Of Scapegoats, Small Fish and Big Sharks

Five years after the collapse of Lehman Brothers, one of the financial crisis’s most notable trials is finally over this week. A jury has declared Fabrice Tourre, a Goldman Sachs employee, guilty of the charges brought against him by the Securities and Exchange Commission. Tourre, who was 29 when charged, has become a scapegoat and the face of the irresponsibility that brought about the crisis.

It is right that even a small fish like Tourre should be held accountable for his actions in court. It is not right that the big sharks of the finance industry have so far escaped untouched.

The pressing question: Why haven’t any of the upper-level bank managers in the U.S. been tried in a civil or criminal court? The answer is both technical and political. U.S. law creates hurdles too high to convict a manager of fraud. Marking a clear difference between fraud and poor business decisions or entrepreneurial failures is equally difficult. However, there is a respectable portion of politics involved as well: At the end of the day, the justice system and the relevant agencies are unwilling to pursue the individuals most responsible for the financial collapse. The ties between the politicized judiciary and the banking industry are simply too strong.

Flaring tempers will have to accept that no upper bank manager will have to stand trial because of the crisis. It may be a comfort, however, that investors can still bring private suits against them. At least in this way, several hundred billion dollars have already flowed back into the hands of bank customers and business partners.