Only one banker has gone to jail for his role in the financial crisis. That person is Kareem Serageldin, formerly an executive at Credit Suisse. He began serving his 30 month sentence earlier this year.
“It’s not a conspiracy,” says Jesse Eisinger, a senior reporter at ProPublica, on why there have been so criminal proceedings. Instead, the Department of Justice was chastened by a series of court losses, and “effectively lost its ability to indict corporations or go after individuals at the highest echelons of corporate America.”
Eisinger details how the Department of Justice “lost its way” in an article for the New York Times Magazine.
In his account, the turning point was the case against Enron’s Arthur Anderson. Two years after winning the original case, the Supreme Court overturned the verdict. Eisinger says the Supreme Court “didn’t say that Arthur Anderson was not guilty of the crime that they had been indicted for, which was obstruction of justice. It revolved around jury instructions. But the Department of Justice took this as a huge black eye.”
Ever since, the DOJ has focused on crimes that are easier to win – such as insider trading cases. And they’ve been reluctant to investigate or bring charges against company CEOs.
“The real bad actors are the top officers in companies that commit crimes,” Eisinger said. “And you have to go after them successfully if you want to deter white collar crime.”
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