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Talks of the Campus

Insiders, experts, faculty, and students discuss pressing issues of the year in the weekly Milbank Tweed Forum.

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With its provocative title, “Crooks on the Loose? Did Felons Get a Free Pass in the Financial Crisis?” the February 8 session of the 2011–12 Milbank Tweed Forum did not disappoint. Before reporters, news cameras and a standing-room-only audience, moderator Neil Barofsky ’95, senior fellow at the Center on the Administration of Criminal Law and the Jacobson Leadership Program in Law and Business as well as former special inspector general of the Troubled Asset Relief Program, kicked off by asking his star panelists why, three years after one of the worst financial crises in U.S. history, had not one executive of a major investment bank been prosecuted?

Lanny BreuerRepresenting the federal government, Lanny Breuer, assistant attorney general for the Criminal Division of the U.S. Department of Justice, bristled. “I just don’t accept the fact that we haven’t done anything,” he said, pointing to myriad recent insider trading convictions and Ponzi scheme busts. As for the big banks, Breuer expressed sympathy with the idea that Wall Street has not been held accountable but said that bringing criminal cases was challenging, as the government must prove every element of a crime beyond a reasonable doubt. “Viscerally, I understand people want to see Wall Street executives being ushered out in handcuffs,” he said. “While I understand the desire, that’s not enough.”

Eliot SpitzerWall Street crusader Eliot Spitzer, former New York governor, gave a glimpse of the ferocity that got him elected by continuing the pressure on Breuer. “There was significant deception and fraud that should be prosecuted,” he said. “Corporations are not held accountable. Wall Street persuaded us that they could regulate themselves. Self-regulation is complete hokum.”

Barofsky mentioned the new financial fraud task force announced in President Obama’s 2012 State of the Union address. He questioned whether the new initiative would amount to anything.

Predictably, Breuer defended it as worthwhile and dropped respected names such as current New York Attorney General Eric Schneiderman. Just as predictably, Spitzer, former New York AG, dismissed it. The wild card was Mary Jo White, former U.S. Attorney for the Southern District of New York and now a partner at Debevoise & Plimpton. She criticized the task force, but because it would make Wall Street firms, now her clients, targets: “It gets back to my frenzy concern. You don’t want that kind of pressure in the system. You don’t want the search for scalps to be the metric for success. Politics doesn’t belong in this space at all.”

Breuer’s exasperated response: “On the one hand, we haven’t done enough; on the other, task forces are too aggressive.” There were no winners here.

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