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Even Bankers Deserve Fair Trials

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When people outside the financial sector learn what I do, they generally ask two things: when will the economy improve, and why hasn't anyone gone to jail yet for the financial crisis.

I don't have the predictive analytics, or the hubris, to answer their first question. But I do have some new insights-new to me, anyway-into the second.

Recently, I spent two and a half weeks as a juror on a criminal assault trial. The case mainly involved teenagers from a rough neighborhood in Washington Heights, in the northern reaches of Manhattan. We acquitted two of the three defendants and cleared the third of the most serious charges he faced. I'm not sure any of them was innocent, but that's different from not being proven guilty. The government's evidence was generally flimsy and uncorroborated, and in some cases the wrong charges seemed to have been brought. Had we been asked to consider lesser degrees of assault in some of the counts, for example, the prosecution might have gotten more of the guilty verdicts it wanted.

In this country, the burden of proof in criminal cases is exceptionally high, and I'm not sure how many people truly appreciate that until they get a live, close-up view of the justice system. (I certainly didn't, and I consider myself a student of American civics.) The case I sat through attracted no headlines. The courtroom, though large, was mostly empty; the trial, though longer than my co-workers probably would have liked, was relatively brief; the defense lawyers, though capable, did not come across as being particularly expensive. And still, aside from two counts where the proof was rock solid, the government failed to convince the jury that it had proven its case.

I certainly don't mean this to imply that anyone should accept a cop-out, but presuming that prosecutors still intend to go after the big names one might tie to the financial crisis, imagine the pressure, the attention, the months or years of proceedings, the armies of lawyers on the other side with unlimited resources for a strong defense. Think of the reams of briefings clogging up the court system, and the mounds of documentation tied to transactions entered into before the crisis, which likely wouldn't look any less confusing today than they looked at the time they were executed. I'm suddenly a bit more, though not entirely, sympathetic to the temptation for regulators to settle cases like the one against former Countrywide CEO Angelo Mozilo, who paid a $22.5 million penalty but made no admission of guilt.

As my fellow jurors and I were polled on our verdicts, I thought a lot about our legal system, which for all its flaws was designed brilliantly. I thought of the young men at the defense table and the young men who testified against them. They live less than 13 miles from Wall Street, in a place where life can be very tough and police encounters routine. My daughter is not yet in kindergarten and already she has more advantages than some of these young men ever may receive. Reflecting on all this, I had to fight back tears as the verdicts were read.

Might my eyes well up the same way over a criminal trial tied to the financial crisis? Well, it's possible. If the government failed to prove its case, then a finding of not guilty would reinforce my respect for the tenets of our justice system, which would be meaningful to me. And of course if prosecutors proved their case and won a guilty verdict, then that's justice, too-and reason to feel a deep sense of shame for people who would seem to have had every conceivable advantage, and wasted it.

Heather Landy is the editor-in-chief of American Banker Magazine. This article appears in the April issue, viewable here

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Comments (3)
Unfortunately many business people that live in the "global" environment weigh compliance with laws across all countries in the same manner as they do environmental, political, or other business risks. It is all about risk measurement. They weigh each risk element, attach a percentage assessment and a total dollar amount to it. So in such an environment--there is no brightline test--such as george Bailey might have faced--would i do this act if it would ruin my standing in my community? That brightline is gone. Instead we have the risk assessment. What are my chances of getting caught, say 10%; and if I get caught, what will it cost me to hire lawyers to get out? $10 million, and what will be the fines or civil liabilities , say $50 mil; --what harm to business reputation? None--because everybody does it--I can just plead ignorance and overexhuberance--business practice etc. [thats where we lost touch with Bailey's world--no concern by big banks about business reputation--a byproduct of TBTF. So after i run these calcs and weigh them agains a calced upside reward of say $100 mill----its a no brainer 10% chance of paying $60 mil. vs $100 mil in pocket. Now if i throw in the risk of criminal prosecution its a game changer; suddenly i must take into account the downside of spending the next 5 years being picked to death by lawyers--no business done--all consuming effort to avoid JAIL. The cost goes up in every context--opportunity cost joins the list--i cant be a wheeler-dealer while under indictment. my friends avoid me not because of their disgust for me--but because they dont want guilt by association. even an unsucessful prosecution strikes a blow at putting more weight back on that scale and preventing unfettered discretion to reighn as if we all lived in a 3rd world "anything goes" counrty. that is where we are today--the Bankers must bring this to bear--or they will be forced to sink to the lowest common denominator--and sooner or later the pendulum will swing and the best one to dend to jail will be the biggest--and what CEO is not afraid that his subordinates will not sink him--his wife or mistress will not roll on him?
Posted by OLDER&WISER | Monday, April 02 2012 at 12:29PM ET
Our Legal system is probably summed up best with the Johnny Cochran's immortal words, "If the glove don't fit, you have to acquit!"

All the rest in commentary.
Posted by Bryan G | Monday, April 02 2012 at 12:38PM ET
The last thing we need is for the government to use its power to railroad an unpopular industry with bogus criminal convictions or civil settlements. That said, the feds seemed to show a lot more vigor and creativity during the tech bust than they have lately. Nothing this time around like Jeff Skilling's conviction and prison sentence for failure to provide honest services (an offense that the Supreme Court sharply narrowed in 2010). Whether that's progress or backsliding is a matter of opinion. Neil Weinberg, Editor in Chief, American Banker.
Posted by Neil Weinberg | Monday, April 09 2012 at 3:53PM ET
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