What Happened on Wall St. Ahead of the Crisis? We May Yet Find Out
The eighth anniversary of the 2008 financial crisis is almost upon us, making this as good a moment as any to take stock of how little we know still about the bad behavior and deception that occurred inside the big Wall Street banks that helped to cause it — and how little we may ever know.
A wave of settlements between Wall Street and the Justice Department and regulators resulted in fines in excess of $200 billion flowing from the shareholders of these firms into the coffers of the various federal and state government entities. These payments still feel to me more like extortion than justice. After all, if the prosecutorial arm of the federal government that regulates you demands a 10- or 11-figure payment, it seems pointless to argue.
The settlements also had another extremely disturbing aspect to them: They allowed the big banks to obfuscate the extent of the wrongdoing. The so-called Statement of Facts documents that accompanied these financial settlements were anything but statements of facts about what occurred. Instead, they were mealy-mouthed cover-ups of activity in the years leading up to the crisis. Settlements being settlements, it is highly unlikely we’ll ever see the relevant evidence behind them.
But fortunately, thanks to two separate court maneuverings in recent weeks, we may yet discover more about what happened on Wall Street that caused, exacerbated or tried to cover up the unfolding crisis. As Andy Dufresne reminded us in “The Shawshank Redemption,” “Hope is a good thing, maybe the best of things, and no good thing ever dies.”