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Prosecute Now: The Justice Department Can Still Act Against Bad Bankers

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Reprinted from Smirking Chimp

From flickr.com/photos/36686551@N06/13849910105/: U.S. Attorney General Eric Holder
U.S. Attorney General Eric Holder
(Image by North Charleston)
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It's been a grim period for American justice. Despite compelling evidence of widespread bank fraud in the run-up to the 2008 financial crisis -- and despite all those billion-dollar settlements -- prosecutors have not indicted executives at any major U.S. bank. This stands in contrast to the much smaller savings and loan scandal of the 1980s, which led to the conviction of more than a thousand bankers.

And as the Justice Department's criminal division remained idle in the aftermath of 2008, the statute of limitations passed for most of bankers' crimes.

But there's a ray of hope: The bankers' own deep-seated propensity for cheating and corruption may have given prosecutors a new opportunity to indict them. With the upcoming departure of Attorney General Eric Holder, there is the chance to forge a new approach toward Wall Street lawbreaking by pursuing evidence of wrongdoing wherever it may lead.

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The stakes are high. As long as the bankers' culture of corruption goes unpunished, the safety of the global economy -- and of individual families' well-being -- remains at risk.

Shouting "Fire"

In a performance that was widely considered disastrous, the president of the New York Federal Reserve Bank told senators in a hearing last week that he didn't believe Wall Street regulators should be "cops on the beat."

"It's more like a fire warden," said William Dudley of the regulators' role, "to make sure that the institution is well run so that, you know, it's not going to catch on fire and burn down. And managed in a way that if the institution is stressed that it doesn't collapse and threaten the rest of the financial system."

Even the normally unflappable Sen. Elizabeth Warren (D-Mass.) seemed momentarily at a loss upon hearing this response. No neighborhood in this country needs policing more than Wall Street, whose culture is rife with corruption and whose record is stained by repeated fraud.

Don't take an outsider's word for it. An expert with many years of experience spoke eloquently last year of Wall Street's "apparent lack of respect for law, regulation and the public trust," describing "deep-seated cultural and ethical failures at many large financial institutions."

That expert? William Dudley.

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Science Says

The corruption of banking culture has been confirmed, not only by the mountains of evidence regarding bank fraud, but by independent research. The first confirmation came from a 2012 survey of British and American bankers. As we reported at the time, one in six bankers said they were "fairly likely" to commit a banking crime if they could get away with it. Forty-five percent refused to rule it out if the payoff were big enough.

Researchers noted that "nearly one-third of all financial services professionals reported feeling pressured by bonus or compensation plans to violate the law or engage in unethical conduct. Nearly one-quarter of the respondents felt similar pressure from other sources."

Those findings appeared to find confirmation in a study published this month by the scientific journal Nature. The report, titled "Business culture and dishonesty in the banking industry," found that bankers were significantly more dishonest than employees of other industries -- once they identified themselves as bankers.

In lay terms, bankers who were reminded of their own culture and business environment tended to cheat a lot. That was not true of any other profession or industry the researchers studied.

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http://www.huffingtonpost.com/rj-eskow/the-dumbest-bipartisa

Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future


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