Former Fed Chair Bernanke Says Bankers Should Have Been Jailed For ’08 Crash
Former Federal Reserve Chairman Ben Bernanke, who engaged in his own questionable conduct while head of the Fed, has now said that individuals should have gone to jail for engaging in the financial crimes that led to the 2008 financial crisis.
Bernanke’s statement came last week during a book promotion tour for his memoir just as the statute of limitations for prosecuting those financial crimes runs out this year. In other words, the claim may help sell his book, ironically titled “The Courage to Act,” but is irrelevant to the pursuit of justice given how long Bernanke waited to offer his testimony.
The former Fed chair told USA Today, “It would have been my preference to have more investigations of individual actions because obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm.” Bernanke did not name any specific individuals he thought should have been prosecuted, though given how intimately familiar he was with the inner-workings of the firms at the center of the 2008 financial crisis, he likely could have.
All the major Wall Street financial firms nicknamed Too Big To Fail banks – Bank of America, JPMorgan, Citigroup, Wells Fargo, Goldman Sachs – have paid out settlements for illegal conduct in the mortgage security market that caused the 2008 financial crisis. No individual executives have gone to jail or even faced prosecution for that conduct.
The evidence for criminal conduct by individuals at Wall Street firms has often been overwhelming, with the most extreme example being the case of Alayne Fleischmann, a compliance officer at JPMorgan who offered eye witness expert testimony on JPMorgan knowingly selling fraudulent mortgage securities before the crash. The testimony led to no criminal prosecutions.
Though Mr. Bernanke is now telling members of the press he believes in prosecuting individuals for corporate misdeeds, he apparently offered no such view during his tenure as Fed Chairman – either during the crisis or in the immediate aftermath. By all accounts Bernanke went along with the prevailing position at the Department of Justice that the firms were Too Big To Jail, and that prosecutions could re-collapse the financial system.
The Too Big To Jail policy was formulated and promoted by both former Attorney General Eric Holder and former head of DOJ’s Criminal Division Lanny Breuer, neither of whom are economists or bankers. Was then-Federal Reserve Chairman Bernanke never consulted on this policy? If he was, did he object at the time?
Given we are now in the stage of writing the history of the 2008 financial crisis, it might be time for Bernanke and other former government officials to justify their self-serving narratives. Otherwise, a false history will predominate and few will learn any lessons from the crash of 2008 and, subsequently, fail to stop the next one.