- Jeffrey Sachs: Banking Abuses ‘Can’t Get More in Your Face’!
by Paul Vigna, http://asia.wsj.com/
When the Columbia University professor Jeffrey Sachs unloaded at a Philadelphia Fed conference in April, telling attendees that most of the daily business of Wall Street is “prima facie criminal behavior,” he set off a small storm, but not exactly in the way one might think.
MoneyBeat caught up with Professor Sachs, who talked about the reaction to his appearance, the lack of Wall Street prosecution, the effects of big money on the political system, and the shortfalls of Dodd-Frank and regulatory reform.
What was the reaction to your appearance?
An outpouring of emails and notes to me saying you’re right, right on, including from inside Wall Street. People recounting stories, people saying that they were happy to hear it because it was what they had observed as well. Actually (chuckles), no push back, strangely enough.
I didn’t think too much about what I was actually going to say at the conference, until the video came on. It wasn’t planned exactly that way, but thinking about who was there and what they were talking about…just a building feeling of mine that almost every day brings new horror stories of illegality, lawsuits, charges, that this needed to be said. So I a little bit let loose spontaneously, but glad that I did.
When I really started to count in fact and keep track of the number of lawsuits, and the number of settlements, and it’s amazing actually how many there are, of course. Libor, Abacus, other financial fraud scandals, money laundering, insider trading. The list is actually extraordinary. The frequency of new cases, new settlements, new SEC charges, is stunning. And the lack of any apparent remorse from leaders of the industry.
[There hasn’t been one] major figure in the industry acknowledging this rot, and also calling upon the industry to clean itself up. And I find that amazing because I would’ve expected at least one or two voices that would’ve have played that role and that hasn’t happened yet.
Why the lack of prosecution?
The legal defenses are very powerful, the lobbying is very powerful, the government in general is completely squeezed even if it would like to regulate. But we also have a revolving door of senior regulatory officials, congressional staff, congressmen and senators. Everyone’s in on this. So the question is how is this going to be cleaned up, what will it really take to get this under control? We just haven’t seen glimmers of that yet.