The Sunday New York Times has a review of Jesse Eisinger's new book The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives.
The review concludes:
While the "unelected permanent governing class" may have been willing to look the other way when highly paid bankers wrecked the economy, many of the workers who lost their jobs and families who lost their homes were not. Outside the Beltway, the fact that the Wall Street titans who blew up the financial system suffered little more than slight reductions in their bonuses only reinforced the perception that the "system" is "rigged" — with the consequences we know only too well.
This strikes me as seriously off base in at least two important ways.
It's an oversimplification to sum up the financial crisis as "Wall Street titans...blew up the financial system" or "highly paid bankers wrecked the economy." That wrongly lets off the hook all the other contributors: the real estate agents and mortgage brokers and builders who sold houses to people who ended up not being able to afford them, the borrowers who made bad judgments or even lied on loan applications to buy properties that turned out to be bad short-to-medium-term investments, the government officials at the Treasury department and Federal Reserve and White House who, with rash actions, made a problem much worse.
It's also inaccurate to say that the bankers "suffered little more than slight reductions in their bonuses." I've written about:
the case of Bear Stearns, whose chief executive, Jimmy Cayne, saw the value of his stake plummet to $61 million from $1 billion. The New York Times reports that the chief executive of Lehman Brothers, Richard Fuld, "was once worth close to $1 billion and now has a net worth estimated at about $100 million."
In addition to the financial costs, those executives suffered reputational damage that, if hard to quantify, is nonetheless more than "slight."
