Justice in finance tamed
"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."
And then Tett (who shared a podium with TJN's John Christensen last week) notes
"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."
Why? Timing is one reason: the wheels of justice grind slowly. And also:
"because of the sheer complexity of the financial deals in the recent crisis, and the fact that these deals were often deliberately and cleverly constructed to “arbitrage” the law (ie skirt, but not break it)."
"Another big issue is the sheer number of powerful parties that typically participated in complex finance deals. Few private law firms have the resources or desire to go head to head with numerous Wall Street banks at one time. And government agencies are often short of resources too, partly because some, such as the FBI, have been forced to divert staff in recent years to terrorist financing issues."
Eva Joly the former Paris-based investigating magistrate, has noted in the past that Anglo-Saxon justice is also ill-suited to complex financial cases, because of the jury system, which requires non-specialists to understand matters of awesome complexity. Complexity which, we should add, is routinely created by companies festooning their financial affairs across multiple secrecy jurisdictions, in order to skirt the law.
Which makes this all the more depressing.