Delamaide: Even Bernanke asks how bankers avoided jailDarrell Delamaide, Special for USA TODAY 8:26 p.m. EDT October 6, 2015
WASHINGTON — Soft-spoken Ben Bernanke can still make the thunder roll.
The former Federal Reserve chairman acted boldly in 2008 as the U.S. slipped into the worst financial crisis since the Great Depression and dragged the rest of the world with it.
Now he is out with his memoir about it, The Courage to Act, and was still willing to make some bold statements in a video interview over the weekend with USA TODAY's Susan Page.
When asked why no big bank executives went to jail in spite of widespread fraud leading to the crisis, Bernanke said, "It would have been my preference to have more investigation of individual action, since obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm."
The Fed is responsible for monetary policy and the prudential supervision of big banks, but as Bernanke noted is not a law-enforcement agency. The Department of Justice, which is, preferred to go after firms rather than individuals.
But a financial firm is a legal fiction, he said. "You can't put a financial firm in jail," Bernanke told Page. "There should have been more accountability at the individual level."
There you have it.
The official who many think is the second most powerful person in the country thought at the time and thinks now that there should have been investigation and prosecution of individual bank executives.
Bernanke said in plain language what President Obama, his first attorney general, Eric Holder, or his first Treasury secretary, Timothy Geithner, have been unwilling to say — bank executives should have been punished for their criminal actions.
Independent Vermont Sen. Bernie Sanders has made the lack of convictions in the wake of the crisis a theme of his campaign for the 2016 Democratic presidential nomination, and reiterated it again this week.
"It is an outrage that not one major Wall Street executive has gone to jail for causing the near collapse of the economy," Sanders said in a statement. "The failure to prosecute the crooks on Wall Street for their illegal and reckless behavior is a clear indictment of our broken criminal justice system."
It is a message that clearly resonates with large crowds Sanders is drawing to his rallies. Over the weekend, he attracted more than 20,000 to the Boston Convention Center, double as many as the 10,000 Obama drew to the Boston Common in 2007.
The Department of Justice last month belatedly corrected its misguided policy on white-collar crime with a memo to federal prosecutors to put a new priority on bringing individuals to trial.
"Corporations can only commit crimes through flesh-and-blood people," Deputy Attorney General Sally Yates, the author of the memo, said in a newspaper interview. "It's only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom."
Bill Black, a former financial regulator and prominent Wall Street critic, said the DOJ "is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed."
Black, now a professor at the University of Missouri-Kansas City, continued in a blog post: "The result was the death of accountability, of justice, and of deterrence. The result was a wave of recidivism in which elite bankers continued to defraud the public after promising to cease their crimes."
But this critic was not impressed by the DOJ's latest move, which comes conveniently after the statute of limitations has run out for frauds committed in the run-up to the 2008 crisis.
"This is the latest in the series of smokescreens that so far haven't led to any change," he told radio journalist RJ Eskow.
Black cited DOJ's failure to prosecute any individual executive at General Motors for the coverup of a faulty ignition switch implicated in at least a hundred deaths.
He also noted that Loretta Lynch, who succeeded Holder as attorney general, declined to prosecute any individuals at HSBC when she was U.S. attorney in New York despite massive evidence of illegal money laundering by the bank.
So don't hold your breath that Lynch's Justice Department will take any more forceful action on white-collar crime than it did under Holder.
Besides, as everyone from Ben Bernanke on down knows, it's too late to punish a generation of Wall Street bankers whose lesson from the financial crisis was that crime, indeed, does pay.
http://www.usatoday.com/story/money/columnist/2015/10/06/delamaide-bernanke-bankers-jail-comments/73459416/
