While the nation has finally recovered most of the jobs lost in the recession, and the stock market has reached all time highs, if you ask many people, the economic downturn that began in 2008 doesn’t seem all that far away. In this edition of FM89’s commentary series The Moral Is, Fresno State Business Law Professor Ida Jones says a five year statute of limitations for those most responsible for the meltdown is a problem.
Time is running out. It’s more than five years after the most severe economic downturn since the Great Depression that cost the U.S. economy more than $22 trillion and homeowners nearly $9.1 billion in lost wealth. That’s according to the Government Accountability Office’s estimates. Yet not one CEO of the major financial institutions that caused the crisis has spent a day in jail.
Now the good news is that the taxpayers have recovered nearly 96 percent of the Troubled Assets Relief Program taxpayer bailout. Congress created TARP to help solve part of the financial crisis. And the economy is slowly recovering. That’s all good.
The bad news is, according to federal Judge Rakoff, “not a single high-level executive has been successfully prosecuted …. and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears likely that none will be.” None will be prosecuted.
So why’s that bad news? It’s bad news because those whose conduct caused the crisis aren’t being held responsible. Nearly everyone agrees that the financial crisis was created through a combination of risky investments, fraudulent reporting to investors, and greedy financiers manipulating the system to maximize their profits at all costs. And at least some of that conduct involved investments that were so speculative as to be criminally fraudulent. Yet not one high level executive has been held accountable? Instead, taxpayers have had to rely on a system of government oversight and recovery of taxpayer bailout funds. And some of those same taxpayers bore the brunt. They lost their homes.
So why is it that mortgage brokers and other relatively small fish were the only ones criminally prosecuted and CEOs weren’t? Why did government fail to prosecute any top officials when in the past, government did prosecute those, like Charles Keating, Jr., a central figure in the savings and loan crisis of the 1980s? This time, according to the U.S. Attorney General, CEOs weren’t prosecuted because the AG was concerned it might cause another financial collapse. That means the government decided that it would prefer to file civil claims against the companies, but not file criminal charges against the individuals who led those companies and whose conduct caused the problem in the first place.
And now…the bell has tolled for society and the CEOs have gotten away with financial murder.
The views expressed on The Moral Is are those of the author and do not necessarily represent the views of Valley Public Radio.