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Why Corrupt Bankers Avoid Jail

Posted on August 7th, 2017 at 2:51 by Sueyourdeveloper in category: News -- Write a comment

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In the years since the mortgage crisis of 2008, it has become common to observe that certain financial institutions and other large corporations may be “too big to jail.” The Financial Crisis Inquiry Commission, which investigated the causes of the meltdown, concluded that the mortgage-lending industry was rife with “predatory and fraudulent practices.” In 2011, Ray Brescia, a professor at Albany Law School who had studied foreclosure procedures, told Reuters, “I think it’s difficult to find a fraud of this size . . . in U.S. history.” Yet federal prosecutors filed no criminal indictments against major banks or senior bankers related to the mortgage crisis. Even when the authorities uncovered less esoteric, easier-to-prosecute crimes—such as those committed by HSBC—they routinely declined to press charges.

This regime, in which corporate executives have essentially been granted immunity, is relatively new. After the savings-and-loan crisis of the nineteen-eighties, prosecutors convicted nearly nine hundred people, and the chief executives of several banks went to jail…

Something has changed in the past decade, however, and federal prosecutions of white-collar crime are now at a twenty-year low. As Jesse Eisinger, a reporter for ProPublica, explains in a new book, “The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives” (Simon & Schuster), a financial crisis has traditionally been followed by a legal crackdown, because a market contraction reveals all the wishful accounting and outright fraud that were hidden when the going was good.

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