The New York Times’ Gretchen Morgenson dutifully tells us, based on a Los Angeles Times sighting, that federal prosecutors will not be filing charges against the Tanned One, Angelo Mozilo of Countrywide. This follows the failure of investigations to lead to a criminal prosecution of another major perp in the financial crisis, one Joseph Cassano, the head of AIG’s Financial Products unit.
There has been far too little discussion of why no legal action has been taken.
Readers can no doubt come up with additional reasons, but I see at least two. The first is that the deregulation of financial services in the 1980s and 1990s, along with some very questionable court decisions (as in ones that reversed decades of precedents), have rendered many activities that would have been impermissible perfectly kosher. Yet the very fact that that people who oversaw businesses that were clearly engaged in reckless behavior and at a minimum serious omissions and misrepresentations to investors have gotten off scott free.
The ability of executives to use lawyers and accountants as paid-for human shields has greatly hindered prosecutions. Cassano’s “get out of jail free” card was that he told his accountants what he was up to.