Why Isn't Wall Street in Jail?

http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

Why Isn't Wall Street in Jail?
Financial crooks brought down the world's economy — but the feds are  
doing more to protect them than to prosecute them

By Matt Taibbi
FEBRUARY 16, 2011 9:00 AM ET
Over drinks at a bar on a dreary, snowy night in Washington this past  
month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's  
your whole story right there. Hell, you don't even have to write the  
rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check.  
"Everything's fucked up, and nobody goes to jail. You can end the  
piece right there."

Nobody goes to jail. This is the mantra of the financial-crisis era,  
one that saw virtually every major bank and financial company on Wall  
Street embroiled in obscene criminal scandals that impoverished  
millions and collectively destroyed hundreds of billions, in fact,  
trillions of dollars of the world's wealth — and nobody went to jail.  
Nobody, that is, except Bernie Madoff, a flamboyant and pathological  
celebrity con artist, whose victims happened to be other rich and  
famous people.

This article appears in the March 3, 2011 issue of Rolling Stone. The  
issue is available now on newsstands and will appear in the online  
archive February 18.

The rest of them, all of them, got off. Not a single executive who ran  
the companies that cooked up and cashed in on the phony financial boom  
— an industrywide scam that involved the mass sale of mismarked,  
fraudulent mortgage-backed securities — has ever been convicted. Their  
names by now are familiar to even the most casual Middle American news  
consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP  
Morgan Chase, Bank of America and Morgan Stanley. Most of these firms  
were directly involved in elaborate fraud and theft. Lehman Brothers  
hid billions in loans from its investors. Bank of America lied about  
billions in bonuses. Goldman Sachs failed to tell clients how it put  
together the born-to-lose toxic mortgage deals it was selling. What's  
more, many of these companies had corporate chieftains whose actions  
cost investors billions — from AIG derivatives chief Joe Cassano, who  
assured investors they would not lose even "one dollar" just months  
before his unit imploded, to the $263 million in compensation that  
former Lehman chief Dick "The Gorilla" Fuld conveniently failed to  
disclose. Yet not one of them has faced time behind bars.

Invasion of the Home Snatchers

Instead, federal regulators and prosecutors have let the banks and  
finance companies that tried to burn the world economy to the ground  
get off with carefully orchestrated settlements — whitewash jobs that  
involve the firms paying pathetically small fines without even being  
required to admit wrongdoing. To add insult to injury, the people who  
actually committed the crimes almost never pay the fines themselves;  
banks caught defrauding their shareholders often use shareholder money  
to foot the tab of justice. "If the allegations in these settlements  
are true," says Jed Rakoff, a federal judge in the Southern District  
of New York, "it's management buying its way off cheap, from the  
pockets of their victims."

Taibblog: Commentary on politics and the economy by Matt Taibbi

To understand the significance of this, one has to think carefully  
about the efficacy of fines as a punishment for a defendant pool that  
includes the richest people on earth — people who simply get their  
companies to pay their fines for them. Conversely, one has to consider  
the powerful deterrent to further wrongdoing that the state is missing  
by not introducing this particular class of people to the experience  
of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass  
prison for one six-month term, and all this bullshit would stop, all  
over Wall Street," says a former congressional aide. "That's all it  
would take. Just once."

But that hasn't happened. Because the entire system set up to monitor  
and regulate Wall Street is fucked up.

Just ask the people who tried to do the right thing.

<Lance: read the rest at the link above>
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