We Were Right Not to Prosecute Banks
Posted at 11:45 a.m. on Jan. 31
Matthew Yglesias: “Had you secured criminal convictions against these megabanks, you’d have had to nationalize them and assume their liabilities or else face an economic catastrophe… They decided nationalization was bad public policy… implementing a non-nationalization approach to bank recapitalization and then prosecuting the banks into a renewed state of insolvency and then nationalizing them would have been nuts.”
“If saving the banks was a mistake, then the error had nothing in particular to do with prosecutions, and if saving the banks was the right thing to do, then curtailing prosecutions was the only way to execute the strategy… One of the main aims of the Dodd-Frank legislation is precisely to avoid this outcome, and people ought to be asked whether we can do things differently in the future.”
