This editorial appeared in the St. Louis Post-Dispatch Tuesday:
No less an authority than Bruce Springsteen has noted that there's never been a criminal prosecution against, much less a conviction of, anyone at a major investment bank involved in the 2008 financial collapse. The last stanza of "Death to my Hometown" goes:
Send the robber barons straight to hell.
The greedy thieves who came around
And ate the flesh of everything they found.
Whose crimes have gone unpunished now,
Who walk the streets as free men now.
Last week, in announcing the appointment of Mary Jo White to head the Securities and Exchange Commission, President Obama suggested that things will be different. Ticking off a list of steps the administration has taken to reform the financial system, Obama said, "But it's not enough to change the law. We also need cops on the beat to enforce the law."
He went on to say, "You don't want to mess with Mary Jo."
As U.S. attorney for the Southern District of New York during the Clinton years, White, 65, headed prosecutions of the late mob boss John Gotti and the terrorists responsible for the 1993 World Trade Center bombing. She has spent the last 10 years as a highly paid corporate litigator at Debevoise & Plimpton in New York, whose list of clients includes JPMorgan Chase, Deutsche Bank, Goldman Sachs and AIG.
White may be as tough as a boot. She may set an aggressive tone. But if she recuses herself from cases involving any of her old law firm's clients, those cases will be decided by the other four commissioners on the SEC. Two are Democrats and two are Republicans. More gridlock.
The SEC was asleep at the switch when the economy cratered during the mortgage credit crisis of 2008. Its chairman then was former U.S. Rep. Christopher Cox, a California Republican of the self-regulating-markets school.
The SEC was rebuilt over the last four years under Mary A. Schapiro, a technocrat who restored some credibility to the agency. Since 2010, the agency has brought 129 civil cases against individuals and firms involved in the financial crisis; it won a $500 million fraud settlement against Goldman Sachs.
Throughout the government, firms were charged, and some small mortgage company cheats went to jail. The U.S. attorney in New York won a criminal conviction against a hedge fund operator in an insider-trading case and brought a billion-dollar lawsuit against Bank of America. State attorneys general won a huge settlement with mortgage lenders.
But the people responsible for packaging subprime mortgages into securities and selling them as AAA-rated bonds and then sometimes betting against the very securities they sold? None has gone to jail, even as millions of Americans lost their homes.
They were too big to fail. And now they're too big to jail.
In many instances the SEC and other government regulators are simply outgunned by the expensive lawyers Wall Street banksters can hire. Additionally in 2010, Congress passed the Dodd-Frank financial reform act. Later that year, Republicans took control of the House and consistently have tried to gut the reforms, including cutting regulatory budgets.
The federal statute of limitations for most financial crimes is 10 years. If there's a will, there's still plenty of time to bring some banksters to justice.