Many have wondered why no big executives of banks, financial or insurance companies were prosecuted after they plunged us into the worst financial crisis since the Great Depression. There are four possibilities:
1) What they did was stupid and reckless, but not illegal. Nothing to prosecute.
2) Financial systems are extremely complicated, so it’s almost impossible to prove criminality in court. There may have been crime, but it’s too hard to get convictions.
3) State and Federal officials knew or suspected that there were crimes committed, but were afraid of causing more financial panic if financial bigshots were hauled into court.
4) The extremely rich do not have to play by the same rules as others. These guys were not prosecuted because they had friends in high places.
An April 13, 2011 article here by Gretchen Morgenson and Louise Story in the New York Times lays it all out, as clearly as it’s ever been done. So what’s the answer?
It looks like (2) and (3) and (4) were all true at the same time. Note in the story the use of the term “collective embezzlement” to describe how financial executives enriched themselves while driving the entire US economy into the ground.
When you read the story, note especially how officials at the Dept. of Justice make it very clear that if financial regulatory agencies don’t do their jobs, it’s almost impossible for prosecutors to get on top of things. The financial regulators of the Bush years had plainly been told to lay off the financial guys – in other words, you get paid to regulate, but don’t regulate “our friends”. For those 8 years, our tax dollars were going to pay people at SEC and other agencies to turn a blind eye to Wall St. And it doesn’t look like much changed when the Obama Administration took over in 2009. Lovely.
So when you feel like the Wizards of Finance have left ordinary American taxpayers holding the bag, getting their companies bailed out with your tax dollars so they can go back quickly to paying huge bonuses --- well, that’s right!
And remember, these are the same people who claim they’re being over-taxed. If it weren’t so viciously destructive of life in the US, it would be laughable.
Lew Jacobson
