Goldman Sachs (GS) agreed yesterday to pay $5.1 billion dollars and admit to “serious misconduct” in its handling of mortgage backed securities. The New York Times this morning says the company will receive tax benefits that make the actual payout closer to $4 billion, but it’s still real money. That comes on top of $13 billion from J.P. Morgan Chase, $16 billion from Bank of America, $7 billion from Citigroup and $3.2 billion from Morgan Stanley.
But don’t expect that to assuage the anger sweeping the American electorate these days. The public wants to know why the people running these big banks aren’t in jail. It’s become one of the most popular tropes in American public life: the big banks blew up the global economy, and nobody went to jail.
So why didn’t top bankers go to jail? It’s certainly not because of a shortage of federal and state prosecutors eager to make a name for themselves by putting them there. Nor is it because the criminal justice system is rigged, or because top bankers are somehow “too big to jail.”
No, the real reason these bankers aren’t in jail is because – brace yourself – they didn’t commit crimes. They may have been guilty of greed, negligence, lack of foresight, lack of oversight, lemming-like herd behavior, wilful blindness and even rank stupidity. But there is no evidence that they knowingly engaged in fraudulent activity.
That’s not a very satisfying answer. The mob wants a lynching. But with statutes of limitation running out, it looks like they’ll have to settle for a mere $44 billion.
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