Matt Taibbi has a new piece in Rolling Stone, using Senator Levin’s report on the financial meltdown to show that Goldman Sachs broke the law repeatedly. You have to take Taibbi with a grain of salt, especially when it comes to Goldman (here is the NY Times on the same report), but here is a stunning fact pattern on how prosecutions of financial crimes have gone steeply downhill in the past 20 years:
William Black was senior deputy chief counsel at the Office of Thrift Supervision in 1991 and 1992…. Black describes the regulatory MO back then. “Every year,” he says, “you had thousands of criminal referrals, maybe 500 enforcement actions, 150 civil suits and hundreds of convictions.”
But beginning in the mid-Nineties, when former Goldman co-chairman Bob Rubin served as Bill Clinton’s senior economic-policy adviser, the government began moving toward a regulatory system that relied almost exclusively on voluntary compliance by the banks. Old-school criminal referrals disappeared down the chute of history along with floppy disks and scripted television entertainment. In 1995, according to an independent study, banking regulators filed 1,837 referrals. During the height of the financial crisis, between 2007 and 2010, they averaged just 72 a year.
Thoughtbasket 