In such a target rich environment, how on earth is it possible that Bank Fraud prosecutions are dropping? It is an outrage!



I bitched about this when George W. Bush was President, and I will continue until we get someone in the White House who understands what the RULE OF LAW actually means . . .


Security Fraud Prosecutions Down 87% Since 2000 (December 25th, 2008)

Failing to Prosecute Wall Street Fraud Is Extending Our Economic Problems (December 15th, 2010)

Bush/Obama Fraud Prosecutions Down 39% Since 2003 (May 25th, 2011)

Criminal Prosecutions for Financial Institution Fraud Continue to Fall
TRAC Reports, Inc.

Prosecutions for Bank Fraud Fall Sharply
Economix, November 15, 2011

Category: Bailouts, Legal, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

61 Responses to “Bank Fraud Prosecution Continues to Drop under Obama”

  1. AtlasRocked says:

    Like =le (That is supposed to be a thumbs up emoticon.)

  2. Expat says:

    Gingrich and Fannie/Freddie. Obama and bank fraud. Insider trading in Congress. Gambling at Rick’s!

    I am shocked! Shocked, I tell you!

    Our political system is broken. Our politicians are criminals. The two political parties are barely different despite the best efforts of the Republicans to claim that someone like Obama is left of Mao. We torture, kidnap, rape, murder, and assassinate across the globe with impunity and barely a moment’s hesitation. We consider poverty to be a choice made by weak, ignorant, and lazy freeloaders. We reward destruction at all levels from sports and movie stars with drug addictions to Wall Street psychopaths who steal billions.

    I have a solution but proposing it would probably get me detained the next time I visit the US. (Big shout out to the NSA, DHS, Echelon, Carnivore, and boys that CIA who may read this).

  3. Winston Munn says:

    From the post 9-11 Revised U.S. Constitution (President’s Book of Secrets): The Rule of Law isn’t really a rule – it’s more like a suggestion.

  4. arbitrage789 says:

    Always important to watch what Obama DOES, not what he says.

  5. paulie46 says:

    Off-topic sort of but another reference to the Big Lie by Krigman…

    The Dem’s need to hire you for messaging.

  6. MayorQuimby says:

    Restoration of the rule of law is where both sides can meet up and demand results.

  7. BennyProfane says:

    That chart should be paired with another in the same time period representing the amounts the banks spent lobbying and contributing to campaigns.

  8. crutcher says:

    I’ll say it before and I’ll say it again: It’s more than a little hypocritical of you to go after government nonfeasance when you are exactly perfectly positioned to prosecute – a law degree, reputation, and a detailed understanding of how this fraud operates. It’s because people like you give up on public service that we get the awful alternatives, and crimes go unpunished.

  9. pintelho says:

    Clearly the chart demonstrates how very little lawlessness has been going on since the birth of the new millenium.

    Either the laws have been made favorable to the law breakers…or the law enforcers have been coopted into turning a blind eye.

    Either way we have legalized corruption clearly occuring.

  10. DeDude says:

    There is one variable that is missing in this chart. How many things that used to be illegal or prosecutable are no longer illegal or cannot be prosecuted (because the burden of proof has been increased). Under Bush II the rules changed, and his supreme court made several rulings that enhanced the burden on prosecutors. That said, I agree that the Obama justice department is a disgrace in its lack of pursuit of Wall Street crime.

  11. formerlawyer says:

    @paulie46 Says:

    The Big Lie is still #5 as the most popular posting in the Business Section of the WP!

  12. tsetsaf says:

    He who has the money makes the rules. This article reminds me of a trip to Albuquerque NM. While watching the local news they led off with a story about a guy who murdered 4 people and was sentenced to 10 years in prison. Two news stories later they talked about another guy who embezzled $1M from the local casino where he worked… the judge sentenced him to hundreds of years behind bars to “set an example”. The system is broke and unfortunately it is beyond repair.

    To “crutcher” are you serious? Just look at what life in the public service gets you. If you make waves they will magically find child porn on your home computer or some woman you have never met will pop up and say you harassed her. No reasonably intelligent individual will subject their loved ones to the potential abuse that a public life creates.

  13. BusSchDean says:

    There have also been a lot of bank closing. Would bank unique data points of bank prosecutions be more correlated with amount of fraud or # of banks?

  14. [...] guess this is part of the “change” we all hoped for from Obama. But at least he is prosecuting [...]

  15. Petey Wheatstraw says:

    Obama is a corporatist, as was Bush, as will be our next President. Until we put a stop to it.

    A few quotes from Frederick Douglas:

    “Power concedes nothing without a demand. It never did and it never will.”

    “The limits of tyrants are prescribed by the endurance of those whom they oppose.”

    “Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them.”

    “Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.” (this one needs to be tweaked by replacing “where any one class is made to feel,” with “where the vast majority is made to feel . . .”)

    And just to show how much has changed since FD’s day:

    “I am a Republican, a black, dyed in the wool Republican, and I never intend to belong to any other party than the party of freedom and progress.”

  16. Cynic_FA says:

    Stay with it Barry… Absolutely disgusting that the Democrats let all the big fish from 2007/2008 walk. I agree with BennyProfane that the free pass given to Banksters is directly linked to the amount of graft (disguised as lobbying). Now the Republicans have control of the house and are taking in dirty money hand over fist.

    Some interesting numbers from the Sunlight Foundation:

    “Eight of the twelve new members chosen to take seats on the House Financial Services Committee can count the finance, insurance and real estate sector as the top contributor to their election.”

    “House Financial Services Committee Chairman Spencer Bachus, R-Ala is only 70% bought and paid for by PACS and individuals in Finance, Insurance, and Real Estate.”

    This is another reason that Too Big to Fail is also Too Big to Jail. The big boys own more politicians than the New York Mob did in the 1920′s.

  17. rd says:

    While it appears that a fair amount of illegal fraud is not being prosecuted, there is more fraud and theft that was simply made legal (e.g. “Tiny Rule Change” article).

    One of my primary goals over the past couple of decades has been to keep my finances simple with the money in places that appear to be dedicated only to servicing cutomers with no apparent routes to become comingled with a company’s own trading and assets. Assets being held by audited outside custodians is a key element of that.

  18. b_thunder says:

    Because Federal-level LE is busy coordinating with local LE how do dismantle OWS camps around the country.

    There’s no LE left to prosecute bank fraud.

  19. Marc P says:

    BR, you ask “how on earth is it possible that Bank Fraud prosecutions are dropping?”

    Well, let’s see. The SEC named a 29 year old Goldman employee as its Managing Executive of the Security and Exchange Commission’s Division of Enforcement. He was hired in October 2009. Correlate that to your graph.

  20. gman says:

    I have been told numerous times by FOX/ WSJ/CNBC and the Republican party that Obama has engaged in a “WAR ON WALLSTREET”. Who are going to believe THEM, or your lying eyes?

  21. Cynic_FA says:

    Hey DeDude, I read your response to Byron M. and I do not agree. Barry’s article starts off with the essence of Cognitive Dissonance:
    “uncomfortable tension which comes from holding two conflicting thoughts in the mind at the same time.”

    Where did you find evidence that Byron M. has two thought?

  22. dougc says:

    Wasn’t there a lot of talk about “clawbacks”, how is that proceeding?

  23. Livermore Shimervore says:

    I have an idea. Let’s elect a “Wall Street CEO type” as President. Wouldn’t you know we have one in Mitt Romney! He will be a mega bank fraud ball buster…. right.

    The Republicans and Democrats, in large part to activists on the Supreme Court bringing us disastrous rulings like Citizens United, have no become as different from each other as beige and taupe. Charcoal and gray, orange and tangerine. Both of these parties are chasing the same special interest dollars to secure re-election.

    The Wall Street types can’t stand that they can’t get the same or better treatment from Obama as they were getting with Bush but without all the public recrimination. Who doesn’t love convenience??

  24. Jojo says:

    Obama isn’t going to get good consulting gigs on Wall Street after he leaves government service if he prosecutes the hands that may feed him in the future.

    Also, I don’t recall any of the Republican candidates discussing this subject or promising to ramp up prosecutions when they are elected. Can someone follow-up with them on this question?

  25. Robespierre says:

    Well there you have it. Bankers are more honest than ever ergo no need to prosecute. Proving once again that if the bonus does not fit you must acquit!

  26. AtlasRocked says:

    @Jojo: Republicans are working the prosecutions either. Both parties appear to be full of cronies in the fiscal and business world. To some degree it is necessary, but allowing mass white collar crime is clearly unhealthy.

    Isn’t the pattern of big parties in collusion with big finance crystal clear now?

    Follow the money here folks: Big social programs need a huge HUGE revenue stream – so gov’t is in bed with the revenue suppliers: Corporations and the wealthy that pay most of the taxes and do the campaign donations. If we reduce government’s need for money, we reduce their need to be in bed with them, right?

    Isn’t every business and every person on earth cozying up to the folks that provide money to them? I don’t understand what is so hard to see here. If you want big social programs, gov’t is going to climb into bed with the revenue generators for those programs.

  27. jpmist says:

    Barry I thought you already knew why there are few prosecutions. Congress chronically underfunds agencies so they don’t have the resources to enforce regulations they’re charged with enforcing. Same thing just happened to the CFTC. . .

  28. willid3 says:

    depends on what they are categorizing as bank fraud

    is it the bank fraud that individuals do?
    or the ones the banks do?

    I am guessing its the one individuals do.
    because they don’t prosecute banksters.
    after all, congress works for them, and is invested in them

  29. rootless says:

    Or, perhaps there aren’t as many bankers anymore that could be prosecuted.

    Although one could expect an increase in the number of prosecutions in the aftermath of the financial crisis, since it is plausible that more fraud comes to light when things go bad.

  30. Gator81 says:

    Demand financial justice. With whatever voice you have, demand financial justice.

  31. JerseyCynic says:

    I think Dylan Ratigan and Greg Palast broke it wide open yesterday for everyone to see

    One of Dylan’s best yet. He gave the “mega panel” an open on one of Greg’s comments and then they both took ‘em down (actually they “figured it out” themselves — well they had to — it was so obvious) you can see Jimmy in the background trying to contain his belly laugh.

    Nicely done, Gentlemen. There’s not much more you can do now (at least I don’t think so).

    (and Karen DID look awesome — didn’t she.)

    at the end they all kind of had that awkward moment look about them. it was borderline embarrassing. almost like har, har, har, laugh it off, shake your head, whattayagonnadoaboutit


  32. JerseyCynic says:

    “The first thing we do, let’s kill all the lawyers” – it’s a lawyer joke (not)

    yes the lawyers ARE the protectors, but not of the truth

    This big pink elephant in the room MUST be dealt with.

    What are your suggestions?

  33. libarbarian says:


    An amusing title, but I don’t think the Goldman wimps – in their big, well stocked, and poorly defended houses – would like to see what a sack is really like:

    “When I had set sail thence the wind took me first to Ismarus, which is the city of the Cicons. There I sacked the town and put the people to the sword. We took their wives and also much booty, which we divided equitably amongst us, so that none might have reason to complain”


  34. Gator81 says:

    I signed the “Get Money Out” of politics petition today. That felt good. Trivial, perhaps, but good.
    Perhaps you all would consider doing so as well, if you have not yet.
    Respecting BR’s blog, I won’t post a link. Look for it, if you will.

    Demand financial justice.

  35. willid3 says:

    maybe its because the banksters laid off those that might be convicted or who knew where the bodies were buried. and for them to continue to work in fiance they have to keep their mouths shut?

  36. JohnnyVee says:

    Haven’t you heard of the Golden Rule?

    He with the gold makes the rules.

  37. ToNYC says:

    Greg Palast is a local guy, grew up near Mattituck, kicking it with the Grecian (financial) Formula.

  38. Sechel says:

    Goes back to your Wall Street vs Gov’t topic on who caused the mess.
    When the cops stop enforcing the law do you blame law enforcement or the criminals?

  39. Francois says:

    Byron M,

    Are you truly THAT fact-challenged? Must you come here and pollute our screens with Reichwing nuts talking points a la Grover Norquist and Fred Luntz?

    Follow the links Barry provided, will ya? You will learn something…if you have the intellectual honesty and ability to do so, that is!

  40. Francois says:


    Brotha Obysmal need north of a billion dollars for his re-election bid.

    Who has a billion to give him?

    The banks.

    I rest my case.

  41. Francois says:

    BTW Barry,

    This graph is a demonstration that Glenn Greenwald is dead on: there is a two-tiered justice system in America.

    And, as you indicated here:
    Failing to Prosecute Wall Street Fraud Is Extending Our Economic Problems (December 15th, 2010)

    this is NOT only a “social” problem. Mind you, I can’t fathom how economists can be so stupid as treating “social” problems as entities that have no bearing on the economy.

  42. leveut says:

    “In such a target rich environment, how on earth is it possible that Bank Fraud prosecutions are dropping?”

    What is it about “Too Big To Fail” you don’t understand?

  43. biglot says:

    Oh Bama! is one of two things: he’s either a Bilderberg plant, or, quite simply, he’s the biggest disappointment to ever sit in the White House. But what is the alternative? The shallow vanity of a weather cock like Mit Romney?

  44. victor says:

    BR: outrage it is, but do not despair, behold! here’s Johnny Cash the personification of Americana:

    There’s a man going around taking names
    And he decides who to free and who to blame
    Everybody won’t be treated all the same
    There’ll be a golden ladder reaching down
    When the Man comes around

    You can run on for a long time
    Run on for a long time
    Run on for a long time
    Sooner or later God’ll cut you down
    Sooner or later God’ll cut you down

  45. [...] Ritholtz notes: In such a target rich environment,. how on earth is it possible that Bank Fraud prosecutions are [...]

  46. Lyle says:

    A couple of points since at least the 1920s the US has not spent enough money on law enforcement to prosecute most crimes. Consider prohibition in NYC for example. Just today I heard that PA does not have the resources to go after child porn detected by computer in 10k locations in the state.
    W decided that terrorism had to be the prime objective of federal law enforcement, so what resources there were were diverted from white collar crime to terrorism investigations. For example the same skill set is needed to trace terrorist money as to go after wall street crime. The congress would rather spend money on terrorism investigations than on financial crimes.
    Actually it has always been this way the prosecutors pick some folks to make an example of in order to attempt to deter others.

  47. JerseyCynic says:

    ‎Well Lyle ….. Look no further than the war on drugs. Check out The short list
    of banks which have resolved cases of money laundering, to avoid federal prosecution (Source: U.S. Justice Dept.):

    A picture is worth a thousand words…,_ma/federal_reserve_bank_of_boston.html

    “Why do they call the Federal Reserve Bank Of Boston ‘The Washboard’ Building?” the trolley car driver asks the tour bus full of siteseers. “Ha Ha Ha — cause it looks like a washboard!!” reply the tourists. I yell out: “I thought is was because THAT’S WHERE THEY LAUNDER ALL THE MONEY” — I dared him to say that on the next tour. I wonder if he did. I want a cut of his tips…

  48. [...] Ritholtz notes: In such a target rich environment,. how on earth is it possible that Bank Fraud prosecutions are [...]

  49. [...] Ritholtz notes: In such a target rich environment,. how on earth is it possible that Bank Fraud prosecutions are [...]

  50. [...] Nonostante le vicende degli ultimi anni, negli USA il numero dei procedimenti penali per reati finanziari é in continuo calo. Secondo i dati del dipartimento di giustizia sono stati 1251 nei primi 11 mesi del 2011 in calo del 28,6 per cento rispetto a 5 anni prima, il 57 per cento meno rispetto a quelli di 10 anni fa. Le tabelle e il commento sul blog di Barry Ritholtz [...]

  51. JerseyCynic says:

    VICTOR — (don’t tell anyone…. I was just whistling ‘Pumped Up Kicks” — has a punked out johnny cash kinda feel to it “” The “man” had better come around before some of these kids do)

  52. wkevinw says:

    Thank you for this post. The whole crisis comes down to a failure of the executive branch to enforce laws. Writing new laws will have little impact if they are not enforced.

    “It’s the executive branch, stupid.”

    Thanks again.

  53. Jim67545 says:

    A year or so ago, in response to this same line of discussion I predicted that there would be relatively few prosecutions. Why? 1. A mistake is not a fraud. God knows there were wholesale mistakes made but PROVING that it rises to a FRAUD is very difficult. Some of the LEH and GS shinanigans are clear, in my opinion. Most others are not. 2. Finding the perpetrator is difficult. If put put an assortment of those who participated in the debacle together and ask who’s at fault, everyone would point to the other guy. We’ve debated incessantly about whether CRA, rating companies, MBS packagers, the Fed, borrowers themselves, etc. are at fault only to conclude that they ALL are at fault. So, who do you prosecute? Also, lots of originators (mortgage companies) are no more.

    We throw around the term “fraud” rather commonly. Do we know exactly what fraud is, or are we equating harm to someone as fraud. Barry, as an attorney perhaps a legal definition is in order.

  54. stewa43210 says:

    Does anybody believe the repubs will be any better??? Keep banging Barry! BARRY RITHOLTZ FOR PRESIDENT!

  55. victor says:

    @Jim67545: your point #1: mistake vs. fraud (crime). Now listen to Joseph Fouché, Minister of Police under Napoleon Bonaparte about the execution of Duke of Enghien: C’est pire qu’un crime, c’est une faute”,( It was worse than a crime, it was a MISTAKE). I know, typical French cynicism but applicable to our posts here.

  56. [...] prima, il 57 per cento meno rispetto a quelli di 10 anni fa. Le tabelle e il commento sul blog di Barry Ritholtz Share | Posted 17 nov 2011 in Uncategorizedby zebzar previousEUROPA: “COME [...]

  57. toddie.g says:

    Barry -

    Your next Washington Post op-ed should be exactly about this, and how Eric Holder is the 2nd worst Attorney General of all time, 2nd only to Alberto Gonzales.

    I’ve been outraged since the beginning of the Obama presidency about the feckless Obama DOJ. Eric Holder is an absolute mannequin

    Eric Holder must be fired ASAP !!!