Authorities’ strategy for holding bankers and Wall Street firms accountable for their role in the financial crisis is a bit misguided, according to Michael Lewis.
The famed author, known for his chronicles of the financial industry in books like Liar’s Poker and the Big Short, called authorities’ response to the financial crisis “bizarre,” in a Friday Q&A with Vanity Fair.
“The judicial response to the financial crisis, especially the criminal and legal response, has been bizarre,” Lewis told the magazine. “Insider trading, theft of property from a corporation, these are easier for them to take on and wrap their minds around than what was actually the center of the financial crisis.”
The interview comes days after Vanity Fair published a piece by Lewis profiling Sergey Aleynikov, an ex-Goldman Sachs computer programmer sentenced to eight years in prison for stealing a piece of computer code from the bank. In the interview with the magazine, Lewis makes the argument -- articulated by other Wall Street critics -- that instead of focusing on the high-level executives and big banks at the heart of the crisis, authorities have focused on “peripheral” characters like Aleynikov in an aim to make it seem like they’re going after the financial industry without having to actually confront major players.
There’s other news in recent days that adds credibility to Lewis’ argument. Ex-Goldman trader, Fabrice Tourre, aka “Fabulous fab,” was found liable of misleading investors on a toxic mortgage deal created by Goldman in the lead up to the financial crisis. The case, which was probably the highest-profile effort by the Securities and Exchange Commission to hold a banker accountable for their role in the meltdown, targeted someone who was just a mid-level employee of the firm.
Meanwhile, no senior Wall Street executives have faced criminal prosecution for their role in the crisis and big banks have largely avoided harsh punishment for their alleged role in the crisis through settlements with authorities.
The result, according to Dennis Kelleher, CEO of Better Markets, a nonprofit committed to Wall Street reform: An environment that targets the “minnows” of financial crime while “ letting the whales of Wall Street go free.”