Holder’s memo asserted that “collateral consequences” from prosecutions-including corporate instability or collapse-should be taken into account when deciding whether to prosecute a big financial institution. The Justice Department’s ethos regarding Wall Street, and the way the department went about its business, appear to be a large part of the story.Īny narrative of how we got to this point has to start with the so-called Holder Doctrine, a June 1999 memorandum written by the then–deputy attorney general warning of the dangers of prosecuting big banks-a variant of the “too big to fail” argument that has since become so familiar.
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But even so, in light of various whistle-blower allegations-and the size of the settlements agreed to by the banks themselves-this explanation strains credulity. And to be sure, much of the behavior that led to the crisis involved recklessness and poor judgment, not fraud. It’s possible that Bharara is correct about that: Wall Street bankers make it their daily business to figure out ways to abide by the letter of the law while violating its spirit. The evidence, he said, does not show clear misconduct by individuals. attorney for the Southern District of New York, made a similar argument to me. “The inability to make them, at least to this point, has not been as a result of a lack of effort.” Preet Bharara, the U.S. “These are the kinds of cases that people come to the Justice Department to make,” he said. (Kareem Serageldin, a senior trader at Credit Suisse, is serving a 30-month sentence for inflating the value of mortgage bonds in his trading portfolio, allowing them to appear more valuable than they really were.) By way of contrast, following the savings-and-loan crisis of the 1980s, more than 1,000 bankers of all stripes were jailed for their transgressions.Īt an event at the National Press Club last February, Holder said the virtual absence of convictions (or even prosecutions) this time around did not result from a want of trying. The more meaningful number is how many Wall Street executives have gone to jail for playing a part in the crisis. After the savings-and-loan crisis of the 1980s, more than 1,000 bankers were jailed. (Settlements were levied on corporations, not specific employees, and paid out as corporate expenses-in some cases, tax-deductible ones.) In early 2014, just weeks after Jamie Dimon, the CEO of JPMorgan Chase, settled out of court with the Justice Department, the bank’s board of directors gave him a 74 percent raise, bringing his salary to $20 million. That may seem like a big number, but the money has come from shareholders, not individual bankers.
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Since 2009, 49 financial institutions have paid various government entities and private plaintiffs nearly $190 billion in fines and settlements, according to an analysis by the investment bank Keefe, Bruyette & Woods. It seems an apt time to ask: In the biggest picture, what justice has been achieved? But the legal window for punishing Wall Street bankers for fraudulent actions that contributed to the 2008 crash has just about closed. How we arrived at a place where Wall Street misdeeds go virtually unpunished while soccer executives in Switzerland get arrested is murky at best. Lynch and her predecessor, Eric Holder, appear to have turned the page on a more relevant vein of wrongdoing: the profligate and dishonest behavior of Wall Street bankers, traders, and executives in the years leading up to the 2008 financial crisis. Lost in the hoopla surrounding the event was a depressing fact. “Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice.”
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“The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States,” she said. She was passionate about their wrongdoing. attorney general, Loretta Lynch unsealed a 47-count indictment against nine FIFA officials and another five corporate executives. O n May 27, in her first major prosecutorial act as the new U.S.