Sun Sep 15, 2013, 08:19 AM
Recursion (40,115 posts)
WonkBlog: Why Wall Street CEOs Didn't Get Prosecuted
And that’s about it. A fraud prosecution of managers of two Bear Stearns hedge funds resulted in a jury finding them innocent. Fabrice “Fabulous Fab” Tourre was found liable for misleading investors in mortgage securities issued by his firm, Goldman Sachs, but it was a civil case, and no one could accuse Tourre of being a senior official at Goldman.
Yes, the men mentioned above ran firms during a time they were taking unwise risks, using too much borrowed money, and packaging securities that turned out to be pretty much worthless. Yes, in some cases they argued publicly that their companies were in sound shape even as they were falling apart. But SEC enforcers, federal prosecutors and state attorneys general spent years investigating these cases, searching for the incriminating e-mail or evidence of illegal activity that would allow them to land a major prosecution. By all appearances, they didn't find anything. There’s a plausible case that the “too big to jail” problem might make prosecutors wary of going after a mega-bank itself. But it’s not at all clear why it would make them wary of going after some long-ago deposed chief executive on criminal charges.
America doesn’t criminalize bad business decisions, even when they lead to business failure; if we did, Silicon Valley would be a penal colony. The fact that the collapse of financial firms can cause so much collateral damage for the economy doesn’t lower the legal bar for throwing CEOs in jail, no matter how much a basic sense of fairness makes a person wish it were so.
That means that our system needs to address the risks financial firms can create for the whole economy through other means. Higher capital requirements and stricter limits on the kinds of risky activities banks can take on will do a lot more to create a stable economy and financial system in the decades ahead than marching Lehman's Dick Fuld to a Lower Manhattan courthouse in an orange jump suit — all the more so knowing that Fuld would have a very good chance of being found innocent if prosecutors' reluctance and the "not guilty" verdict in the Bear Stearns hedge fund case are taken as indications.
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WonkBlog: Why Wall Street CEOs Didn't Get Prosecuted (Original post)
Response to Recursion (Original post)
Sun Sep 15, 2013, 08:32 AM
MannyGoldstein (33,101 posts)
1. DOJ lost its first few cases against John Gotti.
But DOJ was actually interested in prevailing in that case, so it kept at it until Gotti was behind bars for life.
Obama and Holder were brought in to do a job, and they got it done. Good for them.
HSBC: Too Big to Indict