The Savings & Loan Crisis of the late 1980’s resulted in over a thousand felony convictions of executives for wrongdoing, after a third of the institutions went broke. The FBI had a thousand agents on it, and the government was determined to find and punish thieves. The New York Times wrote extensively about this.
Thoughtful people all across the ideological spectrum are incensed that there have been only two felony convictions related to the 2007-2009 financial crisis. The recent crisis had a far greater impact on the economy, workers, families and retirees. Yet far less was done to investigate and prosecute the bad guys.
Naturally, many people of all political persuasions are concerned and upset. Corruption, incompetence, or both? No one knows. It clearly violates the social compact on which our society is based.
Now, get ready for another astonishing shock. In lieu of sending criminals to jail, various agencies of government have been soliciting multi-billion dollar settlements from the large banks. But whose money is this? Yours and mine—shareholders. It is as if the government is collecting ransom from thieves which they are paying from our pockets.
If you think we are being melodramatic, consider that the Justice Department recently asked Deutsche Bank for $14 billion to settle allegations of wrongdoing. This figure is more than two-thirds of the bank’s net worth, as measured by the value of its shares in the market. In our system, the presumption was that a company is owned by its shareholders. Now we find out that the government thinks it is entitled to more than half the net worth of this company—instead of doing its job and prosecuting wrongdoers.
In our opinion, the system worked better and more fairly when thieves went to prison and shareholders enjoyed the rights to their property without impairment by arbitrary government action. One of the worst aspects of this situation is how little attention it is getting; this article is intended to help rectify that. Please spread the word by sharing and linking and emailing your representatives.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.