In the last few days it seems like there has been a little more coverage in various media circles about why no one has gone to jail as a result of the bank crisis. A lot of people probably want a pound of flesh for what was a horrible time in financial history, maybe it is more correct to phrase that in the present tense.
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The push back is that there have been no convictions because there is no evidence of actual illegal activity. Obviously unethical is not the same thing as illegal. The solution is complicated and I certainly don't have all the answers but it seems to me that a basic building block of running an investment bank is knowing the law and spending a lot of money to figure out every legal thing that can possibly be done without breaking the law. If you can accept that banks want to do everything they can without getting in legal trouble then it increases the likelihood that nothing illegal was done--or very little that was illegal was done. Again, unethical and unscrupulous are not the same as illegal.
If the law that existed was broken then great nail them to the wall but it does worry me that a lot of time, man hours, money and any other resources you can think of could be spent and yield no results. Conceivably any resources expended trying to find evidence of illegal activity could be spent on how to fix things going forward. One thing that is true is that no matter how many people could go to jail, it would not restore the value of anyone's home or make anyone more financially literate. People feel bitter (rightfully so) toward the financial system, feel that the market is rigged against them and are probably still nowhere near literate enough to address their financial needs.
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I guess part of my assumption here is that there are not enough resources to both search for wrongdoing and trying to help everyday people fix things from here. If this does frame it correctly then my vote would be to help people from here but if there are enough resources to to do both then great do both although I think it will be very difficult to find evidence that the then existing laws were broken.
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3 comments:
As much as I dislike government.....it is up to government to make sure everyoneplays by the rules and to make the rules
Part of the problem is regulatory and legislative capture: There is too much money allowed to buy ifluence and the rules that influence buys provide too many loopholes and too many revolving doors.
This will not get better on its own: The public needs to get really angry about it and not get distracted by single hot-button issues such as spending or govt size the way the tea party did.
Too many people have forgotten the govt is also us.
There are more than enough resources to do both but the political will does not exist as Anon 1:02PM points out; e.g., after 9/11 the Bush administration moved over 500 FBI agents from fraud investigation to homeland security and after more than a decade they have still not been replaced.
It is true the laws and regulations have been so weakened and the enforcement divisions so thinned out over the past decade that correcting the deficit (and frankly it is the deficit everyone should be most concerned about) would probably be a challenge but there was always the much maligned Sarbanes-Oxley law and, without a doubt, every one of the CEO's and CFO's of the TBTF institutions signed public financial and budget documents that were and are demonstrably false. So ...
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