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The US justice department says it will not prosecute Goldman Sachs for financial fraud. Five years after the start of the United States' worst economic crisis since the Great Depression, why is no one being held accountable?
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"It's another milestone in a sad story that we know all too well. We now have enterprises that are so big, so rich, that are so generous with their political contribution to both parties that when they get themselves into trouble, when they drag a whole economy into a fundamental crisis, we not only avoid punishing them for all that they have done, but we bail them out with billions or trillions of dollars to get them back on their feet ... it could not be a more graphic description of who in the end controls the political economy of the US and who pretends to on the other side."
- Richard Wolff, the author of Capitalism Hits the Fan: the Global Economic Meltdown and What to do About it
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Goldman Sachs lost $1.2bn of its clients' money in the mortgage meltdown that started in 2007. But critics pointed to the firm's practices as key factor in the global economic crisis that continues today.
The decision not to prosecute Goldman Sachs or any of its employees comes after a year-long criminal investigation requested by a Senate committee.
According to the US justice department, there is no evidence Goldman or its employees acted criminally.
"Based on the law and evidence as they exist at this time, there is not a viable basis to bring a criminal prosecution,” the justice department said in a statement.
"If any additional or new evidence emerges, today's assessment does not prevent the department from reviewing such evidence and making a different determination, if warranted," it added.
Goldman Sachs welcomed the announcement, saying it was happy to put the issue behind them. But for Barack Obama, the US president, and other politicians, who promised to hold Wall Street accountable, the decision not to prosecute could be a liability moving forward on the campaign trail.
So why have none of the major players in the financial crisis been prosecuted? Who is to blame?
Joining Inside Story Americas to discuss this are guests: Richard Wolff, the author of the book Capitalism Hits the Fan: the Global Economic Meltdown and What to do About it; Bartlett Naylor, a financial policy advocate; and Maricruz Magowan, an economist based in Washington DC.
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"In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn't afford or understand them. Banks had made huge bets and bonuses with other people's money. Regulators had looked the other way, or didn't have the authority to stop the bad behavior.
It was wrong. It was irresponsible. And it plunged our economy into a crisis that put millions out of work, saddled us with more debt, and left innocent, hard-working Americans holding the bag ... We've put in place new rules to hold Wall Street accountable, so a crisis like that never happens again."
Barack Obama, the US president, State of the Union 2012
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FINANCIAL SERVICE SURVEY:
A recently-conducted survey of financial service professionals in the US and UK uncovered some disturbing attitudes in the industry:
- 24 per cent of respondents said that people who work in financial services may need to engage in unethical or illegal conduct in order to be successful
- 26 per cent said they had first-hand knowledge of wrongdoing in the workplace
- 30 per cent say their bonus plan created pressure to compromise ethical standards or violate the law
- 16 per cent said they would commit a crime like insider trading if they knew they could get away with it
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