Friday, July 6, 2012

Time for jail for some bankers?

When conservative business commentator, Charles Gasparino, of the New York Post says that Wall Street and London bankers are in danger of being sent to jail, I take that as a serious observation rather than just wishful thinking by more liberal commentators.  

The issue is criminal fraud and collusion to lie about the rates that banks were using for interbank loans during the financial crisis, which kept the London Interbank Offered Rate (LIBOR) falsely low.  This allowed the super-banks to make money (greed again, of course).  And it altered the borrowing rates of the entire world.  The tip of the iceberg is Barclays.  More to follow.

It always seemed to me that the unethical things that these behemoths were doing - like deliberately selling toxic assets to unsuspecting investors, placing enormous bets in the derivatives markets that could make themselves fortunes but stick the taxpayers with the losses, etc. - should have been illegal rather than just morally appalling.  Somehow, these financial giants all escaped jail, continue to make private fortunes, managed to make their giant financial institutions even bigger, and increased their power and influence over government by gutting the government's efforts to regulate them and reduce their size and influence.

That run of arrogant domination may be coming to an end.  We may finally have come up with something that they did that was more than just disgusting.  They may have done something that actually is illegal.

And their campaign contributions may not be able to save them from losing their job, and even their freedoms.

More important than the satisfaction of seeing the greedy be punished, however, is the chance that this might finally create the culture change needed in London and on Wall Street.  The country, and the world, may get the financial system back into balance, where the people running these institutions actually are there to be a service to the economy rather than little more than super-casinos designed to create uber-wealth for themselves at the expense of the economy and the tax payer.

One can certainly hope.