Earlier this week, we mentioned a Rolling Stone article that asked why Wall Street wasn’t in jail. That article took a step toward answering that question with some harsh realities. Now, Abigail Field at Daily Finance takes the analysis further with her in-depth report on the wholly unsatisfactory treatment of former Countrywide Financial leader Angelo Mozilo.
Mozilo, like several other architects of the financial crisis we now reside in, won’t face criminal charges. And while the $67 million SEC settlement might sound like big bucks on first hearing, Field points out that it’s a mere drop in the bucket compared to what Mozilo took home while he was hard at work breaking the country. And, whatever impact the settlement might have had was buffered by the fact that Bank of America picked up a large part of the tab.
Bootcamper Mark Malone, a former federal and state prosecutor, had this to say about the lax treatment of Mozilo:
Mozilo was the boss of bosses of predatory lending. He was the inspiration for MERS, the electronic database used to facilitate much of the fraud surrounding predatory lending, mortgage securitization and fraudulent foreclosure practices. If prosecutors are not going to go after low-hanging fruit like Mozilo, the rest of the bankster bosses can sleep well, assured that their fortunes are secure.
Smith notes in part that the U.S. Attorney’s office in New York has set a ludicrously high bar for itself: If conviction isn’t 100% certain, don’t even bother filing the charges. One result of the must-be-able-to-guaranty-victory standard, Smith says, is that the prosecutors are inexperienced and don’t do a good job when they do prosecute, like in the Bear Stearns traders case. Another result is that the criminal statutes have no deterrent effect on white collar crime. Deterrence is based on the certainty of getting caught and prosecuted, not on whether the prosecution will be successful or how severe any punishment would be.