Too Big To Jail

On November 25th, the Friday evening after Thanksgiving, the PBS NewsHour ran a segment called In Aftermath of the Financial Crisis, Who's Being Held Responsible? Yves Smith of Naked Capitalism served as one of the four people interviewed, and noted after the fact that the Friday after Thanksgiving is one of the slowest news days of the year. She also noted that the PBS NewsHour format does not permit cross-talk among those being interviewed, which guarantees that no crucial information will emerge in debate. There is no debate.

Everyone agreed on the central fact under discussion: not a single high-ranking Wall Street banker has gone to jail in the aftermath of the Housing Bubble and financial meltdown.

Now, this fact alone should persuade all Americans without a vested interest in the status quo that the fix is in, the criminal political and regulatory system is incapable of self-correction, and therefore the Empire's obvious decline will continue unabated. Still, for reasons which must surely lie very deep in Human Nature, people still feel a need to discuss this criminal negligence as though ... what? Something will be done about it? To finally get to the bottom of this dastardly business? Who knows?

Even I am talking about it, although I am doing so from a distance large enough to give me some valuable perspective on the matter.

To maintain a Fair & Balanced discussion without crosstalk, PBS included a republican lawyer (Anton Valukas), a liberal blogger (Yves Smith), a conservative think-tanker (Mark Calabria), and an actual former SEC regulator (Lynn Turner). Of the four, only Turner and Smith seemed to think it might be a good idea to prosecute some people, to put some people in jail. (My own view is that a few public executions would have a wondrous effect on banking practices.)

Valukas went first, saying that it's hard to pin the blame on specific individuals and it's almost impossible to prove criminal intent. Moderator Ray Suarez then turned to Lynn Turner, who got right to the heart of the matter.

Ray Suarez: Lynn Turner, does that sound right to you — defuse responsibility and hard to prove intent?

Lynn Turner, former SEC chief accountant: I probably differ with Tony on that one. I think there's a number issues here. You've got to keep in mind that during the S&L crisis, we had 1,000 people charged or convicted and we've only got about 39, 40 to date.

We also had very complex cases in Enron, WorldCom, many of the corporate scandals. Those were just as complex as these are this time, and, yet, there was prosecution then. A decade later, no prosecution.

I think it runs to the heart of some of the problems in Washington. I just think there's a lack of resources for prosecutors. And I think there's a lack of willingness on the part of prosecutors to bring cases.

Ray Suarez: A lack of resources? Does that mean your old agency, the SEC, isn't capable of bringing these kinds of cases any longer?

Lynn Turner: When you look at the case they brought against Goldman Sachs, the investment banking firm, on the large transaction called Abacus, they had a grand total of about four attorneys to work on that case. On the flip side, on the Goldman case, they would have had dozens backing up the defense. So, it's almost like a David versus Goliath type battle.

The other thing, though, that also enters into it is there's a tremendous revolving door between the attorneys at the SEC and the law firms who defend these people and people at the SEC know that ultimately they'd like to get a job in one of those firms. So, at times, it's been demonstrated that they're reluctant, really, to take on and go very aggressively against those firms.

There is little to add to Turner's succinct summary of the state of regulatory corruption in the Imperial Capital. Yves Smith agreed with Turner's assessment, noting that the means exist (Sarbanes-Oxley laws) to prosecute financial fraud, but have not been brought to bear. But surely this doesn't matter if the resources required to go after these bankers no longer exist as they once did during the Savings & Loan meltdown of the late 1980s, and the willingness to go after them doesn't exist.

David versus Goliath, except David doesn't have a slingshot or a pouch full of stones. And he doesn't want to fight the giant anyway. David wants to work for Goliath's lawyers some day. Too Big To Jail.

So it's just a lot of talk, talk, and more talk. Only those with a vested interest in our impotent political/regulatory system could possibly defend it. The rest of us are on the outside looking in. We're up shit creek without a paddle.

You do know that when past crimes are not punished, future crimes are inevitable, right?

Here's the video.

Comments

[sharonsj]

I loved the comment about public executions. The problem is that no one is being held responsible for the fraud, so it's business as usual and next time it will be even worse.

I wonder why no one who has lost everything doesn't shoot a banker instead of shooting themselves and/or their family?