I upset a very old friend the other day with something I said in an email. When I sent the email I didn’t think there was anything wrong with it, but I was mistaken. Re-reading the email I can see exactly why he was upset. I had acted foolishly, rushed the email and used the wrong choice of words here and an inept phrase there. As a result, what I said mattered far less than the way I said it. Hopefully he will forgive me for acting foolishly because it is such an intrinsic part of the human condition. We are all fallible, imperfect creatures with limited knowledge, interacting in a world with similarly endowed beings. Not surprisingly we all regularly do foolish things in our lives and I suppose this where forgiveness comes in. It’s difficult to remain angry with someone for doing nothing more than you have done yourself many times before.
Deliberately and knowingly doing something harmful to another person is another matter, particularly if there is a pattern of harmful acts. For my part, I don’t believe in the existence of bad people, as opposed to people who sometimes do bad things. Still, it’s much harder to forgive this type of person and that is how it should be. Intuitively, we are even less prone to forgive someone for their harmful acts if they hold a position of responsibility, such as a CEO of a large corporation. This is also as it ought to be because the CEO leads by example and has, presumably, misled thousands of employees, shareholders and other stakeholders, into placing their trust in him.
Knowing this, it’s surprising that there have still been no prosecutions of top executives from the major companies involved in the financial crisis. Merrill Lynch, for example, understated its risky mortgage holdings by hundreds of billions of dollars. Angelo R. Mozilo, the chief executive of Countrywide Financial, praised his company’s mortgage practices while privately making derisive statements in e-mails as he sold shares. Executives at Lehman Brothers assured investors in the summer of 2008 that the company’s financial position was sound, even though they appeared to have counted as assets certain holdings pledged by Lehman to other companies. Instead, the government has gone after much smaller fry
like this fifty year old grandmother.
While the justice department appears to have decided that it is simply too difficult to hold top Wall Street executives criminally accountable, a 60 Minutes
segment disagreed and asked why the government is not building criminal cases against companies for violating Sarbanes-Oxley. The Sarbanes Oxley Act, enacted after Enron, imposed strict rules for corporate governance, requiring chief executive officers and chief financial officers to certify under oath that their financial statements are accurate and that they have established an effective set of internal controls to insure that all relevant information reaches investors. Knowingly signing a false statement is a criminal offense punishable with up to five years in prison.
One reason these financial elites have escaped punishment might be that the Justice Department has been captured
by these same financial elites in much the same way that the regulators have. There is a revolving door between the Justice Department and the top law firm of Covington and Burling
, which means that the people on the government’s Financial Fraud Enforcement Task Force
, charged with designing enforcement, are the same individuals that made their careers and fortunes defending the banks and bankers in the first place.
“In a state where corruption abounds, laws must be very numerous.” Tacitus