“The greatest triumph of the banking industry wasn’t ATMs or even depositing a check via the camera of your mobile phone. It was convincing Treasury and Justice Department officials that prosecuting bankers for their crimes would destabilize the global economy.”
Bloomberg News, Barry Ritholz, Why Prosecutors Whiffed on Subprime Crime
Mr. Ritholtz offers two other possibilities regarding causation:
1) Endowment Effect & Sunk Cost Fallacies: The TARP, ZIRP and FASB rule changes were not especially popular. The government under both Bush and Obama had spent trillions on these expensive bailouts. They effectively “owned” these politically, and prosecuting those who were bailed out would revisit those unpopular policies.
...
3) The wrong players in key roles: When Obama began his administration, he appointed experienced people to key economic roles. Unfortunately, their resumes included helping to create the financial crisis.
When hospitals identify a surgical error, they send a different team of doctors to repair it. Their job is to fix the damage, with no concern for career risk or reputation. Lawrence Summers and Timothy Geithner -- aka the status quo duo (See this and this) were simply too vested in the financial crisis to facilitate its clean up.
Bloomberg News, Barry Ritholz, Why Prosecutors Whiffed on Subprime Crime
His conclusion makes sense:
In the end, we find a system that appears to have been hollowed out. The lack of respect for the rule of law threatens lasting damage to the republic. The exact long-term costs of this structural legal problem are unknown at this time. The failure to fix what is broken is simply a colossal failure of political will. However, we can observe that the virtual lack of prosecution of lawbreakers has left the citizenry disgruntled, and de-legitimized our democracy. The U.S. has been transformed into a corporatocracy.
Bloomberg News, Barry Ritholz, Why Prosecutors Whiffed on Subprime Crime
Popular disgruntlement, however, has not transferred into a mass movement against Wall Street, our system, or even for reforms. The biggest popular movement since the crash and Great Recession began has been a white-backlash movement (the Tea Party) that is based on holding onto white privileges and wallows in Bircher ideology (brought to them by the Koch Brothers).
Please discuss.