No Wall Street executives have seen prison time or even been charged with fraud since the 2008 economic meltdown.
Approximately 4.5 years have passed since that time. It is estimated that $12 trillion were lost and millions of jobs ended in what has been considered the worst economic disaster since the Great Depression. How can it be that this group of people has escaped criminal prosecution?
There are a number of reasons given to explain this. None of them hold water. This doesn’t surprise me, but there are three things about the issue of placing blame for the 2007-09 economic meltdown that do surprise me.
Before I deal with my three surprises, let me give you some background.
Lanny Breuer, head of the Justice Department’s Criminal Division (2009-13), is resigning effective March 1, due to pressure brought on him by a “Frontline” documentary. His chief arguments were that it is extremely difficult to prove fraud at the highest levels of financial institutions and he was fearful of the effects on the economy.
Breuer had been very vigorous in going after monetary penalties against big business. The two most notable and recent were against corporate oil giant BP and financial institution HSBC. Breuer’s division won a $4 billion civil settlement against BP in the 2010 Gulf of Mexico oil spill, the greatest settlement in Department of Justice history. His division also successfully investigated and prosecuted HSBC, winning a $1.25 billion dollar civil settlement because it was secretly funding terrorists.
Recently, Attorney General Eric Holder announced another civil lawsuit against the rating agency Standard and Poor’s for its wanton lying to investors. It had given Triple-A ratings to very risky and low-quality, mortgage-backed securities, costing consumers billions in losses when those securities imploded, helping cause the economic meltdown.
Now to what surprises and puzzles me about these events:
Surprise No. 1: Why would Lanny Breuer, assistant attorney general of the United States, be concerned about the social and economic effects of prosecuting top Wall Street executives?
That’s not his job. His thinking was way out of his pay grade. His job is to prosecute criminals no matter who and what they are. It is part of the concept of equal justice under the law.
Surprise No. 2: Why would the Department of Justice go for civil (monetary damages) rather than criminal penalties against corporations? They could seek both dollar punishments as well as charge the executives who committed the fraud with crimes and prison time.
There is a federal law called Sarbanes-Oxley that gives the DOJ power to go after executives who knowingly misrepresent information to investors. I am aware it is easier to win civil suits, but based upon the evidence presented in the “Frontline” report, whistleblowers are easily found who will testify to criminal activity in these
Attorney General Holder’s very recent indictment against Standard and Poor’s in a civil rather than criminal suit falls under the same category. Punishing mega-billion dollar corporations financially is little more than a slap on the wrist unless the fines are in the hundreds of billions of dollars. A few billion dollars is nothing to them, especially since the executives will see no cut in pay as a result.
No matter how powerful a person is, if that person breaks the law, he/she should be prosecuted. There are no “untouchables” under the law. Justice is supposed to be blind. To not be blind to power means that a special class of people will be protected. This is totally contrary to our system of justice.
Surprise No. 3: President Harry Truman had a famous sign on his desk saying, “The buck stops here.” Ultimately, what happens in the DOJ should come to the desk of the president of the United States. Why hasn’t President Obama been the focus of media wrath for the lack of criminal prosecutions of Wall Street executives? After all, it’s been 4.5 years since the economic meltdown became front-page news. In that time the major banks have actually gotten bigger and even more powerful.
It seems in my life that second terms usually trip up presidents, be it Watergate or Iran-Contra or Monica Lewinsky, or no WMDs and the Iraq insurgency. Are we seeing the beginning of President Obama’s second term crisis of trust?
Mr. President, don’t you think it’s time to go after the financial fat cats who are controlling this country through lobbying and campaign contributions? Isn’t it your job to protect America from our modern plutocracy of wealth? You don’t need their campaign contributions anymore. Our democracy is at stake.