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U.S. Opinions: St. Louis

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A new sheriff for the SEC

From an editorial published in the St. Louis Post-Dispatch on Tuesday:

No less an authority than Bruce Springsteen has noted that there’s never been a criminal prosecution against, much less a conviction of, anyone at a major investment bank involved in the 2008 financial collapse. The last stanza of “Death to my Hometown” goes:

Send the robber barons straight to hell.

The greedy thieves who came around

And ate the flesh of everything they found.

Whose crimes have gone unpunished now,

Who walk the streets as free men now.

Last week, in announcing the appointment of Mary Jo White to head the Securities and Exchange Commission, President Barack Obama suggested that things are going to be different. Ticking off a list of steps the administration has taken to reform the financial system, he said, “But it’s not enough to change the law. We also need cops on the beat to enforce the law.”

He went on to say, “You don’t want to mess with Mary Jo.”

As U.S. attorney for the Southern District of New York during the Clinton administration, White, 65, headed the prosecutions of the late mob boss John Gotti and the terrorists responsible for the 1993 World Trade Center bombing. She has spent the last 10 years as a highly paid corporate litigator at a New York firm whose clients include JPMorgan Chase, Deutsche Bank, Goldman Sachs and AIG.

White may be as tough as a boot. But if she recuses herself from cases involving any of her old law firm’s clients, those cases will be decided by the other four commissioners on the SEC. Two of them are Democrats and two of them are Republicans. Oh, boy. More gridlock.

The SEC was asleep at the switch when the economy cratered during the mortgage credit crisis of 2008. Over the last four years, Mary A. Schapiro has restored some credibility to the agency and revamped its enforcement unit. Since 2010, the agency has brought 129 civil cases against individuals and firms involved in the financial crisis; it won a $500 million fraud settlement against Goldman Sachs.

Throughout the government, firms were charged, and some small mortgage company cheats went to jail.

But the people responsible for packaging subprime mortgages into securities and selling them as AAA-rated bonds and then sometimes betting against the very securities they sold? None of them has gone to jail. They were too big to fail. And now they’re too big to jail.

Obama and his outgoing Treasury Secretary, Timothy Geithner, put a higher priority on rebuilding the financial system than punishing the people who put it in jeopardy. But the federal statute of limitations for most financial crimes is 10 years. If there’s a will, there’s still plenty of time to bring some banksters to justice.

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