Put Financial Miscreants in Jail

The Justice Department is a squalid, incompetent mess.  It was this way long before Eric Holder, who has disappointed me greatly by not resigning in the second term.  His pusillanimous colleagues in the banking regulatory system are also wonders to behold.  I thought Elizabeth Warren was just great the other day.

http://www.huffingtonpost.com/2013/02/14/elizabeth-warren-bank-regulators_n_2688998.html

The latest publicity concerns what to do when big banks break the law – which of course they do every day, given the hapless state of Justice, SEC, and other regulators.  As Warren pointed out, are the big banks too big to take to trial?  The Fiscal Times today points out that prosecutors are loath to take the big banks on because, for one thing, they don’t want to upset the financial system!  For another, they worry about jobs lost if a bank should fail.  Funny, no one worries about job losses when they prosecute the mafia – and what’s the big difference?

http://www.thefiscaltimes.com/Columns/2013/02/19/Confessions-of-a-Barclays-Banker-Whos-Seen-the-Light.aspx#page1

It’s one thing to charge a bank and get financial compensation for misdeeds – which comes from the shareholders, who are themselves unable to affect the situation.  But true deterrence comes from what happens to the individuals who participate in the misconduct.  The prospect of being jailed should help to concentrate the mind.  Jail terms are what the Justice incompetents need to pursue.  Not being a lawyer, I don’t know, it could be a question of the laws – probably is.  But then the laws need to be changed.

Call me simplistic.  But I’d like to see Obama arise and say, banks commit a lot of felonies.  It is the role of government to pursue them, and to take the individual who commit them, and throw them in jail.  Let’s pass laws that enable us to do that.

I am simplistic, sure I am.  But wouldn’t that be great to hear?

As a student of organizations, I weigh organizational vs. individual activity and responsibility all the time.  It’s so sophisticated to say, “That’s the organizational culture.”  It’s a true statement.  But it is individuals who act within those organizations and who choose to conform to the culture.  Its called Freedom of Choice.  I say, let’s reward poor use of Freedom of Choice with reduced freedom to walk around.  Then let’s see what happens to corporate culture.  It won’t be simple, for sure, but it would be a good start for change.

Let’s concentrate some minds.

Budd Shenkin