Why was virtually no one prosecuted for causing the 2008 financial crisis?
Occupy Wall Street, October 12, 2011. Photograph by Harrie van Veen.
From The New York Times:
Why was virtually no one prosecuted for causing the 2008 financial crisis, which devastated the global economy and cost the United States almost nine million jobs? Some people think the fix is in: Bankers control the government, so they can get away with anything. Others claim that the banks did nothing wrong to begin with — or, alternatively, that there was insufficient evidence to prove beyond a reasonable doubt that anyone in particular committed a crime. In this new book, the ProPublica reporter Jesse Eisinger tells a different story: Since the turn of the century, changes in the political landscape, the defense bar, the courts and most important the Justice Department have undermined both the ability and the resolve of America’s top prosecutors to go after corporations or their executives.
After decades in which Wall Street masters of the universe were lionized in the media and popular culture, star investment bankers — rich, usually white men in nice suits — just don’t match the popular image of criminals. Democrats as well as Republicans cozied up to big business, outsourcing the Treasury Department to Wall Street and the Justice Department to corporate law firms. Even after the financial system collapsed, the Obama administration’s priority was to bail out the megabanks — to “foam the runway,” in Treasury Secretary Tim Geithner’s words. The Justice Department became increasingly staffed by intelligent, status-seeking, conformist graduates of the nation’s top law schools — all of whom had friends on Wall Street and in the defense bar. In that environment, the easy choice was to play along, strike a deal with an impressive-sounding fine (to be absorbed by shareholders) that held no one responsible, and avoid risking an acquittal or a hung jury. (The book’s title comes from then-U.S. Attorney James Comey’s name for prosecutors who had never lost a trial.) Corruption can take many forms — not just bags of cash under the table, but a creeping rot that saps our collective motivation to pursue the cause of justice. As Upton Sinclair might have written were he alive today: It is difficult to get a man to understand something, when his résumé depends upon his not understanding it.