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March 17, 2013

Bank CEO's Not Too Big To Fire

Banks may be too big to fail; however their CEO's are not too big to go to jail!

Lately, more and more there is a discussion that banks are too big to fail in that it could cause a repeat of the financial crisis of 2008. On March 17, 2013 in the New York Times GRETCHEN MORGENSON wrote an article titled, JPMorgan’s Follies, for All to See, wherein she discusses a trade executed by Chase bank that resulted in a loss close to $6-billion. She reports that we already know such banks are too big to fail and raises the question whether they are too big to manage.

On March 13, 2013 the New York Times reported
"Attorney General Eric H. Holder Jr. responded to a question at a Senate Judiciary Committee hearing last week about the failure to prosecute multinational banks for various transgressions by saying, “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if we do bring a criminal charge – it will have a negative impact on the national economy, perhaps even the world economy.”
I can see accepting the premise that some of these banks may be too big to fail at the present time. However, I do not accept that the CEO's, CFO's and other senior officers are not too big to fire and stick in jail. There is plenty of talent in the world and markets are likely to cheer if this happened as opposed to panicking.

Let's do it! If it is not done it means that politicians are also dirty. More

2 comments:

  1. Agree totally. My article last week in American Banker, "Spare the Bank – Jail the Banker," posits that although a 1999 DOJ memorandum may explain why the agency refrains from prosecuting large financial institutions for their blatant regulatory violations, it does not explain why the DOJ refrains from going after the employees who violated the law.
    http://www.americanbanker.com/bankthink/fine-spare-the-bank-jail-the-banker-1062016-1.html

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  2. One reason is current employees of the DOJ expect to receive a cushy job in the finance field after leaving government.

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