Let the sun shine on Wall Street
© Getty Images

The thieves of Wall Street who crashed our economy are not immune from criminal prosecution. The new leadership of the Department of Justice has telegraphed a new priority:  No longer are financial institutions too big to fail or jail. In a recent policy statement, Deputy Attorney General Sally Yates stated the DOJ will now pursue alleged corporate criminals “regardless of whether they commit their crimes on the street corner or in the boardroom….we mean it when we say, ‘You’ve got to cough up the individuals.’”

Even former Federal Reserve Chairman Ben Bernanke seemed to endorse the change when he opined in his memoirs that the government should have prosecuted bank officials for nearly sending the nation into a depression.

ADVERTISEMENT

Until recently, the Department of Justice was so protective of the banks it actually used its discretion to make sure that no one was prosecuted for financial crimes related to the meltdown. For example, when confronted on 60 Minutes with evidence of bank fraud at Countrywide Financial and Citigroup, Deputy Attorney General Lanny Breuer explained that bad behavior and greed did not translate into criminal misconduct, as if a century of jurisprudence regarding bank fraud did not exist. Later, in a confidential and candid meeting with corporate attorneys, Breuer offered a far more accurate and impassioned excuse for his inaction. He explained his failure to prosecute those responsible for the economic collapse was his fear “about what a lawsuit might result in at a large financial institution.” Shortly after the public release of these remarks he announced his resignation and rejoined a Wall Street law firm that defends the type of white-collar defendants that he had previously failed to prosecute.

Breuer’s unceremonious departure from DOJ and then Attorney General Eric HolderEric Himpton HolderNew Jersey redistricting reform blasted as gerrymandering power grab Trump attorney general pick a prolific donor to GOP candidates, groups: report Trump on sharing photo of Rosenstein behind bars: 'He should have never picked a special counsel' MORE’s call for bank whistleblowers to come forward, after utterly ignoring them for most of his tenure, were the first signs that a promising new dawn was breaking on a truly dark and unaccountable era. Congress refused to back down from its embrace of whistleblowing as a potentially powerful anti-corruption mechanism as established within the whistleblower protection provisions of the Dodd-Frank Wall Street Reform Act. The forces of reaction on Wall Street assembled an army of fraud lobbyists to try to persuade members of Congress to dismantle the whistleblower reforms to no avail.

For its part, the Security and Exchange Commission (SEC) has also shifted gears toward regulatory integrity and beefed-up enforcement. In ruling after ruling, the SEC has signaled that it intends to listen to whistleblowers, treat retaliation against them as evidence of cover-up, review employee agreements for evidence of improper chilling of potential whistleblowers, allow them to present any internal documents that evidence wrongdoing, and view internal whistleblowing as acceptable disclosures warranting whistleblowing protection.

For the dawn of this new age to turn into the sunshine that disinfects, whistleblowers will need to speak out as never before. “If you see something, do something” should be the new motto because the nation’s economic security and well being is at stake.  Remaining silent or staying only within internal bank channels is the equivalent of going back to pre-2008 sharks and foxes enforcing the rules.

Earlier this year Notre Dame University and the Labaton Sucharow law firm substantiated this view when it released the results of the largest survey of employees of banks and finance companies ever conducted. The results were chilling: Nearly one third of all employees with less than ten years of experience would engage in felonies if they thought they could get away with it and of all employees surveyed, one fourth would do the same.

Those who have already blown the whistle are determined to stand behind those who come forward to blow whistles within the federal government’s new regulatory schemes in the hope that they can trust the Department of Justice’s new prosecutorial commitments. Failure will cloak Wall Street with an impenetrable cynicism. Success will finally allow the sunshine in so that it can transform an industry desperately in need of cleansing, especially at the top.

Bowen was a business chief underwriter at Citigroup who discovered that billions of dollars annually of defective mortgages were being sold to investors in securitizations as quality mortgages. He warned management repeatedly for 18 months about possible unrecognized financial losses. He provided evidence to the SEC and gave nationally televised testimony before the Financial Crisis Inquiry Commission on April 7, 2010. His story was featured in the 60 Minutes story “Prosecuting Wall Street,” which aired December 4, 2011 and has since been re-aired on CBS and CNBC eight times. Bowen is presently a senior lecturer of Accounting at the University of Texas at Dallas and is a well-known speaker on ethical leadership and the financial crisis.  www.richardmbowen.com