What happened was collective negligence and stupidity, not
outright individual criminality. Financial engineering is just
incredibly complex, and sometimes things go bad without anyone being
malicious.
In the case of the Great Recession, however, this
narrative has become harder to defend. In the years since, several major
players like Bank of America and JPMorgan Chase have collectively paid (woefully inadequate) fines for various shenanigans. These decisions involved signed
statements of fact that reveal individuals within the companies knew
what was going on: Financiers were well-aware the mortgages in the
securities they were selling were bad, and that they were running
roughshod over proper guidelines for underwriting. All of which goes
beyond the negligent into the criminal.
narrative has become harder to defend. In the years since, several major
players like Bank of America and JPMorgan Chase have collectively paid (woefully inadequate) fines for various shenanigans. These decisions involved signed
statements of fact that reveal individuals within the companies knew
what was going on: Financiers were well-aware the mortgages in the
securities they were selling were bad, and that they were running
roughshod over proper guidelines for underwriting. All of which goes
beyond the negligent into the criminal.
But being in the capitalist aristocracy afforded a different kind of protection: The Department of Justice concluded
they couldn't risk prosecuting individual financial leaders for fear of
destabilizing the financial markets and thus the entire economy.
they couldn't risk prosecuting individual financial leaders for fear of
destabilizing the financial markets and thus the entire economy.
It seems hard to escape the conclusion that people on Wall Street weren't prosecuted largely because
they were part of the same communities as major government agency
heads: friends of friends and colleagues of colleagues, all part of the
same relatively small social circles that exist at the top of the income
ladder. To understand is to forgive, and the elite and the upper class
understand their own.
they were part of the same communities as major government agency
heads: friends of friends and colleagues of colleagues, all part of the
same relatively small social circles that exist at the top of the income
ladder. To understand is to forgive, and the elite and the upper class
understand their own.
The Great Recession was nearly a decade ago, so it is unlikely that those involved will be held accountable for their contributions to the collapse. However, while the effects of the recession are still in the minds of the American public, legislature must be formed that holds financiers accountable for their reckless actions. Yes, there are inherent risks associated with the market, but there is a difference between that risk and the careless ones taken by bankers leading up to the crisis.
ReplyDeleteSince there have been heavier regulations as a result of the Great Recession, I wonder if individuals can be held criminally liable in the next recession. Only time will tell.
ReplyDeleteI feel like this has been happening in the past. It's scary because the frequency of pardoning the powerful will be likely to increase. Just like Piketty suggests, as the gap between the haves and the have-nots increases, America will be turned into patrimonial capitalism and ruled by a few powerful people with great fortune in the future. Then, where does America stand in terms of holding Democratic ideals?
ReplyDeleteI totally agree it is hard to break those sticky bonding among upper classes. In order to make a virtuous cycle, it seems like a radical leader not coming from wealthy background should grab the president position.
ReplyDelete