Why aren’t any bankers in jail?

prison

Earlier this week, we saw how five banks were fined $5.7 billion for cheating the public and rigging the market.

The banks admitted to the crime, they paid $5 billion and no-one went to jail. People and institutions lost a fortune but the bankers got off scot-free. The question is why?

Rolling Stone journalist Matt Taibbi in this interview says it’s quite simple: governments don’t want to take on the banks.

“By and large, the general problem is more unwillingness to enforce existing laws,’’ Taibbi said. “And it wasn’t so much an absence of new regulations that was the problem in 2008. It was more a failure of will on the part of the government. We had laws on the books that were perfectly sufficient in the late ’80s and early ’90s, when we, you know, conducted over 1,800 prosecutions and put 800 people in jail after the S&L crisis. We can do the same thing now, if we want to, with this or with robo signing or with subprime mortgage fraud or any of another dozen other scandals, and we just haven’t done it. And that—I think that’s the main problem, and it’s a failure of will.”

Matt Levine in Bloomberg says the banks will just keep doing it because they can’t admit they did anything wrong.  As they explain to their shareholders, these weren’t crimes, they were practices. They say it’s unfair to be punished retroactively for doing things that everyone thought were fine.

“The Justice Department doesn’t like these practices, the banks like them fine, and they’ve agreed to disagree,’’ said Levine .”These practices have been singled out, in the context of criminal plea agreements (a bad context!), as things that happened. But not quite as crimes. And the banks are careful to make clear: They’re going to keep happening.”

And as the Financial Times says, when you fine the banks, it’s the shareholders who suffer.

Or as Elizabeth Warren puts it, it’s business as usual and it stinks.

“The big banks have been caught red-handed conspiring to manipulate financial markets, and several have even admitted in court that they’re felons — but not a single trader is being held individually accountable, and regulators are stumbling over themselves to exempt the banks from the legally required consequences of their criminal behavior,” Warren said. “That’s not accountability for Wall Street.”

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One Response to “Why aren’t any bankers in jail?”

  1. Forex rigging scandal: now for the lawsuits | BizzMaven Says:

    […] Just another WordPress.com weblog « Why aren’t any bankers in jail? […]

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