Last year, former TARP Inspector General Neil Barofsky hammered Washington for not doing enough to prosecute executives at the banks that brought down America’s financial system and received hundreds of billions of dollars in taxpayer dollars in exchange. He called it “Too Big To Jail.”
Since that time, other people have tried to prevent Too Big To Jail from expanding. Thus far, they have been unsuccessful – for example, HSBC Global famously received a relatively small fine for massive illegal actions.
To be fair, some have tried to hold the banks accountable in other ways. Notably Senator Elizabeth Warren (D-MA) has stepped up to make sure the public is aware of what the banks have done, and the punishments they are avoiding.
More recently, Senator Warren has made news by asking the Securities & Exchange Commission (SEC), the Department of Justice (DOJ), and the Federal Reserve if they have done cost-benefit analyses of the impact of prosecutions vs. settlements with regards to economic impact. And according to Rep. Patrich McHenry (R-NC) – via The Daily Show – the DOJ has gotten no opinions from outside analysts “when making prosecutorial cases involving large financial institutions.
DOJ has long argued that jailing executives would be more harmful to the economy than fines/settlements. Given the great work the DOJ has done in other areas recently, I’m sure we the people can trust them to make the right choice here.
Over in the SEC, the structure for going after “large financial institutions” is just as bad. According to a Capitol Hill aide, “The SEC currently employs 59 economists (as classified) compared to 1,750 attorneys.” The aide pointed out this means lawyers, not economists, are making many of the decisions regarding prosecutions of bank executives and the like.
It’s been nearly five years since the Beltway and the banks colluded to rip apart America’s financial system, then adding insult to injury by bailing out the same institutions that took down the American economy with Main Street’s tax dollars. Yet no major executives have gone to jail, and no politicians or bureaucrats have been brought to task.
Too Big To Fail became official policy of Washington after TARP. It now appears Too Big To Jail is official policy as well.