Why no punishment for CEO greed?

June 9, 2011 – In the 1970’s there was a Texas financial scandal known as “Rent-a-Bank.” Fifty bankers were uncovered by regulators as having perpetrated fraudulent loans. No criminal prosecutions resulted, so it was almost predictable most of the scammers were involved in the national savings and loan scandals of the 80’s, with far more impactful results.

“Crony capitalism is the ability of favored elites to loot with impunity and the failure of regulators to do their jobs,” writes Bloomberg reporter William K. Black in MSN Money. “Unless you imprison the fraudsters, sophisticated financial scams grow ever more destructive.”

MSN Money quotes a 1993 article by George Akerlof and Paul Romer. These two Nobel prize winners, according to Black, explained “how CEOs can use accounting fraud to create ‘a sure thing’ in the form of record short-term gains . . . While it lasts, this fictional income allows the chief executive officer to loot the bank.”

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1 comment for “Why no punishment for CEO greed?

  1. April 8, 2012 at 5:00 pm

    Well put. I was an early supporter and ioutrcbntor to the Obama campaign also, but have come to the same concluisions. Is there any way to change things short of a revolution? As you can see from the above comments, we continue to get bogged down in ideological attacks or bias questioning when neither of the two major parties is really any different on issues related to money influencing policy and neither deserves our support.Could there possibly be enough support generated in 2012 for Jill Stein and the Green Party by the Occupy Movement and others to win an election? Given the history of being stuck with old allegiances to the two-party system I have my doubts. There are probably too many who think we are not able to make a break from old ways of doing business, exploiting labor and natural resources, poluting the environment, and the like, to support a Green Party candidate but there are still 10 months left!

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