Judge Rakoff On Failure To Prosecute Execs

In a speech last week, and with a careful disclaimer, U.S. District Court Judge Jed S. Rakoff bemoaned a DOJ prosecutorial system that likely has let banker-criminals off the hook. No, he says, he does not know there was fraud, but notes that in describing what led to the crisis the Financial Crisis Inquiry Commission, “uses variants of the word ‘fraud’ no fewer than 157 times.” Regarding the packaging and sale of subprime mortgages, he wondered aloud how this “transformation of a sow’s ear into a silk purse” could have been accomplished without dissembling along the way. It’s instructive, he says, to compare the prosecutorial record after the 70s junk-bond bubble, the 80s S&L crisis, and the Enron debacle of the 90s with what has occurred in the more recent and arguably far more serious crisis.