A federal judge has decided to publicly ask the questions millions of Americans have been wondering for years – given that we know people on Wall Street broke the law leading to the crash why hasn’t anyone been prosecuted?
This is particularly pressing given that the 5 year statute of limitations is fast approaching for any crimes committed before the crash. Soon it will be too late to bring charges against any of the perpetrators of the financial crisis.
The article asking the question is by Judge Jed Rakoff a federal judge for the Southern District of New York.
While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and other government agencies, I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities. Rather, their position has been to excuse their failure to prosecute high-level individuals for fraud in connection with the financial crisis on one or more of three grounds.
The three Department of Justice’s excuses, according to Rakoff, are; the difficulty in making cases, the nature of some of the investors being “sophisticated” and therefore not really being defrauded, and the now infamous Too Big To Jail comments by Lanny Breuer and Eric Holder.
Rakoff remains rather unconvinced by DOJ’s many excuses for not doing their job and upholding the rule of law.
Without multiplying examples further, my point is that the Department of Justice has never taken the position that all the top executives involved in the events leading up to the financial crisis were innocent; rather it has offered one or another excuse for not criminally prosecuting them—excuses that, on inspection, appear unconvincing. So, you might ask, what’s really going on here? I don’t claim to have any inside information about the real reasons why no such prosecutions have been brought, but I take the liberty of offering some speculations…
I want to stress again that I do not claim that the financial crisis that is still causing so many of us so much pain and despondency was the product, in whole or in part, of fraudulent misconduct. But if it was—as various governmental authorities have asserted it was—then the failure of the government to bring to justice those responsible for such colossal fraud bespeaks weaknesses in our prosecutorial system that need to be addressed.
While Judge Rakoff ducked one of the key points, seemingly out of collegiality and an attempt to keep his analysis systemic rather than personal – let me say it. The fact that Lanny Breuer and Eric Holder were and are Wall Street lawyers is relevant.
You can not have creatures of Wall Street being in charge of prosecuting it. It is a clear conflict of interest one borne out by that third point Rakoff himself noted. They identify with the banks on a deep psychic level and the thought of hurting those banks causes them psychic pain not to mention if they kill off enough banks who will be their clients?
That’s not the logic of a true prosecutor. A real prosecutor lives by fiat justitia ruat caelum – let justice be done though the heaven’s fall.
Photo by JSquish under Creative Commons license.