Fact or fiction? No one on Wall Street went to jail for financial crisis
Who went to jail for malfeasance after the 2008 financial meltdown? DCDecoder looks at who was punished, who wasn't, and why.
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But what about subprime mortgages? Weren’t there tons of evil things going on there that went well beyond stupidity? Yes - but it’s often hard to make the case that executives are to blame. Consider Countrywide, one of the most notorious subprime lenders, whose CEO, Angelo Mozilo, is far from a sympathetic figure. As the New York Times writes:Skip to next paragraph
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The problem is that Mr. Mozilo, though he helped create the culture that made such predatory lending acceptable, never made the fraudulent loans himself. Legally, if not morally, he’s off the hook.
2. In cases of actual illegality, has the federal government put enough resources into prosecuting malfeasance?
As a comparison, the NYT looked back at the savings and loan crisis of the 1980s, which ended with more than 1000 felony convictions (remember, a single person can get multiple convictions).
[T]he federal government threw enormous resources at those investigations. There were a dozen or more Justice Department task forces. Over 1,000 FBI agents were involved. The government attitude was that it would do whatever it took to bring crooked bank executives to justice.
The executives howled that they were being unfairly persecuted, but the cases against them were often rooted in a simple concept: theft. And as prosecutors racked up victories in court, they became confident in their trial approach, and didn’t back away from taking on even the most well-connected thrift executives
Why can’t they do that today? That’s a serious question. Encumbering factors include a lack of FBI resources, given terrorism concerns, and a lack of legal expertise on the part of public prosecutors outside New York on complicated financial questions. The latter point is particularly relevant given the well-paid legal defenses marshaled by financial executives.
3. To what extent are government figures liable?
On TIME’s list of 25 people to blame for the financial crisis, several government figures are named along with top financial executives - including former Federal Reserve Chairman Alan Greenspan, presidents Bill Clinton and George W. Bush, and former Senate Banking Committee Chair Phil Gramm (R) of Texas.
Peeling back financial regulations, keeping interest rates “too low” (a subjective measure, to be sure), and falling asleep at the regulatory switch (a la the Securities and Exchange Commission) all had a role to play in the financial crisis.
How much liability should we apportion to government figures?