In a speech about the 2008 financial crisis, Pulitzer Prize-winner business reporter Gretchen Morgenson identifies the reasons why no one has been held accountable.
Addressing an audience at The Kirby Center of Hillsdale College, the New York Times reporter said that the Justice Department, under the leadership of Attorney General Eric Holder, decided that much of the activity leading to the Subprime collapse was immoral and wrong, but not illegal. She also declared that prosecutors put off "aggressive prosecution" in 2008-2009 out of fear of holding back the beginnings of a fragile recovery.
Morgenson faulted regulators for "not regulating" and cited "a breathtaking series of ethical breakdowns" in the financial services industry that lead to putting self-interest ahead of "duty to others."
She compared the weak prosecutorial response to the 2008 financial crisis with the aggressive actions taken by the Justice Department during the S&L Loan crisis in the 1990s that lead to over 800 prosecutions.
In the question and answer session with the audience, Morgenson criticized the Dodd-Frank financial services bill as being overly complicated and inefficient. Asked if she would have allowed some of the "too-big-to-failure" to collapse, Morgenson said the failure of Bear Stearns could have sent a message to the financial services industry to "clean up its act."
Morgenson won the Pulitzer Prize in 2002 for her reporting on Wall Street. She is the author of the 2011 book with Joshua Rosner, "Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon," and has covered world financial markets for the New York Times since 1998.