The NYT's Gretchen Morganson and Louise Story posted an "expose" today about the embarassing dearth of financial crisis criminal prosecutions. Pointed is their description of the cosy, crony-capitalistic structure of banks and other financial isntitutions and the so-called regulators that ostensibly babysit them -- as well as their identification of the anti-regulatory cultural consciousness that herded regulators into inaction.
The excuse offered up by regulators that has the most purchase, though, is the fact that even should they get money from these companies, that money would come straight out of the accounts holding taxpayer-funded bailouts. Or, worse yet, would undermine financial stability.
Even if that's true and salient -- which assumes, of course, that financial engineering, especially to this degree, has some sort of overall social benefit:
Clawing back the hefty paychecks of the individual financial executives, traders, and dealers wouldn't implicate such issues. And they're the individuals whose risky behavior the regulators are supposed to regulate to begin with. Financial institutions aren't just some giant non-human hive-mind that has a life of its own. It's the people working for them that do the bad things.
Moreover, the law does not limit fraud actions to corporate behavior. The individuals involved in the fraud, theoretically, are liable too. In fact, corporations only face liability for fraud because the law holds them, as employers, vicariously liable for the acts of their employees.
Certainly, the securities laws don't offer the same kinds of claims as plain vanilla common law fraud -- execs, for example, aren't always individually liable for misstatements in the company's 10-Ks -- but there are other tools in the toolbox.
Meanwhile, wall street pay is through the roof. Still.
