Democrats and Republicans on Capitol Hill have continued to ask why the Obama administration has failed to prosecute more Wall Street executives in light of the 2008 financial crisis.
To date, only one executive of a financial institution—Kareem Serageldin—has gone to jail for participating in the mortgage-based securities mess that crippled the financial sector and helped send the economy into the worst tailspin since the Great Depression. Serageldin was a player, but not a senior one in Credit Suisse’s effort to hide the toxic mess inside the bank, according to Judge Alvin K. Hellerstein of the United States District Court in Manhattan, who sentenced him to 30 months behind bars. The only executive so far punished for the financial crisis represented just “a small piece of an overall evil climate within the bank and with many other banks,” Hellerstein said, according to ProPublica.
That lonely number stands in monumental contrast to the total of financial executives convicted two decades ago following the savings and loan crisis of the 1980s and 1990s: 102. And that has not gone over well with members of the Senate banking committee, including Democrat Elizabeth Warren of Massachusetts and Republican Richard Shelby of Alabama.
“After the savings and loans crisis, the government brought over 1,000 criminal prosecutions and got over 800 convictions,” Warren scolded during a congressional hearing attended by Federal Reserve leaders. “The main reason we publish illegal behavior is for deterrence to make sure that the next banker who’s thinking about breaking the law remembers that the guy down the hall was hauled out in handcuffs when he did that,” she said.
However, the Obama administration has instead pursued civil cases against firms, resulting in no executives facing the threat of prison.
“The message to every Wall Street banker is loud and clear: If you break the law, you are not going to jail, but you might end up with a bigger paycheck,” Warren remarked in reference to JPMorgan Chase CEO Jamie Dimon’s bonus following the settlement with the Department of Justice over crisis-related mortgages, according to the Washington Examiner.
The Justice Department has found it easier to prosecute companies rather than individuals, which takes more time and requires a different technique, according to ProPublica. Lanny Breuer, who was appointed to lead the criminal division of the Justice Department, was said to avoid taking cases to trial that he wasn’t assured of winning.
Shelby specifically took the Justice Department to task for not going after bankers.
“Something’s wrong with the Justice Department. People shouldn’t be able…to buy their way out of culpability,” he said, adding, “ultimately it seems the Justice Department is bent on money, not on justice.”