In a recent Atlantic article, “How Wall Street’s Bankers Stayed Out of Jail,” William D. Cohan asks, “the probes into bank fraud, leading to the financial industry’s crash have been quietly closed. Is this justice?”
It appears that the legal window for punishing Wall Street bankers for fraudulent actions that contributed to the 2008 crash has just about closed. And, few tough, just actions have been taken.
Both Cohan and I have been writing about the Department of Justice’s indictments of the major Wall Street banks for some time, starting with former Attorney General Eric Holder and continuing with our new Attorney General, Loretta Lynch. Cohan quotes Attorney General Lynch on bank behavior: “The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States,”… “Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice.”
Her intentions and Holder’s seemed fairly forthright, yet as Cohan and I point out, the department of Justice has lost sight of the larger issue that is the fraudulent behavior of the Wall Street bankers and traders that resulted in our 2008 financial crisis. The D.O.J. has only managed to indict and jail one banker.
We conveniently overlook that in the 1980’s financial crisis over 1,000 bankers were jailed, not let off with just a fine. They paid for their fraud and financial wrong doing. To date, the 2008 crisis has resulted in nearly $190 billion in fines and settlements from 49 separate financial institutions (Keefe, Bruyette & Woods analysis).
That’s a hefty number, indeed. However, let’s not forget that those fines and settlements were paid by the bank’s shareholders, not the bankers themselves. And, they were paid out as corporate expenses. In other words, the payments were treated as the cost of doing business and in some cases these expenses were tax deductible. Unbelievable, but true!
Astonishing as it seems, the bankers robbed their banks, customers and tax payers and only one banker, Credit Suisse’ senior trader, Kareem Serageldin, has gone to jail. So, in the 2008 crisis, 1; 1980’s crisis, 1000! Incredible odds and odds that just don’t add up.
The message is clear. Regardless of what our past and present Attorney Generals claim — that the lack of prosecutions are not a result of their lack of effor — to date, the D.O.J. has not displayed the desire to seek punishment for the misconduct on the part of individual bankers.
A long list of whistleblowers, including me, have repeatedly testified that the evidence of fraud is there. We’ve uncovered it. And the D.O.J. is apparently using that and additional evidence to levy large settlements.
[tweetthis]A long list of whistleblowers have repeatedly testified that the evidence of fraud is there. ~ @RichardMBowen #tbtf #2008 #doj[/tweetthis]
So how is it possible we keep finding evidence to force these large settlements and yet not enough to prosecute? There’s obviously a huge piece missing here which just doesn’t add up. But William Cohan provides much of the answer by clearly showing the template repeatedly used by the D.O.J. in getting these settlements from the banks.
Cohan describes how the D.O.J. threatens to publicly disclose the evidence of wrongdoing and then, in exchange for large settlements by the banks, the D.O.J. seals the evidence so it will never become known by the public and bank executives are not inconvenienced by a perp walk.
By following this template the D.O.J. gets to show the media and public how tough they are on the big bad banks. The banks simply have another expense and the public never sees how widespread the fraud really was.
I have also written in “Were Bank Payments Really Payments of Extortion to the Justice Department,” that the settlements are merely payments to the D.O.J. to hide the evidence. And, not one penny of the billions paid to the D.O.J. coffers goes to the investors who lost the money.
The infamous bank robber Willie Sutton, when asked why he robs banks, supposedly said, “Cause that’s where the money is.” The D.O.J. has also obviously taken that to heart in filling their own coffers.
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