More than three years after the one of the worst financial crises in U.S. history, the government has been severely criticized for its failure to criminally prosecute senior executives at the Wall Street banks that helped cause the meltdown. Have the feds been soft on banking execs? Are laws on the books inadequate for holding people criminally accountable? Has the Department of Justice been too timid or too intimidated by the complexity of the potential misconduct? Or is it the case that actions of the individuals who caused the crisis were potentially reckless and immoral, but not unlawful? Does the lack of prosecutions reflect a weakness in our system of justice? Or does it demonstrate the strength of a system that has resisted the political pressure to scapegoat executives who may have committed no crimes?

A panel of senior criminal justice officials, including a former New York State Attorney General, a former United States Attorney, and the current head of the Department of Justice’s criminal division, takes on these questions and more.

Lanny Breuer, Assistant Attorney General, U.S. Department of Justice
Eliot Spitzer, Former Governor and Attorney General for the State of New York
Mary Jo White, Partner, Debevoise & Plimpton LLP; Former U.S. Attorney for the Southern District of New York
Neil Barofsky, Senior Fellow, Center on the Administration of Criminal Law; Adjunct Professor, NYU School of Law

(My question comes up at the 57:15 minute mark)

Category: Bailouts, Legal, Video

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.

24 Responses to “Did Felons Get a Free Pass in the Financial Crisis?”

  1. Greg0658 says:

    I think you missed one:
    Can the system bring down the system if it doesn’t get its way?
    I fear – as with imo many others – Yes
    not that should be an excuse – but there’s always a but

    (now I need to go – my fresh download of IE9 has my mouse/cursor on the fritz)

  2. DrSandman says:

    Yes. Next question.

  3. michael-D says:

    thats the ultimate in being blown-off. they hand your question to the person on the panel who is in the best position to speak to it who then says he’s not going to speak to the issue you raise [but thanks for playing]

  4. tonyarko says:

    Typical lawyer response. Never answered the question. Talked in circles. Brought up all kinds of excuses for complete abdication of duty by every attorney general in the US.

  5. jaytrader says:

    Hello Barry-
    What everyone is missing here is the Bear Stearns Hedge Fund Case with those two dolts. They basically lied to everyone that was above ground regarding the health of their portfolios but got away Scott Free. The prosecutors had a good case but were not able to secure any convictions because most people (Jury) just don’t understand these markets. This IMHO scared the government away from actually doing their job. If they can’t get convictions for two low level Hedge Fund Guys how in the world can they get convictions on Stan O’Neill, Lewis, Fuld, and the rest?
    Bottom line, if they wanted to prosecute fraud they can and should do it but they don’t want to because it’s really hard to convict? This is Unacceptable!

  6. biscuits says:

    Jesse on where Ritholtz gets it wrong on MF Global:


    BR: I tweeted that yesterday, and its in tomorrow’s weekend linkfest!

  7. jaytrader,

    with..”…but were not able to secure any convictions because most people (Jury) just don’t understand these markets…”

    what, in specific, are you referring to?

    what, exactly, is that People (jury) cannot understand?

  8. bear_in_mind says:

    @jaytrader: “…but they don’t want to because it’s really hard to convict.”

    You may have distilled the whole issue into that one thought. Many in the the various government agencies have said either those very words, or paraphrased them, in response to why they haven’t moved forward with criminal prosecutions.

    We ought to really think about the implications of this message – of this mindset. Our law enforcement community is telling the populace they won’t enforce the laws because it’s “hard” work to gain a conviction. The second-level message is that they might lose, so better to stand-pat than risk being wrong.

    I’m not sure if this mindset is based upon ideology, political expediency, generational norms, peer pressure, laziness or some additional unstated factors. But whatever the cause, the American justice system is signaling a capitulation of the rule of law… and that should scare the hell out of every citizen.

  9. bear_in_mind says:

    By the way, David Dayen and Jane Hamsher are currently hosting (began @ 2:00pm EST) a live chat with Professor Bill Black about the mortgage fraud scandal at FireDogLake.

    One of Professor Black’s first comments is:

    “The rush to conclude the settlement and to hype the settlement demonstrates that what we are suffering from is a political exercise rather than a serious criminal investigation. The efforts of the administration, e.g., to announce the deal by the State of the Union address and to invite favored AGs to sit with the First Lady during the SOTU are sad and destructive.”

    Check it out for yourself here:

  10. bear_in_mind says:

    Another comment from Professor Black (February 17th, 2012 at 11:14 am):

    “FIRREA extended the statue of limitations so we still have time to go after the most egregious mortgage origination fraud if President Obama fires Holder, Breuer, Geithner, and Donovan (HUD) and appoints real banking regulators to make the criminal referrals that are essential to produce successful prosecutions of the elite bankers. The President’s new working group doesn’t even include the banking regulatory agencies — one of several reasons that it is obviously more smoke and mirrors.”

  11. DuchessGateau says:

    Lanny Breuer’s answer to BR’s question was such complete and utter bs that I’m astounded by Barry’s self-control. And impressed. How could you let him get away with that? It’s outrageous. He’s a public official blatantly looking the other way when large financial institutions commit criminal acts. He has made it as obvious as he can that the justice department will not prosecute Wall St for robo-signing crimes. It is the go-ahead to commit more crime.

    Great phrasing of the question. You made it clear that many pre-meditated crimes needed to take place on a grand scale in order for robo-signing and MERS to be accepted by the entire banking, investment, and real estate industry.

    If they refuse to prosecute robo-signing piecemeal, what grand plan does the administration have? Aren’t many mortgages still recorded in MERS and only MERS? Isn’t this an ongoing trainwreck? They are waiting for orders from Wall St, but Wall St is hiding this on the same shelf with discarded accounting standards and mark-to-market valuation.

  12. screech says:

    Watching that almost gave me a stroke. Jesus, it’s no wonder nothing has been done with Breuer worrying about the visceral-ness of his prosecutions. After his blow off of BR, implicit in his response to the next question is money buys justice under this system. What a fucking tragedy.

    Side note: Can we all agree that task-force is synonymous with boondoggle, clusterfuck, etc.? It’s like the beginning of a bad joke, “How many prosecutors does it take to make a successful prosecution of a financial crime?’ Answer. You’ll never get there because there is a giant Assymptote in the way (Breuer, Holder, Obama, Congress, Money, . . .), and as the number of lawyers approaches infinity, successful prosecution never converges.

  13. screech says:

    I almost forgot, was anyone else expecting BR to ask Mary Jo, “What exactly was wrong with the result of Arthur Anderson and how the government got that wrong?”

  14. OscarWildeDog says:

    Geewhillikers! – lots of questions posed. And peeps are talkin’, talkin’, talkin’ all de liblong day, yassuh! I ‘spose if I gets me a Series 7 and start sellin’ derivatives of futures of lemon milk grenades, then repackage them in tranches of muh own choosin’, sell ‘em to my friends while I buy ‘em (secretly) for muhsef, I ain’t done nuttin’ wrong, no SUH!

  15. off_leash says:

    I guess you can tell who is used to getting paid by the hour.

  16. emaij says:

    Bill Black’s name must have come up as a possible panelist. Do you know if he was asked?

  17. Leeskyblue says:

    I am not surprised to see Lanny Breuer and any other Obama administration official talk in circles. What can we expect of Elizabeth Warren, if elected? She has a good background but keeps maintaining how beholden she is to Obama.

    There is still a larger untold story of why several higher minded people in state AG offices felt obliged to fold for so little. The panelists maintained in their defense that they couldn’t go higher than low level people.
    I thought that the way you prosecute high level fraud was to pressure the low level people who, granted, are mere flunkies, to turn state’s evidence against superiors who put them up to it.

  18. V says:

    Did I just detect the old “we are prosecuting, we’re maybe just not doing a good enough job of explaining it” ???

  19. jaytrader says:

    @Mark e Hoffer
    What I meant was that there was so much evidence of their (BSAM HF) guilt, that it almost was too much of a slam dunk. Just read all of the evidence against them. What I believe happened was the defense made the trial about complexity and not about actual guilt/innocence. The closing arguments and instructions to the jury were so confusing to the jury that they didn’t know if they were coming or going. Now take this to trying to put these thieves behind prison…How many Americans know about CDS? CDO? Synthetics? ABX? Repo Markets? The Government has their work cut out for themselves and simply doesn’t want to do the extra work needed for convictions. It’s basic intellectual laziness on part by the Justice Department, add in some crony capitalism/socialism, and lobbying….What do you get?

  20. dougg says:

    Geez Barry, Breuer really gave us a bit of a tell in his answer to you. This idea that the statute of limitations is not important, or that they have had successes that go unreported is complete nonsense. The collegial deference; one to another, is one way to describe an adversarial system that is myth, like an electoral system that boasts choice. Those who ignore history are doomed to repeat it. When the French ignored their 99% , the bloodletting affected 5% of the French population before it stopped. After the next American Revolution, the courts will be conducted on YouTube and Facebook. with the “like” button forming a national jury. There will be no room for apologists.

  21. Greg0658 says:

    “After the next American Revolution” .. with respect to the sentiment – I don’t believe “courts will be conducted on YouTube and Facebook” .. imo the network/system will be offline except for the MIC.

    But typing / pause’g before the submit – I see whats happening in the MidEast .. so it matters who controls the radiowave towers and charges the grid.

    5% for nothing
    yes its Yes

  22. Defining Quality says:

    Bill Black is THE EXPERT – he is being ignored by the Plutocracy!
    The criminal fraud was so prevasive that it became the DEFINING QUALITY of our entire culture, and the Plutocracy looked the other way, as sooooo much more money was stolen through accounting fraud than ever before in history. The fraud was securitized and then sold, all insured by WE THE PEOPLE, as the criminals simply walked away!

  23. alnval says:

    How many of you would like to work for a guy like Ass’t AG Lanny Breuer whose first response to an obviously informed member of the public was to react to the question with a disparaging ad hominem comment?

    Seeing this inappropriate behavior I have no doubt that he would do exactly the same thing with anyone he believed he could bully or intimidate. I can’t see Breuer allowing his staff to be anything but subservient to his own point of view. A political animal if I ever saw one. No wonder they hadn’t been chasing the big guys.