Posted on 14-05-2013
Filed Under (Current Affairs) by Rashtrakut

As Washington gets subsumed by faux scandals and a desperate Republican attempt to convert Barack Obama to Richard Nixon the entire political class has pretty much let Wall Street off the hook.  Not a single banking executive has been prosecuted even with ample evidence of fraud.  The fines inflicted on the for misconduct still leave financial institutions with a healthy profit from their illegal activities.

Elizabeth Warren has been one of the only legislators who has been highlighting this ridiculous state of affairs.  She sent a letter to Federal Reserve Chairman Ben Bernanke, Attorney General Eric Holder, and Securities and Exchange Commission Chairwoman Mary Jo White questioning the culture of a slap on the wrist for offenders.  The whole letter is worth a read, but a key paragraph is quoted below:

I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial — either because it is too timid or because it lacks resources — the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer. The consequence can be insufficient compensation to those who are harmed by illegal activity and inadequate deterrence of future violations. If large financial institutions can break the law and accumulate millions in profits and, if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.

This is not a difficult point to grasp. But in our corrupt bastardized capitalism our regulators don’t seem to get it.  Elizabeth Warren does.

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