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After the savings-and-loan scandals of the 1980s, the FBI opened 5,490 criminal investigations, 1,100 people were prosecuted, and 839 were convicted, including top executives at many of the largest failed banks. But Jesse Eisinger writes in the NYT that the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker, Kareem Serageldin, to 30 months in jail. Many assume that federal authorities simply lacked the guts to go after powerful Wall Street bankers but according to Eisinger, the truth is more complicated. "During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms."
From 2004 to 2012, the Justice Department reached 242 deferred and nonprosecution agreements with corporations, compared with 26 in the previous 12 years, and while companies paid huge sums in the settlements, several veteran Justice Department officials say that these settlements emboldened defense lawyers. More crucially, they allowed the Justice Department's lawyers to "succeed" without learning how to develop important prosecutorial skills. The erosion of the department's actual trial skills soon became apparent. In November 2009, the U.S. attorney's office in Brooklyn lost the first criminal case of the crisis against two Bear Stearns executives accused of misleading investors. The prosecutors rushed into trial, failing to prepare for the exculpatory emails uncovered by the defense team. After two days, the jury acquitted the two money managers. "For sure, it put a chill" on investigations says one former prosecutor. "Politicos care about winning and losing." Federal prosecutors have their own explanation for how only one Wall Street executive landed in jail in the wake of the financial crisis, says Eisinger. "The cases were complex to investigate and would have been infernally difficult to explain to juries."
(Score: 5, Insightful) by physicsmajor on Wednesday May 07 2014, @04:09AM
It doesn't matter if they fail to convict some. Those who did wrong must be punished. Settlement after settlement amounts to far less than corps or banks reaped thanks to their wrongdoing. This incentivizes wrongdoing!
Consider:
You stole 17 expensive cars, but got caught. Instead of being arrested, you got a call saying "Hey, just letting you know - we're going to bill you for one of those. You won't serve any time, you won't even see a courtroom, and you won't have to admit you did anything wrong so your record remains squeaky clean."
Is this a deterrent for bad behavior, or does it make you want to go out and steal more cars?
We have the laws to go after the top executives. They are on record, some lied to Congress itself under oath. These are not difficult cases. Until or unless they are brought, this country will not recover.
(Score: 1) by Horse With Stripes on Wednesday May 07 2014, @05:04AM
I'm not sure where I'm going to put them, but I'm going to go steal 17 expensive cars to test your theory. Wish me luck!
(Score: 3, Insightful) by Thexalon on Wednesday May 07 2014, @11:59AM
It's very simple, really: Eric Holder put forward a policy back in the Clinton administration that said, in a nutshell, don't punish important corporations enough to really hurt them. At this point, when they announce some big settlement, what they are actually announcing is how big a cut of the take the regulatory agency is getting.
Also, obligatory Dave Chappelle sketch [cc.com].
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0, Troll) by Grishnakh on Wednesday May 07 2014, @01:35PM
Not only that, but every time these financial crimes come up in discussion, liberals will immediately chime in and and demand proof for these allegations of financial crimes, and defend the banksters.
(Score: 3, Insightful) by Thexalon on Wednesday May 07 2014, @01:55PM
Umm, which liberals are you talking about here? Elizabeth Warren, Bernie Sanders, and a bunch of other liberals on Congress have been demanding bankers be put in jail. Occupy Wall St was demanding, in part, that bankers be put in jail. Several MSNBC anchors have demanded that bankers be put in jail.
Don't mistake Obama or Democratic Party hacks for liberals. (And yes, I don't mistake Republican Party hacks for conservatives, many of whom were appalled at the Bush administration.)
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 1, Troll) by Grishnakh on Wednesday May 07 2014, @02:21PM
Bernie Sanders isn't a liberal, he's a socialist and an independent. In America, "liberal" equals "Democrat".
Anyway, I'm talking about random liberals on the internet, who will always defend Obama no matter what. Since Obama and the other Dems refused to do anything about Wall Street, and the Dems are in bed with the banksters, the liberals are all for this.
Don't mistake Obama or Democratic Party hacks for liberals.
Sorry, but they're one in the same in America. Similarly, "conservative" equals "Republican". There's always some fringe people who try to argue otherwise ("no, they're not true liberals|conservatives. We're the true liberals|conservatives!!" See the No True Scotsman [wikipedia.org] fallacy).