To cite but one example: http://www.foxnews.com/story/2008/09/26/wamu-gives-new-ceo-m...
http://www.npr.org/2017/07/11/536642560/is-the-justice-depar...
The most common way that liability for fraud was offloaded was to have the bank purchase the service of validating loan applications from some willing schmuck.
That is, by law the originating institution is required to verify that the applications it processes meets some guidelines. Since the applications absolutely did not, and the bank was unwilling to lie about it itself, what they did was purchase the service of looking through the application from whoever who was willing to sign that the application meets requirements for the least amount of money, and over time picking the "institutions" that had the lowest denial rates (which of course trended to 0).
This way, the defense of the bankers was essentially: "We did not defraud our customers, instead our dastardly subcontractor did, and we had absolutely nothing to do with it."
However, I bet that a jury could be convinced that they had both sufficient information that they should have known that their subcontractors were fraudulently approving applications, and a duty to make this not happen. The ultimate reason why no heads rolled is that those heads are extraordinarily politically connected.
This is probably very true
That said, in business, if someone is willing to put their signature on a dotted line, it isn't your job to remind them of its implications.
Personal example: a friend of mine sold his house recently. The HVAC system was suspected but not known to have a leak - it had lost about a pound of coolant in a month. The leak was suspected a few days before close. He got the HVAC refilled, told the technician to write "may have a small leak" in his report, and sent this report to the buyer. The buyer agreed to close the deal anyway. Morally, his job was to properly identify and fix the leak before selling the house. In reality, the buyer signed the dotted line given the information available to her. If the HVAC now needs repairs costing several thousand dollars, no judge is going to tell him to accept liability.
Standing on the outside, it's very hard to see the laws as not being a massive inside job - the top tier looking after the top tier of society.
The problem isn't that they didn't break laws.. it's the justice department's fault for accepting cash settlements instead of actually taking people to trial and holding them accountable. The criminals always win in this scenario because nobody goes to jail, the fines are less than the profit, and there are no lessons to be learned other than to not get caught.
Matt Taibbi does a really good job of examining this shift in the Justice Department's strategy in his book The Divide: American Injustice in the Age of the Wealth Gap, which I recommend if this is a subject you are interested in.
What is one specific law that one of these executives broke? I have yet to see anyone specify what law they broke.
Just like the Wells Fargo CEO, bad incentives are not illegal. He didn't personally break any laws or illegally sign anyone up for an account without their knowledge. He may have even known that a bunch of their accounts were fake, but there is no evidence he had any knowledge of specific accounts.
Good work if you can get it.
Also, taxpayers made a profit on the bank bailouts. The bailouts that cost taxpayers a lot money were of GM and Chrysler: https://www.thebalance.com/auto-industry-bailout-gm-ford-chr... Wikipedia has details on TARP, the ProPublica page I usually cite for the return on bank bailouts is down: https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
The priority seems to be keeping firms solvent in spite of horrible stupidity and decades of rent seeking behavior.
This isn't capitalism it's a game that lets the powerful win over and over again. True capitalism has firm failure and creative destruction.
"the useful bits that remain." Yeah, a bunch of well-financed speculators will buy those foreclosed properties for pennies on the dollar and profit from the other end of that as well. And don't forget, for every dollar that was long on a swap, someone was short and made a damn killing. It's not like that those 30 year US notes were bought back by the government to decrease USD circulation.[2]
I'm right there with you though on your second and third assertions. (Though, on an optimistic note, more companies seem to be side-stepping the standard monopolistic 'approach the standard set of IBs to underwrite your IPO and give them 6% since they're the only ones who have the Rolodex to call up John, his old buddy from Wharton, or Grant his golfing buddy')
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[0] And let's not forget, banks around the world fixed LIBOR for years to fatten up their bonus. There are the equivalent of IRC chats admitted to evidence from a whistle-blower (immunity for amnesty) where Trader A would say "can you plz make sure that __ doesn't go above __ for 2 days? ive got <a position worth about 300 million USD> in <some ISDA product> deep, it'd rly help.. if you can make this work I'll get you whatever you need 50k..100k". (It's been a while since I read the transcripts, but that's the lexicon in which they spoke, and how the transactions were structured internally amongst what amounts to a group of ~100 people. With more or less complete control for the overnight rates for the entire world, they were gaming the system at magnitude so large where kickbacks between other agents would treat 50k and 100k EUR as interchangable.)
[1] Basically every single person from the buyer, to the broker at the local bank who altered the risk profile so he could post more loans for his $500 closing bonus, to the broker who locked the loans and bundled them up into CDOs for vast amounts, to every quant with a PhD and a seat at ISDA who concocted tranching MBS', to every trader who made a risky trade -- until the house of cards fell -- was at fault. Some certainly harmed more than others.
[2] https://fred.stlouisfed.org/series/WCURCIR I think that's M2, but par for the course
The idea of the economy grinding to a halt is a straw man. Assets sold at a discount are typically snatched up. What is "lost" is just the profits that were earned via a bad risk management strategy. We should not incentivize firms to be sloppy about risk, ever.
Vibrant firm failure and rebuilding is a better health indicator for an economy than state-backed crony corps claiming solid profits year after year.
They were highly compensated exectives who knowingly played Russian roulette with the world economy. Yet were never prosecuted? And in the end we "lost" a major bank so the power further concentrated.
I can't see how any of that is a positive.
Capitalism only makes sense when the big guys are allowed to fail and fail big.
If they had been allowed to, smarter people would have bought up the bits that had value and likely done much more with them to benefit society.
The status quo is so full of entrenched rent seeking, which is probably why it got saved.
Same with banks. Why should a startup like bank simple fail after being deluged by regulatory obstacles, yet the firms doing things the bad old way get bailed out over and over?
Capitalism without firm failure is much more like fascism than anything else.
http://www.pbs.org/wgbh/frontline/article/were-bankers-jaile...
Few, but some.