Rumblings of Bankster Accountability
I don’t disagree with Adam Levitin at all about the foreclosure crisis and the deliberate backing away from any accountability for the banks. Clearly this accountability crisis is at the forefront of not only our financial meltdown and our economic malaise, but a host of other matters including civil liberties in particular.
However, without concluding that a corner has been turned or that a new era has come to Washington, let me relate a few disparate items here for you. First:
The Federal Deposit Insurance Corp (FDIC) is conducting about 50 criminal investigations at U.S. banks that have failed since the start of the financial crisis, the Wall Street Journal said.
The FDIC, which is responsible for dealing with bank failures, is probing former executives, directors and employees at failed U.S. banks and is taking efforts to punish alleged recklessness, fraud and other criminal behavior, the Journal said.
My understanding is this is mostly about failed bank executives stealing on their way out the door.
Federal agents arrested two former employees of Bernard L. Madoff on Thursday morning, a spokesman for the Federal Bureau of Investigation told DealBook.
Annette Bongiorno was arrested at her home in Boca Raton, Fla., and Joann Crupi was arrested at her residence in Westfield, N.J., the spokesman said. Both women worked for Mr. Madoff for more than 25 years. Ms. Bongiorno served as Mr. Madoff’s longtime personal secretary; Ms. Crupi, among other responsibilities, handled the company’s daily cash balances.
Charges against the two are expected to be unsealed later on Thursday.The Securities and Exchange Commission also sued the two.
The Madoff case is the only one where federal prosecutors have not been reluctant to seek criminal charges and jail time.
Then there’s this:
The SEC is all over the news today. It’s investigating Citigroup! It’s examining Charles Schwab, over the YieldPlus fiasco which we thought was settled but wasn’t! And, of course, in conjunction with Andrew Cuomo, it’s coming down on Steve Rattner like a ton of bricks […]
Technically it’s Cuomo who’s bringing the suits, while the SEC is announcing a $6.2 million civil settlement with Rattner, timed beautifully to coincide with the first day of trading in GM shares. But what seems clear is that the SEC, egged on by the likes of Cuomo and emboldened by its success in extracting half a billion dollars from Goldman Sachs over the Abacus affair, has started to grow some teeth for the first time in living memory.
Growing teeth is of course relative. The Abacus settlement didn’t force Goldman Sachs to admit any wrongdoing, for example.
As I said, I don’t any of this, alone or in total, adds up to a new era of accountability for the banksters. I think it shows a way they could be held accountable, however. If the FDIC cracked down on all the executives at the banks they supervise, if the SEC worked with the FBI more often on criminal proceedings, if the SEC fulfilled its mandate completely, and if regulators enforced the law along a whole host of other agencies, you could see how the financial industry would have to reform their ways. That day hasn’t arrived, but the blueprint is there.
Hopefully, when the Financial Crisis Inquiry Commission releases their report, it will be so devastating that the regulators will continue with more than baby steps toward real action.