U.S. Judge Asks: Why Haven’t The Financial Executives Been Prosecuted?
Why not, indeed? Could it be the huge political donations made by the very executives who could be prosecuted? Obama and his appointees can’t blame Bush for failing to prosecute these individuals. The responsibility lies on their shoulders. They are protecting the Fat Cats, plain and simple. JP Morgan Chase, Citigroup, Wells Fargo Bank of America have all settled consent decrees with the SEC and Justice Department, but not one individual was prosecuted. It is nice to see at least one judge speak out about this travesty. – Shorty Dawkins, Associate Editor
This article comes from the LATimes.com
by Michael Hiltzik
As the five-year statute of limitations approaches for the wrongdoing that bequeathed us the Great Recession, the question of why no high-level executives have been prosecuted becomes more urgent.
You won’t find a better, more incisive discussion of the question than the one by U.S. District Judge Jed Rakoff of New York in the current issue of the New York Review of Books.
Rakoff, 70, is the right person to raise the issue. He’s a former federal prosecutor in Manhattan, where he handled business and securities fraud. A Clinton appointee, he’s been on the bench for more than 17 years.
It’s unsurprising to find Rakoff emerging as a critic of the government’s hands-off treatment of Wall Street and banking big shots in the aftermath of the financial crisis: He’s never shown much patience for the settlements in which the Department of Justice and the Securities and Exchange Commission allow corporations and executives to wriggle out of cases by paying nominal penalties and promising not to be bad in the future. These are known as “consent decrees.”
In 2009, he tossed a $33-million SEC settlement of a white-collar case with Bank of America, calling it “a contrivance designed to provide the S.E.C. with the facade of enforcement and the management of the Bank with a quick resolution of an embarrassing inquiry.” The parties later agreed to a higher fine and stricter terms. And in 2011 he rejected a $285-million consent decree Citigroup entered with the SEC. That rejection is still being pondered by a federal appeals court.
In his new essay, Rakoff takes particular aim at the government’s habit of prosecuting corporations, but not their executives — a trend we railed against earlier this year.
“Companies do not commit crimes,” Rakoff observes; “only their agents do…So why not prosecute the agent who actually committed the crime?” He’s witheringly skeptical of prosecutions of corporations, which usually yield some nominal fines and an agreement that the company set up an internal “compliance” department. “The future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing.”