Why Aren't Big Bankers in Jail? - FAIR: Fairness & Accuracy In Reporting - 0 views
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financial-collapse criminal-immunity too-big-to-jail too-big-to-fail banksters
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The man in charge of a bank that engaged in massive mortgage fraud chatted with a corporate media host (CNBC Squawk on the Street, 7/12/13) about the fact that virtually none of those who enriched themselves while eviscerating the life savings of many blameless people, derailing the US economy along the way, have faced criminal prosecution
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Granted, Cramer is no one's idea of a serious interrogator of the financial system (FAIR Blog, 3/13/09). But much journalism on the question of criminal prosecution of industry leaders amounts to similar apologia. While there have been substantive inquiries into the wrongdoing of investment banks and auditors, those calling for jail time are often dismissed as irrational, driven by "blood lust" (Washington Post, 9/12/13), "anger" (Chicago Tribune, 11/30/13) or "vengeance" (Washington Post, 11/18/13).
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What the soft-headed among us don't recognize, evidently, is that "blowing up your company isn't necessarily a crime," as the Christian Science Monitor (10/11/11) put it. "America doesn't criminalize bad business decisions," wrote the Washington Post (9/12/13). Or, from Businessweek (5/12/11): "In the American legal system, people who merely act badly or unwisely do not do time." But some have no trouble pointing to actual crimes in the crisis. "Issuing a mortgage that is known to be based on false information and then selling it in the secondary market is fraud and punishable by time in jail," economist Dean Baker (Beat the Press, 9/13/13) noted, citing the Financial Crisis Inquiry Commission. "Packaging loans into mortgage backed securities that an investment bank has good reason to believe are based on false information is also fraud and punishable by time in jail." Former federal bailout inspector Neil Barofsky agrees we're not talking about a perhaps lamentable but inactionable "culture." Asked by NPR (7/26/13) about the no-actual-crime "narrative," Barofsky answered: "No. I think that there was a tremendous amount of fraud."
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We're told such calls come from the margins: That no "financial industry types" have been jailed is "a recurring theme among Occupy Wall Street protesters and some Democratic politicians" (Christian Science Monitor, 10/11/11) or "the Occupy Wall Street crowd" (New York Times, 3/1/13). People who believe bankers should go to jail are deflecting blame—from the people: "The real scandal," explained the Washington Post's Charles Lane ("Banks Aren't the Bad Guys," 11/18/13), was "Americans' shared, erroneous belief in ever-rising housing prices and corresponding mania to profit from them." And maybe they need to move on: "This all happened a really long time ago. What-ever happened to the statute of limitations?" the Washington Post (11/19/13) asked itself in a recent Q&A.
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Certainly the problem extends beyond the actions of a few bigwigs. But people who say jailing industry executives should be the sole response exist only in pundits' minds. William Black, who advocates prison for industry executives (Moyers & Company, 9/17/13), pointed to structural reasons for a lack of prosecutions, including regulatory agencies' abandonment of key functions since the 1980s' Savings & Loan scandal. "When the regulators ceased making criminal referrals—which had nothing to with an end of crime, obviously; it just had to do with a refusal to be involved in the prosecutorial effort anymore—they doomed us to a disaster where we would not succeed." Others say revolving-door relationships between banks and their government watchdogs contribute to settlements that are too generous to serve as deterrents (LittleSis, 10/23/13). Even the historic $13 billion JP Morgan settlement winds up being less than meets the eye, as much of the fine is tax-deductible, $4 billion of it is part of an earlier settlement and much of the rest will take the form of mortgage relief that will help the bank in the long run (Salon, 11/20/13).