Jesse Eisinger is upset that the wrong people are going to jail. Nobody from Lehman, Merrill Lynch or Citigroup, no top AIG or Bear Stearns executives, no big mortgage company executive, not even Angelo Mozillo.
Eisinger dismisses the insider trading prosecutions as a “sideshow” to take attention away from the lack of prosecutions over the banking meltdown. That’s because it’s easier to convict for insider trading than for corporate stupidity. Yet, says Eisinger, Enron was complicated and yet “prosecutors got the big boys.”
Eisinger’s incredulous: “The world was almost brought low by the American banking system and we are supposed to think that no one did anything wrong?” He dismisses as “wildly implausible” the explanation that the banking disaster was unforeseeable, and “shocking” that the “dumb-rather-than-venal justification” has been “pervasive and triumphant.” According to Eisinger, “it strains credulity to contend no one was” guilty of a crime.
Well, my credulity is doing ok because I don’t think that losing a lot of money is a crime. Of course, if the prosecutors were unleashed, as they were in Enron, they could probably trump up some crime or other, but it wouldn’t be losing money. At worst it would be lying about it, as supposedly happened in Enron. But the money still would have been lost.
Even most journalists seem to understand this now. Hopefully the few that don’t will not make a comeback anytime soon.
I was already no fan of the insider trading prosecutions. The idea that they occurred just to divert attention from the absence of even dumber prosecutions for losing money is plausible but not reassuring.