Matt Levine, Columnist

Today in Why Aren't More Bankers in Jail

Rules vs. principles, knighthood vs. prison, and other possible explanations for why financial crisis prosecutions are sort of hard and sort of not the point.

November 13, 2013 at 8:16 PM UTC

By Matt Levine

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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Judge Jed Rakoff gave a pretty interesting speech yesterday about financial-crisis-related prosecutions and how way more people should be in prison for the financial crisis, though he's judicial enough not to say who, which makes the whole thing a bit of a strange exercise.

He starts from the premise that there's a lot of unprosecuted fraud, and then spins some theories for why that might be. They're interesting theories! One -- that prosecutors worry that anyone they charged with mortgage fraud could argue "I was just doing what the government wanted" -- practically qualifies as a conspiracy theory. But I'm going to use this speech as a tenuous excuse to give you my unified theory of financial regulation and punishment,1which is less racy but also perhaps related to some of his questions.