The readers of my commentaries know how incensed I am that no CEO of a major corporation or major figure in the banking industry who is alleged to have contributed to the Great Recession has been pursued criminally. All of us have read and heard the phrase, "Too big to fail." I have suggested an add-on: "Too big to jail." For all of the chest puffing by the U.S. government, no one I know of connected with the Great Recession of 2008 has been pursued criminally and gone to jail.
Instead, the corporation involved agrees to pay a fine while specifically denying wrongdoing, often claiming the corporation simply wants to save the legal costs involved in defending the lawsuit, clear the decks and get on with its regular business. We have seen that happen in the last year with Citibank paying a $258 million fine, Goldman Sachs paying a $550 million fine, Wells Fargo paying a $175 million fine and most recently, Barclays Bank paying a $450 million settlement.
These institutions are alleged to have engaged in conduct that violated federal laws, rules and regulations injuring the public and often their own clients financially. We know that the Great Recession almost destroyed the U.S. economy, causing losses to Americans in the trillions of dollars. It destroyed the savings of many Americans; it caused many not to retire because their retirement funds had been substantially lost; and it caused millions of Americans to lose much of the value of their homes and others to lose their homes through foreclosures in the sub-prime mortgage meltdown. People living on fixed incomes, dependent on interest on their savings, have seen their income from interest paid by banks wither away as the Federal Reserve lowered interest rates in an effort to save the country's economy, and bail out the banks.
During the recovery period, the banks -- assisted by taxpayers' monies provided by the U.S. Treasury and the Federal Reserve -- got bigger and richer, and today are bigger and wealthier than they were before the Great Recession, which many of them helped bring on.
I, along with millions of Americans, applauded when President Obama in his State of the Union address of January 24, 2012 made reference to the unfairness of no one having been prosecuted for the sub-prime mortgage scandal where banks encouraged people who were not creditworthy to apply for mortgages. They committed, it is alleged, crimes when the near worthless mortgages became part of a complicated sales package referred to as mortgage-backed securities, and knowingly sold to third parties, contributing to the Great Recession and still a major reason for the continuing deterioration of the economy and loss of housing values and jobs.
The president in that speech stated he was asking the U.S. Attorney General Eric Holder and other states' attorneys general to join in seeking out those who committed criminal offenses. The president's words were:
And tonight, I'm asking my attorney general to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.
I haven't seen a single indictment relating to this area of fraud announced by the Department of Justice since the president's speech of more than six months ago. I was heartened when reading the New York Times of July 15 that, as a result of Barclays Bank's fraudulently manipulating interest rates, which its president admitted, the Justice Department is apparently going to pursue criminal complaints against the Barclays corporation and its employees.
As the Times reported:
As regulators ramp up their global investigation into the manipulation of interest rates, the Justice Department has identified potential criminal wrongdoing by big banks and individuals at the center of the scandal. The department's criminal division is building cases against several financial institutions and their employees, including traders at Barclays, the British bank, according to government officials close to the case who spoke on the condition of anonymity because the investigation is continuing. The authorities expect to file charges against at least one bank later this year, one of the officials said. The prospect of criminal cases is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities. The Justice Department investigation comes on top of private investor lawsuits and a sweeping regulatory inquiry led by the Commodity Futures Trading Commission. Collectively, the civil and criminal actions could cost the banking industry tens of billions of dollars."
It isn't only the banks that have ripped off the public. Within the last month, a drug company, GlaxoSmithKline, manufacturing prescription drugs, was fined $3 billion by the Food and Drug Administration (F.D.A.). The allegation is that they violated federal rules and regulations on what purposes a particular drug could be used for, which were not approved by the F.D.A., endangering people's lives.
Shouldn't the Glaxo officers, directors and employees if they knowingly committed criminal acts, and not just the corporation, be fined and tried criminally, and if convicted, lose their licenses to practice their profession and be jailed?
In some states, someone with a criminal record cannot get a barber's license. But these bankers and CEOs, directors and employees of corporations, who have ripped off the public, continue to do business and get richer with each passing day. And, by the way, what's happening with the case involving Jon Corzine, former New Jersey governor and U.S. Senator, who as CEO of MF Global, hasn't been able to account for the missing $630 million belonging to the customers of his brokerage firm? Wouldn't it be a travesty of the highest magnitude if all that happens is that he or his brokerage firm simply pays a fine?
Is it any wonder that the American public is disgusted and has lost its faith in government?