The report released today by the court-appointed bank examiner makes it clear that there is a good chance that criminal malfeasance was committed by senior executives of Lehman Brothers, accountants working on the Lehman books, and possibly others, in association with materially misleading information disclosed to investors in violation of securities laws.
The Justice Department would be well advised to vigorously investigate, and to prosecute where it is believed that convictions can be obtained, all individuals and corporations involved in these actions.
The reasons to do so are below the break.
I feel that there are three main reasons why it would be a good idea to do this:
- It is the right thing to do morally. Nobody is above the law, and a CEO who breaks the law should be subject to its penalties just like the rest of us.
- It is the right thing to do economically. If there is virtually no personal penalty to the kinds of cheating that took place (sure some folks might have lost money but when you have multiple $millions and you lose half you still have lot$) then you will have lots of folks making bets which involve leverage ratios that are destabilizing to the financial system.
- IT IS A BIG WIN POLITICALLY.
Going after the Lehman culprits will be a popular move. It is also a populist move which will help to position the administration as being on Main Street's side rather than Wall Street's. It will be big attention-grabber for the media and will take media focus away from the opposition to some degree due to the need to report the story.