The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?

[Scuba]

http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years. Indeed, it would stand in striking contrast to the increased success that federal prosecutors have had over the past fifty years or so in bringing to justice even the highest-level figures who orchestrated mammoth frauds. Thus, in the 1970s, in the aftermath of the “junk bond” bubble that, in many ways, was a precursor of the more recent bubble in mortgage-backed securities, the progenitors of the fraud were all successfully prosecuted, right up to Michael Milken.

Again, in the 1980s, the so-called savings-and-loan crisis, which again had some eerie parallels to more recent events, resulted in the successful criminal prosecution of more than eight hundred individuals, right up to Charles Keating. And again, the widespread accounting frauds of the 1990s, most vividly represented by Enron and WorldCom, led directly to the successful prosecution of such previously respected CEOs as Jeffrey Skilling and Bernie Ebbers.

In striking contrast with these past prosecutions, not a single high-level executive has been successfully prosecuted in connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears likely that none will be. It may not be too soon, therefore, to ask why.

...

One possibility, already mentioned, is that no fraud was committed. This possibility should not be discounted. Every case is different, and I, for one, have no opinion about whether criminal fraud was committed in any given instance. But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior.

[djean111]

1. Because the legal system, the people who adminster the legal system,

and almost all politicians have been purchased. Dogs usually do not turn on their owners. If they do, they are put down.

[jsr]

2. The executives would have been executed in China

They wouldn't survive 2 years, tops.

[Enthusiast]

3. Several years in prison should do the trick for these coddled thieves.

[Octafish]

4. Weird, huh.

The Incredible Con the Banksters Pulled on the FBI

By William K. Black, J.D., Ph.D.
OpEdNews Op Eds 8/18/2013 at 09:33:47

EXCERPT...

(M)any economists still seem not to understand that a combination of circumstances in the 1980s made it very easy to loot a financial institution with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution? (1993: 4-5).

In criminology jargon, the death of criminal referrals has created an intensely criminogenic environment which creates incentives so perverse that accounting control fraud can become epidemic.

The central puzzle is how the largest epidemics of elite white-collar crime in history, frauds that drove the ongoing financial crisis and made the Wall Street banksters wealthy beyond their most avaricious dreams, resulted in not a single conviction of those elite frauds. The FBI report allows us to figure out some of the key missing puzzle pieces that explain this tragic mystery.

This article (and the next) focus on the brilliant con that the mortgage lending industry was able to pull on the FBI because the banking regulatory agencies and the SEC failed to provide the FBI with the expertise and investigative findings of fraud essential for the FBI and the Department of Justice (DOJ) prosecutors to succeed in investigating and prosecuting the officers controlling complex frauds. Three key facts are essential for the public to understand the FBI's total dependence on criminal referrals from the banking regulatory agencies. First, "control frauds" cause greater financial losses than all other forms of property crime -- combined. "Accounting control frauds" must gut their underwriting process and internal controls in order to make massive amounts of bad loans. That is equivalent to hanging a sign on the front door inviting thieves to rob the bank with impunity.

SNIP...

So we return to the question this column addresses -- how could the DOJ make zero criminal prosecutions of the elite banksters that caused this crisis through the twin epidemics of accounting control fraud by lenders (appraisal fraud and fraudulent "liar's" loans)? The FBI Report shows (indirectly) that the answer is an exceptionally effective con run by the mortgage industry on the FBI. The con could have never succeeded had the banking regulators not ceased making criminal referrals and providing their expertise to the FBI and DOJ on accounting control fraud schemes. The OTS was supposed to regulate Countrywide, Washington Mutual (WaMu), and IndyMac -- three of the most notorious fraudulent lenders in the world. The OTS made zero criminal referrals in this crisis -- which was over 70 times worse than the S&L debacle in terms of losses and fraud.

CONTINUED...

http://www.opednews.com/articles/The-Incredible-Con-the-Ban-by-William-K-Black--130818-359.html

In a world where the banksters get away with ripping off trillions, is it any wonder the Department of Justice focuses on stopping the warmongers who lied America into war? Oh. Wait a minute!

[Jefferson23]

5. I love that guy.

ahem: The OTS made zero criminal referrals in this crisis -- which was over 70 times worse than the S&L debacle in terms of losses and fraud.


No need to hold your breath, waiting.

[marmar]

6. To paraphrase Dick Durbin: They run the place.

[jazzimov]

7. Why Have No High-Level Executives Been Prosecuted?

Because they all have a bad case of Affluenza.