Yes. Just look at all those bankers that went to prison for 30+ years of manipulating LIBOR. Well one banker anyway. And all those bankers that went to prison for reps and warranty fraud on synthetic CDOs. Well no bankers anyway.
This is clearly a dog bites man story about something that happens all over.
Please point to the convictions. We don't throw people in jail because we don't like their business practices.
The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. Of course, often these are the same people who interpret things like TARP as a "gift" to the banks.
Let's be honest, for every overworked DA who is ambitious enough to attempt to prosecute a banker, you will immediately have ten 6th year associates out of their top 1/3rd from UChic, Yale and Stanford willing to put in 90 hours because junior partner at Cravath or Skadden is so close they can taste it. TARP was absolutely necessary (we absolutely would have had a complete and total systemic failure had relief not been provided), but the US government could have dictated far stricter terms at which the T-notes were issued which would have benefited the country in the long-term.
Instead of a simple bond, they could have offered an alternative instrument that ensured less of a .. cavalier.. attitude towards trading. "These bonds are issued contingent upon .. {loans must be underwritten by X% in fungible assets, rather than ISDA 3rd-order derivatives (ugh bad pun); Y% of your profits for the next Z years must be invested in a FDIC-esque safety fund as insurance for the next crash; or hell, 'the US government will offer $foo MM in exchange for $bar equity, the profits of which will go towards this years deficit/national debt/...'. If you read first-party accounts at the time when Mae/Mac/Stearns and AIG when down, absolutely everyone was so panicked the board members/CEOs would have taken those terms.
Yes, convicting these people would have been difficult (which speaks to the alleged crimes, in my opinion). Yes, the bank bailouts weren't a paragon of good sense. Hopefully lessons will be learned for the next time.
Perfectly valid arguments and far removed from "toss these chaps in prison". I don't want to live in that world.
TARP has yielded a $64.5B profit [0] for the government. It was a loan, not a gift. It should be noted that the financial bailout was profitable, while the auto bailout netted a $9.5B loss [1].
The return on TARP money was far below market rate. The difference is unquestionably a gift. In addition, had the TARP money not been sufficient to get the businesses back to profitability an additional bailout would have followed. It's heads-you-win tails double-or-nothing game. The recipients understood this was a gift, which is why wall street cheerfully awarded itself 18 billion in bonuses after receiving 125 billion in bailouts.
As the auto bailout shows, bailouts are risky. There was no guarantee that the Treasury would "profit" on either bailout. Therefore, these public actions must be judged in terms of public priorities, not by the "returns". Really though, does this have to be spelled out? The government should represent citizens, not investors.
All of the chronic systemic problems that led to the "crisis" conditions in 2008 have only gotten worse since the bailouts. By that measure, they were not the best public actions that could have been taken, for the public. For Hank Paulson and his cronies, they certainly were the best public actions that could have been taken.
>We don't throw people in jail because we don't like their business practices.
We do when they're fraudulent*
* Exceptions for too big to jail bankers. Jamie Dimon won't see a day in jail despite running a criminal enterprise.
>The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things.
The banking industry has a meltdown when the government isn't treating them with utter admiration.
If the DoJ were actually concerned about putting bankers behind bars they could easily use Sarbanes-Oxley to make a few bank CEOs do the perp walk in an orange jumpsuit.
They're far too rich a source of campaign contributions, however (see Hillary's Goldman Sachs speaking fees for instance).
This is clearly a dog bites man story about something that happens all over.