Today’s New York Times features an above-the-fold opus by Gretchen Morgenson and Louise Story that spends 3,900 words trying to answer the question, “That financial crisis a few years ago, why did nobody go to jail for that?”
It’s the same question Matt Taibbi, Rolling Stone’s resident insult artist, recently took up himself in a 6,800-word article.
The Times (where, full disclosure, I also contribute finance articles), Morgenson and Story cover some of the same ground as Rolling Stone, but without the name-calling and axe-grinding (one of Taibbi’s sources recommended deterring white-collar crime by putting Lloyd Blankfein in “pound-me-in-the-ass prison”) and with more details about how regulators were pressured to ease up their investigations.
The result is a smoother, less splenetic story - sort of the Stefan Urquelle to Taibbi’s Steve Urkel - and probably the best explanation to date of how some of the worst villains of the financial crisis came out more or less unscathed.
The Revolving Door, or Strong-Arming Feds?
Taibbi blames most of the failure to charge bank executives with crimes on a Wall Street-Washington revolving door that has turned the relationship between regulators and banks into “a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats.”
The Times story is more specific about what actually happens to regulators who try to go after fraud cases, including details of a private meeting between then-Federal Reserve president Tim Geithner and then-Attorney General Andrew Cuomo, in which, according to the Times’ source, Geithner pressured Cuomo to ease up on his anti-fraud crusade.
Famous Villains or Faceless Regulators?
The bad guys in Taibbi’s story are some of the FiCri’s time-tested whipping boys: former AIG executive Joe Cassano, former Lehman Brothers head Dick “The Gorilla” Fuld, and, of course, Goldman Sachs, whose CDO-slinging VP Fabrice Tourre he calls an “outrageous Euro-douche.”
The Times, on the other hand, finds some more unexpected villains: obscure regulatory groups like The Office of Thrift Supervision - which basically hasn’t done its job in a decade, referring exactly zero financial crimes to the Justice Department since 2000 - and a guy named Phil Angelides, who was appointed by Congress to investigate the financial crisis and ended up giving a free pass to Countrywide, the world’s worst mortgage giant.
Populist Rage vs Measured Caution
Taibbi calls the Wall Street dealings of the last few years “worse than common robberies” and adds a touch of class resentment, making the point that although no financial executives have been jailed for their roles in the crisis, 393,000 illegal immigrants were deported last year.
The Times is more careful, allowing that “Wall Street’s role in the crisis is complex, and cases related to mortgage securities are immensely technical.”
There are more differences, but really, you should just set aside an hour and read both pieces. Whichever explanation you like more, you probably have some opinion on the topic of Wall Street’s prison avoidance: the Times article has 435 comments and counting.
In Financial Crisis, No Prosecutions of Top Figures [NYT]
Why Isn’t Wall Street in Jail? [RS]