Now that is the million dollar question…
A British banker is headed to prison for over a dozen years for cheating the markets, but American prosecutions of financial and other professionalized crimes are at their lowest levels in 20 years, according to data compiled by Syracuse University’s Transaction Records Access Clearinghouse (TRAC).
The decline in American vigor against crooks who keep their hands clean comes as Britain prepares to send a financier to prison for his role in a megabank conspiracy to rig interest rates in their favor. Tom Hayes, 35, was sentenced Monday to 14 years behind bars by a British jury.
William Black, a white collar criminologist and finance professor who helped expose the vast fraud underlying the Savings & Loan (S&L) crisis of the 1980s and then authored a book titled “The Best Way To Rob A Bank Is To Own One,” said the prosecutorial neglect going on today makes future abuses more likely.
“This means that deterrence has been eliminated and the fraud epidemics that drive our future financial crises will be led by the same elite bankers who will already have fraud schemes down pat,” Black said in an email. “Both results are in sharp contrast to the S&L debacle, with more than 1,000 felony convictions in cases…that were hyper-prioritized against the most elite and destructive defendants.”
The government’s response to the fraudulent deals that triggered the S&L crisis was far more robust from the jump, as the New York Times has detailed. There were multiple task forces set up within the first two years after the crisis broke that specifically investigated criminal behavior related to the S&L meltdown. By contrast, federal officials took over a year after the housing market collapsed to even propose a task force – and the idea was shot down by Justice Department decisionmakers. It would eventually reverse course and create the task force 3 years after the crisis, but that team was notoriously underfunded and overhyped.
The more than one-third drop in white collar casework documented in TRAC’s data is in keeping with a longstanding trend. Annual white collar crime prosecutions have been falling gradually ever since the mid-90s, apart from a brief, slight resurgence in the three years immediately following the housing market’s collapse. Even during that post-crisis bounce in activity, white collar prosecutions made up a far smaller share of overall federal cases than they did from 1995-97.