Why No One Went to Jail in the Financial Crisis
One of the puzzling questions about the financial crisis is why none of the executives of the major firms were prosecuted for what some legal experts believe was widespread fraud. Jesse Eisinger, a Pulitzer Prize-winning journalist at ProPublica, sat down to discuss this perplexing issue on this week's Masters in Business podcast.
Like many of us, Eisinger was angered by the failure to prosecute in spite of a paper trail leading to senior management at many of the biggest banks and brokers. That should have made convictions possible, while helping to heal society and quell the populist anger in the aftermath of the crash.
Eisinger, whose latest book is "The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives," recounted the recent history of white-collar prosecutions, focusing on the accounting fraud at Enron Corp. and auditor Arthur Andersen. The Andersen conviction, though later reversed by the Supreme Court, led to the firm's collapse. It also fostered a reluctance in the Justice Department to prosecute financial firms and executives, fearing that doing so would be the equivalent of a death sentence. By the time the financial crisis struck, the prosecuting arm of the government had been neutered.
You can stream/download the full conversation, including the podcast extras, on iTunes, Soundcloud, Overcast and Bloomberg. Our earlier podcasts can all be found on iTunes, Soundcloud, Overcast and Bloomberg.
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