Bankers: if you can’t jail them, at least you can sue them

I read three interesting commentaries this week about the financial crisis, and it builds upon yesterday’s discussion of Credit Suisse being the first bank for over a decade to admit to criminal wrong-doing in the USA.

The first is from Private Eye last week:

“The death of Charles Keating, synonymous with the US savings and loan scandal of the 1980s, was a reminder of how different things were.  Keating ran Lincoln Savings & Loan (similar to a building society), the largest of the 700-plus S&Ls that failed, costing more than $90 billion to rescue.  Despite influential political connections, he was jailed for ten years in 1992 – that sentence was overturned in 1996, but he pleaded guilty to wire fraud.  Keating was one of 839 criminal convictions of those responsible for S&L frauds.

“Fast forward to the global financial crisis.  More than 450 US banks failed. Over 700 received government support.  The cost to the US taxpayers is more than $3 trillion.   The number of bankers jailed?  Less than 20 and all local, not national figures like Keating.

“No Wall Street banker or trader has been successfully prosecuted for their role in the crisis.”

“Britain’s banking crisis has cost taxpayers £141 billion, according to the National Audit Office estimates last year.  No British banker has been charged with a criminal offence – unlike the successful prosecution of bankers in Iceland and Germany, and the ongoing cases in Ireland and Holland.”

The second is in the opening salvo of Iain Martin’s excellent book Making it Happen about the rise and fall of the Royal Bank of Scotland (RBS) and, specifically, Fred Goodwin:

“Goodwin lives in Edinburgh, draws a pension from taxpayer owned RBS, sees a few friends, shoots, repairs vintage cars, tries not to read the newspapers and avoids engaging with those who want to question him about his motives, recollections and regrets. ‘He has shut out the world’, says a friend.  His marriage foundered after it emerged that he had an affair with a member of staff at RBS in the run-up to the financial crisis … other than the removal of the Goodwin honour, very few banks have faced any sanction, which is remarkable considering the scale of the disaster. 

“Johnny Cameron, the former head of the division at RBS that oversaw investment banking, was singled out for criticism in an investigation by the FSA.  Cameron is not allowed to take up any full-time position in the City.  Peter Cummings, a former banker at HBOS has been fined … Bob Diamond was forced out of his post at Barclays … Sir James Crosby of HBOS lost his knighthood,  A few others have been forced to stand aside from their jobs, and that is pretty much it. 

“No one has gone to jail.”

Finally, a third piece from Ian Fraser in the Scottish Herald:

“A third of the 12,000 plus individuals who have signed up to sue the Royal Bank of Scotland over its ‘misleading’ £12.3 billion 2008 rights issue are current or former members of staff at the bank … they are effectively suing their employer, together with four of their former bosses - Fred Goodwin, Sir Tom McKillop, Johnny Cameron and Guy Whittaker.”

If you can’t jail them at least you can sue them.