|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Will Bankers Be Prosecuted?
Floyd Norris
International Herald Tribune . December 11, 2008
_________________________________________________________________________
EXCERPT: The Wall Street backlash is under way. If it grows strong enough, it could end with some bankers facing criminal trials. As with most searches for scapegoats, the process will not be entirely fair. But efforts by the big banks to point the finger of blame elsewhere - to Fannie Mae for guaranteeing bad loans, or to the accountants for requiring the banks to admit they owned assets that were not worth much anymore - seem to be failing at the same time public anger is growing. […] If public pressure rises to prosecute one or more bankers, there is the not-unimportant question of what charges could be proven. The bosses at Tyco stole from the company, and those at Enron put out false financial statements that violated accounting rules. WorldCom lied about the nature of its spending, and thus turned losses into profits. In this mess, on the other hand, there is every indication that many top bankers did not understand the risks they were taking, and were stunned when the losses materialized. That may have been stupid - another reason to think bonuses are inappropriate - but stupidity is not a crime. As a U.S. District Court judge wrote this month in considering claims against the officers and directors of the mortgage lender Countrywide Financial, "the federal securities laws do not create liability for poor business judgment or failed operations." But that same opinion, by Mariana Pfaelzer, a judge in Los Angeles, offers a road map for any prosecutor who wants to make such a case, even if there is no proof that company executives knew their financial statements understated the losses and risks they were facing.
|
|
|
