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Today's Washington will never bring charges against big banks' major Wall Street criminals – criminal charges, that is.
Five years have passed since the peak of the subprime financial crisis, in which the nation's largest banks formulated sloppy loans that taxpayers ended up paying for. Wall Street's greed cost the United States nearly 9 million jobs (6% of the workforce), a 30% fall in housing prices, and a 50% dip in the stock market.
All in all, the estimated total crisis-related loss equals around 40% of 2007 gross domestic product.
Yet, even with this long list of multi-million-dollar costs, not a single too-big-to-fail chief executive officer (CEO) is in jail.
Instead, former Lehman Brothers CEO Dick Fuld walked away from the subprime crisis with half a billion dollars and three homes. And former Bear Stearns CEO Jimmy Cayne left with more than $300 million; he and his wife own two Manhattan residences, a vacation house on the Jersey shore, and a $3 million condo in Boca Raton.
There is a simple reason why these Wall Street thugs weren't criminally charged.
It all started back in 2007, before the collapse of Bear Stearns that would be the death knell of the economy…
The Case That Ended All (Criminal) Cases
By 2007, banks had made an estimated $3.2 trillion in loans to homebuyers with bad credit and/or undocumented incomes.
Wall Streeters had bundled these loans into mortgage-backed securities (MBS). Then hedge fund managers packaged them into funds with different risk levels.
Among these hustling hedge fund managers: Ralph R. Cioffi and Matthew M. Tannin.
In 2007, Cioffi and Tannin ran two hedge funds at Bear Stearns that together had about $20 billion invested in asset-backed securities. Their funds hadn't performed badly – yet – but the men weren't exactly forthcoming to clients about the involved risks.
Turns out, the two men may have known the funds were in risk of collapse, due to their exposure to subprime loans.