Financial Stability News

Flashing news about financial stability and central banking

The beauty of being TBTF

Sometimes in the US you get these angry blog post with “jail the bankers”. There are obvious some folks out there who are angry if their house has been foreclosed, but this attitude is spread much wider, and not just with “radicals”. The financial crisis commission and the Senate Investigative Committee Report (and many others) have documented tons of evidence of fraud and malpractice. But despite all this,  few bankers have gone to jail. The Justice department and SEC has preferred to settle cases, and only the opposition by some brave judges have prevented a clean bill of health for the financial industry after the crisis.

The latest development is the settlement with the banks over “robo-signing”, a practice used in the heydays of the property boom, to make quick loans with little documentation. Now the Obama administration has signed an agreement with the industry that settles all claims and nobody goes to jail.

Simon Johnson is upset by this and discusses why the administration consistently avoids confrontation with the financial industry. A good read and it also gives some insight into the politics around the financial sector in the US.

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