In a recent interview, U.S. Attorney for the Southern District of New York Preet Bharara took a few shots at his critics (my emphasis added):
Q: You have also received criticism from some on the left—including writer Matt Taibbi and Wall Street documentarian Charles Ferguson—who say that while you’ve convicted insider traders, you’ve missed the big guys who committed the mortgage fraud that led to the financial crisis. How do you respond to that?
A. I would suggest that some of these critics should go to law school and apply themselves and become prosecutors and make the case that they think we should be making. This is by reputation and track record the most aggressive office in white-collar crime in the country ever, and if we’re not bringing a certain kind of case, it’s because the evidence is not there. Pure and simple.
If it wasn’t clear that we weren’t going to see Wall Street CEOs doing perp walks after the government failed to convict two Bear Stearns hedge fund managers of securities fraud after the funds they oversaw blew up, then it should have been the case after the government settled its civil fraud case against ex-Countrywide CEO Angelo Mozilo. That the government chose to pursue a civil fraud case as opposed to a criminal fraud case, like the government’s current case against Standards and Poors, tells me how much confidence it has in securing a conviction (or settlement) on criminal charges – none.
Personally, I don’t buy the argument that the Wall Street/SEC relationship or regulatory capture played any role in the lack of convictions. More from Bharara:
…when people are in government and they are responsible for prosecutions or for enforcing regulations, every single one of them knows that the bigger case they make, the bigger person they become and the bigger opportunities they have. That’s not a good reason to go do these things. But some people speculate that human nature being what it is, that’s how it works…
The incentives were there. The evidence wasn’t. Pure and simple.
Hat tip: Elias Isquith via his Facebook feed
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