Why were there almost no prosecutions of investment bankers for the 2008 financial crisis? Jesse Eisinger, the excellent reporter at ProPublica and frequent guest columnist for the New York Times argues plausibly for something more systemic than foot dragging:
“Many assume that the federal authorities simply lacked the guts to go after powerful Wall Street bankers, but that obscures a far more complicated dynamic. During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms...
Part of the Justice Department’s futility can be traced to the rise of its own ambition. Until the 1980s, government prosecutors generally focused on going after individual corporate criminals. But after watching their fellow prosecutors successfully take down entire mafia families, like the Gambino and Bonanno clans, many felt that they should also be going after more high-profile convictions and that the best way to root out corruption was to take on the whole organization.”
This explains the rash of huge bank fines over the past few years, rather than jailed "banksters." Another factor seems to me to be the status of a public service careers. In the US, public service is not held in high regard. Moreover, many of the top layers are politicos - they come and go with the President. In the justice system it means that lawyers have become risk averse. They avoid the complex cases and go for something safe. Some of the financial crisis cases might have taken years. As Eisinger explains:
“Top governmental lawyers generally don’t want to spend their entire careers in the public sector. Many want to score marquee victories and avoid mistakes and eventually leave for prominent corporate firms with starting salaries at 10 times what they make at the Department of Justice. ”
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