A conventional wisdom about the recent financial crisis is that no one paid a price for what went wrong. Crooks and con men are thought to have got off Scot free, unpunished and even untarnished by whatever their culpability and venality.
To a degree the conventional wisdom holds true. It is correct to conclude that most of the large cast of characters who played a role in what befell us have never and will never pay the piper.
But it is similarly correct to conclude that there are significant exceptions to this general rule. Since the long arm of the law is slow to reach out, the story is not yet over. In fact, there have been and will continue to be high level leaders who have been charged in a court of law with one or another misdeed, ranging from misconduct to a crime. Moreover bills such as Dodd-Frank have proven to have teeth, to be, at a minimum, a pain in the neck to those would try to cut corners at their convenience.
For several reasons, including the expense involved and the difficulty of obtaining enough evidence, legal recourse is hardly an everyday occurrence. But it is one way plain people have – the state has – of taking on leaders. It is one way of going after and bringing down people in positions of authority. Examples abound of those who have been or are being investigated or even prosecuted for what they did and did not do – some of them with marquee names from the past (Jeffrey Skilling, former CEO of Enron, and Dennis Kozlowski, former CEO of Tyco), and from the present (Jon Corzine, former Governor of New Jersey and former CEO of MF Global Holdings, and Bob Diamond, former CEO of Barclays). Similarly there are examples of investigators who have made a name for themselves by taking on the high and mighty, for example, New York State Attorney General Eric Schneiderman, who seems to specialize in going after high profile individuals and institutions famously (or infamously) seeming to smack of excess.
Look at what’s happening with Libor: More than ten governments around the world are looking into whether big banks rigged rates in a big way. While the case likely will drag on for years, it’s hard to imagine that in the end no one will be held liable. In fact, Barclays has already paid $450 million to settle charges it had reported false rates. For the Big Bank $450 mill is of course a mere pittance. But in this case at least, it’s likely to be a harbinger of more, far more, to come – which means that some individuals and some institutions will probably be brought to account.
Here’s the point: It’s difficult or even impossible for most of us directly to take on those who have far more money and power than we. In this significant sense, the law is our stand-in, our surrogate. It does, or at least sometimes it tries to do what we cannot: to bring to justice parties guilty of crimes and misdemeanors for which the rest of us have already had to pay.