As everyone knows when you play the game of Monopoly you can buy a Get out of Jail Card. Well, in documents just released by the federal government, it appears that the Justice Department under Eric Holder and the SEC under Mary Shapiro and Elisse Walter were much more interested in shaking down Wall Street rather than placing any Wall Street executives in Jail.
It is still unknown whether executives from Wall Street who donated $297 million to the 2008 Obama presidential campaign did so to buy protection from jail terms or whether the shake down of Wall Street firms by the Justice Department and the SEC was unrelated but either way, the lack of jail terms smells bad! Regardless, we all suffered and the lesson learned is that the US taxpayer can be hurt with impunity and as long as the government can receive money no executive has to suffer for their own bad behavior!
The government released new information on 11th of March, a Friday. Did the government do that so news agencies would miss the import of the document? It is a real smoking gun when the commission investigating the meltdown found probable criminal conduct, yet the DOJ has done nothing. Why then is the news coverage so minimal? Makes me wonder….
The Financial Crisis Inquiry Commission (FCIC) documents show that the FCIC referred a handful of matters to the Justice Department for possible criminal prosecution. Basically that means the FCIC thought a crime was committed by the executives at several large banks. Surprisingly, or, if you are cynical not, no one was criminally prosecuted.
Rather, the Justice Department and the Securities and Exchange Commission (SEC) did fine Wall Street firms $110 billion. Since the executives were not spending a lot of their own money, they had no problem gouging the shareholders to pay the fines. What fines they did pay, seem ludicrously small for people earning many millions of dollars a year. The year before the crisis Gary Crittenden was compensated $19 million a year. The fine he agreed to pay was a measly $100,000.1
The FCIC’s inquiry into the SEC actions had this conclusion: The SEC’s civil settlement ignores the executives running the company and Board members responsible for overseeing it. Indeed, by naming only the CFO and the head of investor relations, the SEC appears to pin blame on those who speak a company’s line, rather than those responsible for writing it.” The FCIC further found the behavior of the executives so egregious that a recommendation was sent to the Justice Department to investigate Citigroup and other bank executives for criminal prosecution.
Eight years after the meltdown and six years after the FCIC investigation recommended that the Justice Department criminally prosecute several Wall Street Executives, none have been prosecuted for fraud and misrepresentation. However, although no Wall Street executives have been criminally prosecuted under Sarbanes-Oxley, you may be happy to know that our ever resourceful Justice Department has seen fit to prosecute individuals: a fisherman and a taxi cab driver as well as some others but none were corporate executives or Wall Street types. It is possible, that just the threat of Sarbanes-Oxley has caused the Wall Street executives to plea bargain for lesser charges allowing the government not to prosecute under Sarbanes-Oxley and only rugged fisherman and taxi drivers are willing to stand up to the Department of Justice, but I don’t think so!
Where is the outrage! Our government has sent a message that there are two criminal justice systems, one for the masses and another set of rules for banking executives. I think it is time we force all Americans to obey the law, not just those who cannot pay millions in fines!
Sources:
http://finance.yahoo.com/news/bethany-mclean-why-no-one-prosecuted-for-financial-crisis-fcic-new-documents-233806072.html
https://www.sec.gov/news/press/2010/2010-136.htm
http://www.archives.gov/press/press-releases/2016/nr16-45.html
http://www.wsj.com/articles/big-banks-paid-110-billionin-mortgage-related-fines-where-did-the-money-go-1457557442
http://www.theverge.com/2015/6/6/8741275/browser-history-law-sarbanes-oxley
https://www.opensecrets.org/pres08/contrib.php?cid=N00009638
1) An example of this attitude is the SEC’s own press release of July 29th, 2010. Between July and mid-October 2007, Citigroup represented that subprime exposure in its investment banking unit was $13 billion or less, when in fact it was more than $50 billion. Citigroup and the two executives agreed to settle the SEC’s charges. Citigroup agreed to pay a $75 million penalty. Former chief financial officer Gary Crittenden agreed to pay $100,000, and former head of investor relations Arthur Tildesley, Jr., (currently the head of cross marketing at Citigroup) agreed to pay $80,000. Citigroup stated that its investment bank’s subprime exposure was reduced to $13 billion from $24 billion at the end of 2006 — without disclosing the more than $40 billion in additional subprime exposure relating to the super senior CDO tranches and liquidity puts.
