William Cohan had a column in the NYT noting that the Justice Department's settlements with the major banks over their securitization of fraudulent mortgages largely let the banks off the hook. His alternative route would have been criminal (as opposed to civil) prosecutions of the banks. While this may have led to more severe consequences for the banks and their current shareholders, it still would have allowed most of the people responsible off the hook.

In most cases, the top executives who set the course for the banks during the housing bubble years have moved on. They are either retired or employed elsewhere. Therefore they would not be affected by harsh punishments directed at their former employers. If the point is to have a sanction that will provide a serious disincentive to illegal actions then the Justice Department should have been trying to criminally prosecute the bankers themselves.

Knowingly packaging and selling fraudulent mortgages is fraud. It is a serious crime that could be punished by years in jail. The risk of jail time is likely to discourage bankers from engaging in this sort of behavior. The risk that their former employer may face serious sanctions years after they have left will not.

Leave your comments

Post comment as a guest

0
  • No comments found

GuideStar Exchange Gold charity navigator LERA cfc IFPTE

contact us

1611 Connecticut Ave., NW
Suite 400
Washington, DC 20009
(202) 293-5380
info@cepr.net

let's talk about it

Follow us on Twitter Like us on Facebook Follow us on Tumbler Connect with us on Linkedin Watch us on YouTube Google+ feed cepr.net rss feed