Keeping the Wall Street crooks out of jail

More than four years after a catastrophic financial meltdown caused in large part by fraudulent behavior on Wall Street, no one has gone to jail.


There are many reasons, including the complexity of the cases and the lack of criminal referrals from the regulatory agencies. But perhaps the key reason is that those most responsible for indicting and prosecuting Wall Street executives seem to believe that, just as there are banks that are too big to fail, there are people who are too big to jail.

In a speech he gave last fall, the retiring head of the Criminal Division in the Department of Justice, Lanny Breuer, explained that position:

“To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects.

“Sometimes – though, let me stress, not always – these presentations are compelling. In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct. I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake. And, in some cases, the health of an industry or the markets are a real factor. Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.”

From my point of view, this is certainly a novel approach to prosecutorial decision-making.

It also puzzles me because, back in 2009 and again in 2010, in testimony before the Senate Judiciary Committee, and in meetings in my Senate office, Mr. Breuer never said anything like it.

The argument seems to be that, if the president of a major bank were to be indicted for criminal behavior, his prosecution would endanger the bank itself and the jobs of all of its employees.


I just don’t buy that.

Scores of executives went to jail because the government prosecuted them after the Enron and Savings and Loan scandals. Those prosecutions certainly did no lasting damage to our economy.

“Justice for all” always has been a basic tenet of this country. Have we really gotten to the point where we are afraid to prosecute a Wall Street executive for stealing millions while we send some teenager who steals $20 from the corner store to prison?

The fact is, the behavior of some on Wall Street led directly to millions of Americans losing their jobs or their houses. We must do all we can to make sure this doesn’t happen again.

Criminal prosecutions are not just about punishing the guilty. They also send a message that we as a society will not allow similar misconduct in the future.

That is why I totally agree with something Mr. Breuer said earlier in his speech: “The strongest deterrent against corporate crime is the prospect of prison time for individual employees.”

Nothing I have seen in the past four years leads me to believe that Wall Street as a whole learned much from the events of 2008-2009. The government’s bailouts that helped the big banks survive have been pretty much forgotten. The multimillion dollar bonuses are back with a vengeance, and with them incentives to cut corners and, for some, to circumvent the law.

We must do all we can to make sure Wall Street doesn’t repeat the mistakes that led to the Great Recession.

To do that, we have to make certain that no bank is too big to fail. And that nobody in America is too big to jail.

Originally published 16 February 2013 on