The vast majority of the people "responsible" were not doing anything wrong or illegal. Who is responsible? Anyone who:
-Sold a house at an inflated price
-Bought a house at an inflated price
-Sold a mortgage to someone who could not afford it
-Bought a mortgage that they could not afford
-Sold MBS
-Bought MBS
-Used or provided leverage to buy MBS
-Insured these transactions with derivatives or other instruments
Who, precisely, would you like to arrest, and for what? This was not the result of fraud (although I'm sure there was some of that) but the result of a systematic setup for failure. Even if you cleaned up all of the fraud, it still would have happened.
The problem is not that something illegal happened. The problem is that what happened wasn't illegal.
Prosecution is boring and pointless. We should focus on limiting the damage that the next crisis can do. There's the real problem: Nothing happens in this regard. The beneficiaries of the current system have become powerful enough to deflect any external influence on their schemes.
That is the question of our time: How can we break this regime before we find ourselves (or rather: our children) living in a dystopia. As of today the odds are not looking good.
Those are systemic changes, though. Breaking up banks, reinstating Glass Steagall, that sort of thing. I don't think those solutions are out of reach. It will be tough, but it certainly seems doable.
It is a shame that politicians are demagoguing with all this "they need to go to jail" talk, because it is a distraction from the actual problem. That is simply that when too much leverage is applied to the same bet and hedged in the same way by everyone, it will blow up catastrophically when things go bad. That has nothing to do with legality or fraud or any such thing, and everything to do with regulation. It was a political and intellectual failure, not a moral one.
It is a shame that politicians are demagoguing with all this "they need to go to jail" talk
Depending on how cynic you are you could believe this is exactly the message that $wall_street wants them to push. Everyone knows that nobody relevant is going to jail anyway, but it's a nice, superficial "debate" to keep the general public busy with...
Nice in the sense that you can apparently drag it out near infinitely. Remember: Lehmann crashed 5 years ago. Yet when you look at the state of discussion in the mainstream media you'd think it happened just yesterday.
No, it was caused almost entirely by fraud. If not for people within 'the banks' knowingly rating these mortgages as a ludicrously good buy, etc, there wouldn't be a banking crisis.
There are even further systematic abuses that should see thousands jailed, such as deceptive marketing and intentional misrepresentation of clients. None of this would have been self-sustaining without all the coverups.
The scale of the market is so huge that you would have to believe that the entire finance industry is composed of idiots for that to be true. These securities are not rocket science. They were sub prime mortgages that had a certain historical default rate. People ignored those rates all over the place and levered up. That is not fraud. That is greed.
Did fraud make it worse? Probably, but you can debate how much since people were willingly taking these risks anyway. We all knew it would end, and that it might end dramatically. But we didn't know how or when that would happen, or how bad it could get.
>There are even further systematic abuses that should see thousands jailed, such as deceptive marketing and intentional misrepresentation of clients.
I'm okay with that as long as all the homeowners who lied about their financial situation go to jail as well. How many thousands of otherwise ordinary people made false statements on loan applications?
Oh, so you aren't okay with charging a single uber-fraudster until all the little guys are safely put away. That's handy.
While I agree that the little guys committed crimes too the bankers were ALSO in a position of power AND have a duty to protect their clients AND engaged in an on-going conspiracy to commit fraud. I'd be pissed if someone tried to cheat me on EBay, I'd be livid if I discovered my banker had intentionally been giving me bad advice because he profited on every dollar I lost.
The difference in scale between these things is so monumental that it makes your comment seem absurd.
-Sold a house at an inflated price
-Bought a house at an inflated price
-Sold a mortgage to someone who could not afford it
-Bought a mortgage that they could not afford
-Sold MBS
-Bought MBS
-Used or provided leverage to buy MBS
-Insured these transactions with derivatives or other instruments
Who, precisely, would you like to arrest, and for what? This was not the result of fraud (although I'm sure there was some of that) but the result of a systematic setup for failure. Even if you cleaned up all of the fraud, it still would have happened.