Jesse Eisinger on Why No One Went to Jail

For your Saturday reading (or listening) this week is a stirring podcast from Barry Ritholtz's column this morning about the financial meltdown and why, despite the massive abuses, no one was ever prosecuted.  Of course this topic has already been covered exhaustively by the financial press and PBS and everything I've ever read and heard boils down to one simple truth:  No one was ever prosecuted because, after an incredibly thorough analysis, investigators were forced to conclude that no laws were broken.


The sad fact was that government had so severely deregulated the banking and mortgage industries that practices that had previously been considered unthinkable were now completely (or at least technically) legal.  They could not see the rationale of bringing charges against an executive who was only doing what the law said was okay, even if it was atrociously damaging.  We certainly hear a lot in our professions about the dangers of too much government regulation.  But this Great Recession (and certainly the Great Depression) also both serve as stunning examples of the dangers of too much deregulation.  It would  be interesting to see if Mr. Eisinger's analysis agrees or comes from a completely different perspective.


MiB: Jesse Eisinger on Why No One Went to Jail - The Big Picture

MiB: Jesse Eisinger on Why No One Went to Jail

July 22, 2017 10:00am by Barry Ritholtz

This week, we sit down with journalist Jesse Eisinger, author of The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives. He was previously at the Wall Street Journal, TheStreet.com and Conde Nast Portfolio, and is currently at Pro Publica, where he won a Pulitzer Prize for reporting on various CDOs.

Like many of us, he was perplexed by the lack of prosecution following the financial crisis. The obvious paper trail at various banks and brokers should have made winning prosecutions not terribly difficult. The issue of why white collar criminals are treated with such respect, and afford rights not available to blue collar criminals.

Eisinger traces the collapse of Enron for accounting fraud, and its auditor’s Arthur Andersen’s corporate death penalty, as the start of the unraveling of the Justice Department’s ability to actually win in court.  A series of astounding events took place as the credit crisis was building; by the time the economy melted down, the prosecutorial arm of the government had effectively been neutered not accidentally, but by design.

All of the books he references can be found here.

You can stream/download the full conversation, including the podcast extras, on iTunes, Soundcloud, Overcast, and Bloomberg. Our earlier podcasts can all be found on iTunes, Soundcloud, Overcast and Bloomberg..