If We Don’t Send Bankers to Jail, They Will Not Stop Cheating

Crime pays, if you’re a banker.

How many stories of fraud do we hear from the banking industry? NY Post reported that the DOJ probing Goldman Sachs for allegedly rigging Treasury auctions. This is a $14 trillion dollar market. Apparently, Goldman Sachs won almost all auctions for US Treasury bonds from 2007 to 2011.

Supposedly, there are safeguards in place to make the bidding competitive. But using emails/chats, Goldman bankers colluded with other banks and somehow managed to submit a bid “just above” the offer at the last minute.

I can’t pretend to understand all the intricacies of this, but one has to wonder how much kick back the colluders at the other banks were getting.

The main point, anyway, is that this is more of the same. Bankers will lie, cheat, and steal their way to immediate riches because nothing happens when they’re caught. The bank makes billions, they pay millions in fines. The guilty bankers don’t go to jail, don’t get their licenses revoked, don’t get clawbacks. There is no real disincentive to cheat. Frankly, it’s a good investment to continue to break the laws.


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