America has not jailed its bankers

[Houyhnhnm]

In every debate about the fallout from the crash it is held as a truism that Irish society is lacking by comparison to the US due to our failure to prosecute and jail criminal bankers. However this belief that America has been successful in carrying out wide-scale prosecutions of its bankers is illusory, in fact the US has jailed but a handful of bankers for their frauds that caused the collapse.

Above all, Bernie Madoff is cited as an example of the capacity of the American criminal justice system to prosecute complex financial fraud successfully, but the Madoff case is the exception that proves the rule that bankers don't get prosecuted. The fact that his crime was a classic Ponzi scheme, that he was turned in by his son, and that he pled guilty from the start made the investigation simple. Besides Madoff, those investigations that have resulted in jail—such as the prosecution of traders and hedge fund managers in Bear Stearns for their involvement in the Galleon insider trading case—have not gone beyond the shop floor level, nor are they likely to.

Much of the perception that America has jailed its bankers stems from the historic record of American prosecutors to pursue corporate criminals for offences such as fraud, but this is no longer happening. In the period 1989-1993 about 1,000 bankers were prosecuted for their role in the savings and loans scandal. The massive FBI investigation that followed that event (which had a number of parallels with the 2007 crash, albeit on a much smaller scale) saw over 90 percent of those charged convicted and jailed. Other spectacular frauds such as the Bank of Credit and Commerce International collapse, the Ivan Boesky insider trading case and the Enron bankruptcy resulted in the top executives in those companies sentenced to lengthy prison terms.

However the deregulation of Wall Street under Clinton and Bush saw the dismantling of much of the investigatory teams that completed those investigations, and a refocusing from investigating fraud in the financial services sector to terrorist financing and money laundering. In the same period the globalisation of financial services means that most frauds are ran via offices outside the US which complicates all investigations. All of this has led to an erosion in the capacity of detectives to investigate these frauds and the capability of prosecutors to carry out lengthy and complex investigations into the culpability of board members in the banks for the actions of their company. Nor is there any great political will to investigate. Obama is not driving the investigations forward, resulting in harsh criticism, particularly from the left (one of the main demands of the Occupy Wall Street movement is for more prosecutions) for his perceived obsequiousness to the banks.

Therefore the Irish experience is not unique, and we should not be looking to America for cues as to how best to see the the top bankers who stole millions answer for their crimes.

[Sister Mercedes]

But this $7 billion hedge fund manager was sent to prison for 11 years for insider trading in the US. A bit different from the treatment of those involved in insider trading in Ireland. Not to mention that a whole slew of Irish Ponzi Scheme operators and embezzling solicitors are still walking the streets.

[Sister Mercedes]

Charles Ferguson made the same point as the OP when he won the Best Documentary Oscar for "Inside Job".

Charles Ferguson's Oscar Speech Rips Wall Street: 'Inside Job' Director Levels Criticism During Acceptance

[Snackwafer]

Excellent OP. This cannot be emphasised enough. Some of these guys which have been justifiably arrested and convicted are boy scouts compared to the crowd that have been responsible for the major collapses.

In the 1930's the Pecora Investigations were held. This very public investigation into perpetrators of the banking crash of 1929 was, although flawed and perhaps with a largely symbolic outcome, very important for the public mandate and momentum for the huge legislative reform necessary to rain in a runaway financial system.

The Pecora hearings were held three years after the 1929. Although I recognise that the Garda Bureau of Fraud Investigation and the DPP need time, any postponement of even some closure in the form of convictions will, I believe, leave a vacuum to be filled with reactionary and undesirable manifestations of anger. In this case it is wise to look to the US to see what these may be.

[Houyhnhnm]

Inside Job is an excellent documentary.

[Tawdy]

In every debate about the fallout from the crash it is held as a truism that Irish society is lacking by comparison to the US due to our failure to prosecute and jail criminal bankers. However this belief that America has been successful in carrying out wide-scale prosecutions of its bankers is illusory, in fact the US has jailed but a handful of bankers for their frauds that caused the collapse.

Above all, Bernie Madoff is cited as an example of the capacity of the American criminal justice system to prosecute complex financial fraud successfully, but the Madoff case is the exception that proves the rule that bankers don't get prosecuted. The fact that his crime was a classic Ponzi scheme, that he was turned in by his son, and that he pled guilty from the start made the investigation simple. Besides Madoff, those investigations that have resulted in jail—such as the prosecution of traders and hedge fund managers in Bear Stearns for their involvement in the Galleon insider trading case—have not gone beyond the shop floor level, nor are they likely to.

Much of the perception that America has jailed its bankers stems from the historic record of American prosecutors to pursue corporate criminals for offences such as fraud, but this is no longer happening. In the period 1989-1993 about 1,000 bankers were prosecuted for their role in the savings and loans scandal. The massive FBI investigation that followed that event (which had a number of parallels with the 2007 crash, albeit on a much smaller scale) saw over 90 percent of those charged convicted and jailed. Other spectacular frauds such as the Bank of Credit and Commerce International collapse, the Ivan Boesky insider trading case and the Enron bankruptcy resulted in the top executives in those companies sentenced to lengthy prison terms.

However the deregulation of Wall Street under Clinton and Bush saw the dismantling of much of the investigatory teams that completed those investigations, and a refocusing from investigating fraud in the financial services sector to terrorist financing and money laundering. In the same period the globalisation of financial services means that most frauds are ran via offices outside the US which complicates all investigations. All of this has led to an erosion in the capacity of detectives to investigate these frauds and the capability of prosecutors to carry out lengthy and complex investigations into the culpability of board members in the banks for the actions of their company. Nor is there any great political will to investigate. Obama is not driving the investigations forward, resulting in harsh criticism, particularly from the left (one of the main demands of the Occupy Wall Street movement is for more prosecutions) for his perceived obsequiousness to the banks.

Therefore the Irish experience is not unique, and we should not be looking to America for cues as to how best to see the the top bankers who stole millions answer for their crimes.

Actually you will find that all the top bankers who were responsible for the banking collapse are now working for obama, as financial advisers.

[Ribeye]

Erm, the term "them and us" applies equally to the corrupt elites in the US aswell as Ireland,

I see that this thread is parked in the Justice forum, I would like to point out that the word Justice is spelt incorrectly, the correct spelling is "Just Us", as that's who the law applies to, just us, not them!

[Houyhnhnm]

Actually you will find that all the top bankers who were responsible for the banking collapse are now working for obama, as financial advisers.

With respect, that's claptrap.

[Spanner Island]

I think some people thought because the Yanks allowed Lehman's to go bust and because they speedily prosecuted the ponzi scheme king Bernie Madoff that the US was coming down like a tonne of bricks on the bankers etc.

They didn't though. Not really.

If they had there wouldn't have been any need, any appetite or any support for Occupy Wall Street.

[mr_anderson]

It wasn't always this way ...



Where Are The Handcuffs Now? During S&L Crisis, Thousands Of Bankers Went To Jail

How many financiers do you think ended up in jail after America's Savings and Loans scandals? The answer can be found in a fascinating, old report from the US Department of Justice*.
According to some of its records, between 1990 and 1995 no less than 1,852 S&L officials were prosecuted, and 1,072 placed behind bars. Another 2,558 bankers were also jailed, often for offenses which were S&L-linked too.

Those are thought-provoking numbers. These days the Western world is reeling from another massive financial crisis, that eclipses the S&L debacle in terms of wealth destruction.
Yet, thus far, very few prison terms have been handed out. For sure, there have been a few high-profile dramas. Bernie Madoff is one, obvious, example.

But one reason why the Madoff drama has grabbed so much attention and already sparked a slew of books this month, is precisely because there are precious few other financiers behind bars, or facing momentous fines. Compared to the S&L days, the level of retribution so far seems almost non existent.

InfoViewer: Insight: A matter of retribution