Washington, D.C. – The foreclosure crisis and accompanying financial collapse left deep scars on the economy and the American psyche. And in the wake of that crisis and the people and some lawmakers have questioned; why has no responsible been prosecuted? Are big banks too big to prosecute as Sen. Elizabeth Warren asked recently?
It appears that they are, according to Attorney General Eric Holder, who appeared before a Senate Judiciary Committee Wednesday affirmed that large banks are indeed too big to prosecute indicating that not only is our financial system broken but our judicial system is as well.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps the world economy,” Holder said according to the Hill. “And I think that is a function of the fact that some of these large institutions have become too large.”
While banks admitted they played a part in the financial crisis by trading toxic mortgage investments. There was a great deal of fraud and misrepresentation involved both on the consumer’s and the lender’s part, and it’s very complex to unravel, but it was a plan driven by entirely by greed. For those interested, Frontline on PBS thoroughly examines the mortgage scandal and the financial collapse in a number of documentaries.
Mortgage brokers at the very bottom were allegedly instructed from top executives in Wall Street to ignore fraudulent mortgage applications, Frontline explained. Banks bundled those mortgages and traded them on in the U.S. and world markets. Investors were misled, purchased those mortgages and banks became over-leveraged, but no one at the top has been prosecuted. Despite the President’s and the Justice Department’s tough rhetoric and it’s unlikely they ever will be.
Thus far, a couple of thousand mortgage brokers have been prosecuted; however no one at the top, who orchestrated the financial crisis, has been pursued criminally. Major Banks have been forced to pay billions in settlement funds for mortgage abuses, but many crimes have gone largely unpunished.
Some economists believe that prosecuting these bankers would be bad for the already struggling economy and trigger another recession, according to the Huffington Post. There is no proof that this would be the case if bankers were actually held legally accountable for their complicity in the collapse.
Holder’s comments echo the concerns of lawmakers and lately there has been a push for justice. Massachusetts Senator Elizabeth Warren grilled federal regulators about why no one on Wall Street has been prosecuted.
There is a bipartisan push by lawmakers to address why banks are too big to jail. According to PBS, Senators Sherrod Brown (D.-OH) and David Vitter (R.-LA) sent a letter to the Justice Department in late January asking them to explain how they determined which cases to prosecute.
The response from the Justice Department was “aggressively evasive” the senators said.
Whether any one on Wall Street will face criminal consequences for their actions remains unanswered, but there is an itch among the American people to see someone punished.