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Wall Street crime goes deeper: The system means prosecutors fail to jail corporate criminals.

Hats off to Matt Taibbi for staying on the Wall Street crime beat, asking in his most recent report in Rolling Stone: "Why Isn't Wall Street in Jail?"

"Financial crooks," he argues, "brought down the world's economy — but the feds are doing more to protect them than to prosecute them."

True enough, but that’s only part of the story. The Daily Kos called his investigation a "depressing read" perhaps because it suggests that the Obama Administration is not doing what it should to reign in financial crime. Many of the lawyers he calls on to act come from big corporate law firms and buy into their worldview.

Kos should be more depressed by the failure of the progressive community to focus on these issues, and not pressing the government to do the right thing.

There is much more to this story. It's also more about institutions than individuals, more about a captured system that enables and covers up crime and, then, deflects attention away from the deeper problem.

Ten problems

You could see that when television host Bill Mahrer pressed Taibbi to name the biggest Wall Street crooks, on his weekly political comedy show, he didn't fully understand what we are really up against.

Here are ten of well-planned but flawed factors that help explain the procrastination and rationalisation for inaction. The government is not just to blame either. Several industries working together, through their firms associations, and well-paid operatives, collaborated over years to financialise the economy to their own benefit.

Personalising bad guys makes for good TV without offering a real explanation.

When financial institutions and services became the dominant economic sector, they, effectively, took over the political system to fortify their power. It was a done incrementally, over years, with savvy, foresight and malice.

First, many of those who might be charged with financial crimes and fraud invested in lobbying and political donations to insure that tough regulations and enforcement were neutered before the housing bubble they promoted took off.

After hundreds of bankers were jailed in the wake of the Savings and Loan crisis, financial fraudsters pushed for weakened regulations, guaranteeing that their colleagues wouldn't be jailed in when the next crisis hit.

In effect, their deregulation strategy also deliberately "decriminalised" the environment to make sure that practices that led to high profits and low accountability would be permissible and permitted. What was once illegal soon became "legal".

No enforcement

The cops and watchdogs were taken off the beat. Anticipating and then dissolving restraints, they engineered a low-risk crime scene in the way the Pentagon systematically prepares its battlefields. This permitted illicit practices, to be encouraged by CEOs in a variety of control frauds to keep profits up so that the executives could extract more revenue.

Today’s proposed Republican cutbacks of the funding of regulatory bodies aims to undercut recently passed financial reforms. One Commissioner of the Commodity Futures Trading Commission said if the budget is slashed, "there would essentially be no cop on the beat...we could once again risk another calamitous disintegration." He added, according to a New York Times report, "the process will mean nothing, squat, diddley … if we get cut we're going to be in a world of hurt."

Second, the industry invented, advertised and rationalised exotic financial instruments as forward looking "innovation" and "modernisation" to disguise their intent while enhancing their field to maneuver.

This was part of creating a shadow banking system operating below the radar of effective monitoring and regulation. Where is the focus on controlling the out of control power of the leverage-hungry gamblers at unregulated hedge funds?

Third, the industry promulgated economic theories and ideologies that won the backing of the economics profession which largely did not see the crisis coming, making those who favored a crackdown on fraud appear unfashionable and out of date.

As economist James Galbraith testified to Congress: "…the study of financial fraud received little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students. Economists have soft-pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now."

Fourth, prominent members of the financial services industry were appointed to top positions in the government agencies that should have cracked down on financial crime, but instead looked the other way. The foxes were indeed guarding the chicken coop guiding institutions that tolerated if not enabled an environment of criminality.

Alan Greenspan and Ben Bernanke were repeatedly warned by underlings at the Federal Reserve Bank about pervasive predatory practices in the mortgage and Subprime markets and they chose to do nothing. Now Greenspan acknowledges pervasive fraud but decries the lack of enforcement while Bernanke wants to run a Consumer Protection Agency after ignoring consumer complaints for years. Even as the FBI denounced "an epidemic of mortgage fraud" in 2004, their white-collar crime units were downsized.

Fifth, the media has been complicit, seduced, bought off and compromised. The housing bubble mushroomed in the very period that the media was forced to downsize. Dodgy lenders and credit card companies pumped billions into advertising in radio, television and the internet almost insuring that there would no undue media investigations.

Financial journalists increasingly embedded themselves in the culture and narrative of Wall Street by hyping stocks and CEOs. The "guests" routinely chosen by media outlets to explain the crisis were often part of it.

Foxes guarding the chicken coop

"Many of the ‘experts' whom I read or see on TV seem clueless, [and] full of hot air. Many of their predictions turn out wrong even when they seem so self-assured and well-informed in making them," writes Jim Hightower,

His advice: "Don’t be deterred by the finance industry’s jargon (which is intended to numb your brain and keep regular folks from even trying to figure out what’s going on)."

Sixth, politicians and corporate lawyers fashioned settlements of abuses that were exposed rather than prosecutions. The government benefited by getting large fines while businessmen avoided jail.

Financial executives were often rewarded with bonuses and huge compensation for practices that skirted or crossed the line of criminality.

Intentional violations of the spirit and letter of laws were justified because "everyone does it" by high priced legal firms that often doubled as lobbyists. Conflicts of interest were sneered at. Judges, dependent on industry donations for reelection looked the other way.

Seventh, as the economy changed and industries that were once separated began working together, laws were not updates. Financial institutions worked closely with Insurance companies and real estate firms. Yet law enforcement did not recognised this new reality.

Financial crime was still seen almost entirely under the framework of securities laws that are designed to protect investors, not workers or homeowners who suffered far more in the collapse. Cases are framed against individuals with a high standard of proving intent, not under other kinds of laws used to prosecute organised crime and conspiracies.

By defining crimes narrowly, prosecutions became few and far between.

"Cases against Wall Street executives can be difficult to prove to the satisfaction of a jury because of the mind-numbing volume of emails, prospectuses, and memos involved in documenting a case," Reuters news agency reported.

Criminal minds

Convicted financial criminal Sam Antar who appears in my film Plunder is contemptuous of how government tends to proceed in these cases, in part because they don’t seem to understand how calculated these crimes and their cover-ups are. "Our laws—innocent until proven guilty, the codes of ethics that journalists like you abide by limit your behavior and give the white-collar criminal freedom to commit their crimes, and also to cover up their crimes," he said.

"We have no respect for the laws. We consider your codes of ethics, and your laws, weaknesses to be exploited in the execution of our crimes. So the prosecutors, hopefully most prosecutors, are honest if they're playing by the set of the rules; they're hampered by the illegal constraints. The white-collar criminal has no legal constraints. You subpoena documents, we destroy documents; you subpoena witnesses, we lie. So you are at a disadvantage when it comes to the white-collared criminal. In effect, we're economic predators. We're serial economic predators; we impose a collective harm on society, time is always on our side, not on, not on the side of justice, unfortunately."

Eighth, even as the economy globalises, and US financial firms spread their footprint worldwide, there was little internationalisation of financial rules and regulations.

Today, even as the French and the Germans propose such rules, Washington still opposes a tough global regime of codes of conduct.

Overseas, in Greece and England, and other parts of Europe, there has been an indictment of American corporate predators, especially Goldman Sachs. They are being denounced as "financial terrorists" and discussed in terms of their links to various elite business formations like the Bilderberg Group.

Ninth, With the exception of softball inquiries by a financial crisis inquiry commission, there has been no intensive investigations in the United States even like the tepid 9/11 Commission.

While Senator Carl Levin of Michigan did spend a day aggressively grilling Goldman Sachs on one deceptive practice, their defense was more telling about the real nature of the problem: "everyone did it".

The case for criminality has still not achieved critical mass as an issue to become a dominant explanation for why the economy collapsed. In fact, it is still being sneered at or ignored.

Finally, tenth, a big problem in my countdown, are the progressive critics of the crisis who also largely ignore criminality as a key factor and possible focus for an organizing effort.

They treat the crisis as if they are at a financial seminar at Harvard, focusing on the complexities of derivatives, credit default swaps and structured financial products in language that ordinary people rarely can penetrate. They argue that banks should not be too big to fail, but rarely they are not too big to jail.

Few progressive activist groups stress the immorality of these practices, much less their criminality after all these years! There is little active solidarity even in the progressive community with the newly homeless or jobless.

Where is the active empathy, compassion and the caring for the victims of the financial crimes?

A populist response to the crisis has been muted. There is little pressure from below on the Administration and Justice Department—which has now created a financial crimes task force—to take real action. It is as if this crime crisis within the financial crisis does not exist.

Curiously, as they refuse to discuss the pervasive fraud that did occur, the Obama administration is considering a "global settlement" of all housing fraud to get the issue off the table. They a proposing a $20bn dollar deal to bury the problem.

By all means, workers should rally to protect their jobs and pensions as they have in Wisconsin, but they should realise that it is the banks who are ultimately to blame for the financial pressures behind the attack on them. Pension funds have lost billions because of Wall Street scams. State governments have taken a big hit.

Why have the unions and leftist groups been mostly silent on these issues?

Even after the markets melted down, even after Wall Street bonus scandals and bailout disgraces, Wall Street has hardly been humbled. It is still spending a fortune on PR and political gun slinging with 25 lobbyists shadowing every member of Congress to scuttle real reform.

Its arrogance is evident in an email the Financial Times reported was "pinging around" trading desks. It reads in part:
“We are Wall Street: It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable… Go ahead and continue to take us down, but you’re only going to hurt yourselves. What’s going to happen when we can’t find jobs on the Street anymore? Guess what: We’re going to take yours... We aren’t dinosaurs. We are smarter and more vicious than that, and we are going to survive."

Perhaps it’s not surprising, that in an act of preemptive anticipation, some years ago, Wall Street firms began financing the construction and administration of privatised jails. They know how to profit from incarceration too.

When will we call a crime a crime? When will we demand a jail-out, not just more bail-outs. Unless we do, and until we do, the people who created the worst crisis in our time will, in effect, get away with the biggest rip-off in history.

http://english.aljazeera.net/indepth/opinion/2011/02/2011226131635826806.html
 

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So now we're going to al-jazeera for our political opinions. :laughing:

Bottom line, the article states over and over that ultimately most of the actions of these people were legal. So why do we keep calling them criminals? Words mean things. Their actions may not have been in the best interest of the public, and that needs to be corrected. But we shouldn't call them criminals because we think what they did SHOULD have been illegal. I'm all for investigating and charging for real crimes discovered. I'm not for calling people criminals because I don't like what they did.
 

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So now we're going to al-jazeera for our political opinions. :laughing:

Bottom line, the article states over and over that ultimately most of the actions of these people were legal. So why do we keep calling them criminals? Words mean things. Their actions may not have been in the best interest of the public, and that needs to be corrected. But we shouldn't call them criminals because we think what they did SHOULD have been illegal. I'm all for investigating and charging for real crimes discovered. I'm not for calling people criminals because I don't like what they did.
:agree: Again, Rationality strikes again :D
 

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Discussion Starter #4
So now we're going to al-jazeera for our political opinions. :laughing:
:laughing: Message/source.. pick your poison.

Bottom line, the article states over and over that ultimately most of the actions of these people were legal. So why do we keep calling them criminals? Words mean things.
You know, in some people's world it's legal for you to kill your wife/daughter if they get raped.. words do mean something. But principle means more. Just because you purchase enough government, to make your crimes meet the legislative meaning of legal, don't make it ok to commit crimes in the name of legality. And it don't make it any less criminal.. political shenanigans are crimes also Tex..

In Iran, it's completely legal to cut the hands off of thieves. In America, it is completely legal to steal people's life savings and retirement.. who has the worst system? :huh:

Their actions may not have been in the best interest of the public, and that needs to be corrected.
Understatement of the year, possibly the decade.. :laughing:

:cheers:
 

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Discussion Starter #5
Madoff to NY magazine: Government a Ponzi scheme

NEW YORK (AP) -- Wall Street swindler Bernard Madoff said in a magazine interview published Sunday that new regulatory reform enacted after the recent national financial crisis is laughable and that the federal government is a Ponzi scheme.

"The whole new regulatory reform is a joke," Madoff said during a telephone interview with New York magazine in which he discussed his disdain for the financial industry and for its regulators.

The interview was published on the magazine's website Sunday night.

Madoff did an earlier New York Times interview in which he accused banks and hedge funds of being "complicit" in his Ponzi scheme to fleece people out of billions of dollars. He said they failed to scrutinize the discrepancies between his regulatory filings and other information.

He said in the New York magazine interview the Securities and Exchange Commission "looks terrible in this thing," and he said the "whole government is a Ponzi scheme."

A Ponzi, or pyramid, scheme is a scam in which people are persuaded to invest through promises of unusually high returns, with early investors paid their returns out of money put in by later investors.

A court-appointed trustee seeking to recover money on behalf of the victims of Madoff's massive Ponzi scheme has filed a lawsuit against his primary banker, JPMorgan Chase, alleging the bank had suspected something wrong in his operation for years. The bank has denied any wrongdoing. :)laughing:)

Madoff is serving a 150-year prison sentence in Butner, N.C., after pleading guilty in 2009 to fraud charges.

In the New York magazine interview, Madoff, 72, also said he was devastated by his son Mark Madoff's death and laments the pain he wrought on his family, especially his wife.

"She's angry at me," Madoff said. "I mean, you know, I destroyed our family."

Mark Madoff, 46, hanged himself with a dog leash in his Manhattan apartment on the second anniversary of his father's arrest. He left behind a wife and four children, ages 2 to 18.

At the time of his suicide, federal investigators had been trying to determine if he, his brother and an uncle participated in or knew about the fraud. The relatives, who held management positions at the family investment firm, denied any wrongdoing.

Bernard Madoff has maintained that his family didn't know about his Ponzi scheme.

http://finance.yahoo.com/news/Madoff-to-NY-magazine-apf-2369562769.html?x=0&.v=2
 

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Madoff to NY magazine: Government a Ponzi scheme
........ And so on



I guess I have still missed your point, The guilty guy was caught and arrested, The Hedge fund people are paid to make other people money, Its government regulation that should over see that the documetation is legal.

Maybe the regulation is as fault and maybe it should be made more simple ( the same as our tax code?) :lookinup:
 

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........ And so on



I guess I have still missed your point, The guilty guy was caught and arrested, The Hedge fund people are paid to make other people money, Its government regulation that should over see that the documetation is legal.

Maybe the regulation is as fault and maybe it should be made more simple ( the same as our tax code?) :lookinup:
:laughing:

Ok, here's what happened. Some corrupt people recruited/paid for other corrupt people, to write and pass corrupt laws which allow the first group of corrupt people to make a shitload of money, and the other group of corrupt people to make a **** load of money. Now, they got all this done, and normal people were making money too, then the ponzi scheme had run it's course, so the original group got the second group to write/pass more laws allowing the first group to go in and legally empty the treasury, putting the middle class on the hook for $100 trillion of so that they can never pay back.

Groups 1 and 2 kept their ill-gotten gains, then took more money from group 3, paid themselves record profits and bonuses, and the cake topper is that the people left holding the bag, are their most ardent apologist.. fricking genius.. but still, crime is crime, no mater how you word it. ;)
 

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:laughing:

Ok, here's what happened. Some corrupt people recruited/paid for other corrupt people, to write and pass corrupt laws which allow the first group of corrupt people to make a shitload of money, and the other group of corrupt people to make a **** load of money. Now, they got all this done, and normal people were making money too, then the ponzi scheme had run it's course, so the original group got the second group to write/pass more laws allowing the first group to go in and legally empty the treasury, putting the middle class on the hook for $100 trillion of so that they can never pay back.

Groups 1 and 2 kept their ill-gotten gains, then took more money from group 3, paid themselves record profits and bonuses, and the cake topper is that the people left holding the bag, are their most ardent apologist.. fricking genius.. but still, crime is crime, no mater how you word it. ;)
IMO, it's not illegal to donate money to political campaigns, and it's not against the law to ask for legislative changes that will benefit a person or organization. If there is responsibility here, it is with legislators who caved to the pressure and allowed changes that proved to be disastrous. But that's not criminal either unless a specific bribe can be proven, so the remedy is to vote the responsible people out and insist that the new people work more in the interest of the general population. We have a system for dealing with this. We just need to use it. Again, I'm sure there were some specific actions by both parties that technically broke laws. I'm for rooting out those actions and punishing the guilty. I'm just not for running around on pure emotion calling for the jailing of people I think profitted improperly.
 

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So now we're going to al-jazeera for our political opinions. :laughing:

Bottom line, the article states over and over that ultimately most of the actions of these people were legal. So why do we keep calling them criminals? Words mean things. Their actions may not have been in the best interest of the public, and that needs to be corrected. But we shouldn't call them criminals because we think what they did SHOULD have been illegal. I'm all for investigating and charging for real crimes discovered. I'm not for calling people criminals because I don't like what they did.
Market manipulation, securities fraud, money laundering...ect...


Illegal.
 

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IMO, it's not illegal to donate money to political campaigns, and it's not against the law to ask for legislative changes that will benefit a person or organization. If there is responsibility here, it is with legislators who caved to the pressure and allowed changes that proved to be disastrous. But that's not criminal either unless a specific bribe can be proven, so the remedy is to vote the responsible people out and insist that the new people work more in the interest of the general population. We have a system for dealing with this. We just need to use it. Again, I'm sure there were some specific actions by both parties that technically broke laws. I'm for rooting out those actions and punishing the guilty. I'm just not for running around on pure emotion calling for the jailing of people I think profitted improperly.
having been a staffer one sollution isn't just voting in good people it's paying for more research... All too often we recieved "friend of the court briefs" and all sorts of "research" saying that something was good and wholesome.. this as you guess came from people wanting to skew you towards that view. Unless another organization had a counter view it was often a difficult task to uncover legitimate research or to timely/costly to develop and commision a research model into the impacts of new laws and regulatory guidance.
 

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having been a staffer one sollution isn't just voting in good people it's paying for more research... All too often we recieved "friend of the court briefs" and all sorts of "research" saying that something was good and wholesome.. this as you guess came from people wanting to skew you towards that view. Unless another organization had a counter view it was often a difficult task to uncover legitimate research or to timely/costly to develop and commision a research model into the impacts of new laws and regulatory guidance.
I'm sure that's true. But let's face it. Most of the time, a legislator knows when he is voting in a way that favors a big donor. I'm not saying that is always wrong. But when the results are disastrous, the legislator should expect his error to be pointed out to the public and pay for it at the polls.
 

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Discussion Starter #15
I'm just not for running around on pure emotion calling for the jailing of people I think profitted improperly.
That's why I said it was fricking genius, they screwed you and your future generations to the wall, and have you covering their backs.. :laughing: It's not conjecture, it's documented.

And "pay for it at the polls"? :rolling: Yeah, let's vote this guy out (and give him a ridiculous retirement, let him keep his ill-gotten rewards).

Like I keep saying, steal a guys TV and go to jail, steal his livelihood and retirement.. get a golden parachute. No fears, the guy you raped will defend you. :crazy:
 

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That's why I said it was fricking genius, they screwed you and your future generations to the wall, and have you covering their backs.. :laughing: It's not conjecture, it's documented.

And "pay for it at the polls"? :rolling: Yeah, let's vote this guy out (and give him a ridiculous retirement, let him keep his ill-gotten rewards).

Like I keep saying, steal a guys TV and go to jail, steal his livelihood and retirement.. get a golden parachute. No fears, the guy you raped will defend you. :crazy:
I'm not defending anyone. All I'm saying is you can't draw a big circle, put every banker in America in it and then declare everyone in the circle a crook or evil. Find the ones who are crooks and punish them, but don't paint with such broad strokes that lots of innocent people are thrown under the bus.
 

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I'm not defending anyone. All I'm saying is you can't draw a big circle, put every banker in America in it and then declare everyone in the circle a crook or evil. Find the ones who are crooks and punish them, but don't paint with such broad strokes that lots of innocent people are thrown under the bus.
Oh, I think I have made it clear who I feel the culprits are.
 

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:laughing: Message/source.. pick your poison.



You know, in some people's world it's legal for you to kill your wife/daughter if they get raped.. words do mean something. But principle means more. Just because you purchase enough government, to make your crimes meet the legislative meaning of legal, don't make it ok to commit crimes in the name of legality. And it don't make it any less criminal.. political shenanigans are crimes also Tex..

In Iran, it's completely legal to cut the hands off of thieves. In America, it is completely legal to steal people's life savings and retirement.. who has the worst system? :huh:



Understatement of the year, possibly the decade.. :laughing:

:cheers:
Very well stated...and I completely agree. :thumbsup:
 

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:laughing:

Ok, here's what happened. Some corrupt people recruited/paid for other corrupt people, to write and pass corrupt laws which allow the first group of corrupt people to make a shitload of money, and the other group of corrupt people to make a **** load of money. Now, they got all this done, and normal people were making money too, then the ponzi scheme had run it's course, so the original group got the second group to write/pass more laws allowing the first group to go in and legally empty the treasury, putting the middle class on the hook for $100 trillion of so that they can never pay back.

Groups 1 and 2 kept their ill-gotten gains, then took more money from group 3, paid themselves record profits and bonuses, and the cake topper is that the people left holding the bag, are their most ardent apologist.. fricking genius.. but still, crime is crime, no mater how you word it. ;)
You have done a great job of capturing this entire problem in this one single post. My hat is off to you sir. Well done. :thumbsup::thumbsup::thumbsup:


PS: I wish the others on this thread understood the truth of what you speak. Unfortunatly they are afraid of what the political implications would be...which party would get the most blame??? And as you say this makes us all "their most ardent appologists". We must ignor politics as the shell game that keeps our eye over there while they pick our pockets over here.
 

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You have done a great job of capturing this entire problem in this one single post. My hat is off to you sir. Well done. :thumbsup::thumbsup::thumbsup:


PS: I wish the others on this thread understood the truth of what you speak. Unfortunatly they are afraid of what the political implications would be...which party would get the most blame??? And as you say this makes us all "their most ardent appologists". We must ignor politics as the shell game that keeps our eye over there while they pick our pockets over here.
I see a lot of people who seem to know exactly who is responsible for the recession. I think it is much more complicated than just "the bankers and congress did it". But assuming it was that simple, what I'm not hearing are solutions. Do we line them all up and shoot them? Do we close all of the banks? If you are all so damned smart, and the rest of us so damned stupid, exactly who do we punish? Was every banker who got a bonus a crook? How do you separate the ones who were from the ones who weren't? Do we send them to jail when the AG's office can't find evidence of laws that were broken? You are acting like this is a simple open-shut case that could be solved over dinner. It's not. It's very complicated, and it's very important that innocent people not be lumped in with guilty people and punished. I'm frankly shocked to hear Machine, who is always so adamant that our system protect innocent people, be so cavalier about declaring guilt. Don't tell me what group is to blame. Tell me what individuals are to blame and exactly what each one did that was illegal. Then we might be on the road to a solution.
 
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