Shall We Stop Carping About the Lack of Prison Terms for Bankers and Regulate the Saps?

The New York Times weighed in yesterday with an article about the huge corporate penalties being paid – for civil and criminal violations by corporations – accompanied by what many regard as frustratingly few criminal cases against the executives who presided over these outrages.

Why aren’t we sending the bastards to jail, people want to know?

Yes, it seems like big companies can buy their way out of things, often without any actual guilty plea – using the neither-admit-nor-deny option.

Bankers drilling the entire Western Economy and then either keeping their jobs or collecting a nice severance and retiring, is a particular insult to our culture of retribution for crime; truth is, proving criminal acts is a lot harder than showing someone did something stupid or self-serving.

But really, it’s time we grew up and took a more practical approach. To date, we’ve been light on regulation and then lived by the fiction that we’ll catch the offenders after the fact. Bad approach for two reasons: there’s no proven deterrent effect even when we convict corporate wrongdoers (insider trading continues, thank you very much); and bankers in particular are free to inflict huge losses on the public sector, as seen in 2008-2009.

The only thing that stopped Jamie Dimon, CEO of JPMorgan (JPM), from carping about the watered-down provisions of the Dodd-Frank regulations was his bank’s recent trading blunder. Memories and attention spans are short among legislators and officials in every administration. But they’re not among companies seeking freedom to do as they please, including run amok. Count on Dimon and his cohorts at Citigroup (C), Bank of America (BAC), Goldman Sachs (GS) and Morgan Stanley (MS) to start carping as soon as they think it’s tasteful to do so.

Any one of them is big enough to sink the Federal Deposit Insurance Fund and require another federal bailout, with but one stupid move.

JPM Total Assets data by YCharts

Wouldn’t you trade tough regulation of banks – and the possibility that they’d be perhaps less profitable institutions because of the government shackles – to avoid a repeat of the recent financial collapse?

We sure as hell aren’t going to be sending to jail those who presided over the mess.

Jeff Bailey is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.

Filed under: Economic Watch