators caved in. Meanwhile, the financial industry continues to grind away at watering down the provisions of the Dodd-Frank legislation that was supposed to protect us from future meltdowns. Given these circumstances, it's only a matter of time before other bank executives make fortunes at banks that will go on, like Citibank, to receive $45 billion in taxpayer bailout funds plus $300 billion in government guarantees of securities they have sold.

Ignoring Bowen's email both at Citibank and later in government hearings is why no senior bank executives have ever gone to jail. By comparison, Ronald Reagan, back in the '80s, made sure that hundreds of savings and loan executives caught in that scandal spent time behind bars.

Warren Buffett sums up the situation succinctly in a recent speech when he said, "It's very hard to write regulations that will keep people from acting foolishly, particularly when acting foolishly has proven profitable over the preceding few years." "It (a crash) will happen again. But buy when it happens."

When will "it" happen? That's anyone's guess, but a 50 percent drop in market values has happened just once in a lifetime, on average, so we've just endured what should be the only drop of that magnitude for the next 70 years or so. Except for one thing. We've been protected most of the past 70 years by the Glass Steagall Act, which prevented government-guaranteed banks from being in the high-risk brokerage business. That umbrella of protection went away back in the early 2000s, and nothing with any teeth has replaced it. Today. we're in uncharted territory created by an unholy alliance between Washington and Wall Street.

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