> that in no way prevents making an example of the people who are in a position of responsibility
I can't stand this argument.
If as a CEO you completely destroy a company, an industry or the entire economy that does not mean that (a) you have done some illegal and (b) you therefore deserve to go to jail for it. Yet the "witch hunt" that seems to permeate through society seems to suggest that they should.
Avoiding another GFC requires focusing on managing systemic risk not individual people.
I'm not talking about punishing people for destroying the economy and I agree that a lot of people have a lot of misplaced anger about it.
But in this particular financial crisis there were large amounts of outright fraud and criminal activity, and the authorities are systematically looking the other way and even rewarding the perpetrators because they're well connected and it would be awkward to do otherwise.
In particular, AIG was engaging in insurance fraud, selling policies beyond any conceivable ability to pay. This is not something you do by accident, or a calculated risk that doesn't pan out.
As another example, HSBC's recent revelation that they were in the money laundering business, and the US government's public statement that nothing can be done about it because they're too important to the economy.
I'm not concerned about avoiding another GFC, those will keep happening and the consequences are manageable. The consequences of the bad incentives of parasites and criminals being allowed to prosper are much more serious.
I can't stand this argument.
If as a CEO you completely destroy a company, an industry or the entire economy that does not mean that (a) you have done some illegal and (b) you therefore deserve to go to jail for it. Yet the "witch hunt" that seems to permeate through society seems to suggest that they should.
Avoiding another GFC requires focusing on managing systemic risk not individual people.