Protests under the slogan "Occupy Wall Street" have spread from New York to Tampa, and their common theme is expressing anger at an unjust economic system.
But Occupy Wall Street isn't your typical protest action. The group has no list of demands, and it says it has no leaders. Rather, people are organizing through social media and making decisions by consensus.
Independent filmmaker Michael Moore recently spoke to protesters in lower Manhattan and then discussed the movement on Amy Goodman's Democracy Now radio show.
"Well, it's highly ironic that now over 100 of the protesters have been arrested, and not a single banker, a CEO from Wall Street, anyone from corporate America — nobody, not one arrest of any of these people who brought down the economy in 2008," he said.
We noticed Occupy Wall Street protesters making similar statements in the media and on the Internet. We wanted to know if it's right that not a single banker or corporate executive had been arrested for damaging the economy.
We found a few prosecutions, but not many.
If you're looking for arrests and prosecutions of execs with the firms most widely associated with the financial crisis — Countrywide, AIG or Lehman Brothers — you won't find them.
The highest-profile convictions we found were from Taylor, Bean & Whitaker, which was a mortgage lending firm based not on Wall Street, but in Ocala. Its former chairman, Lee B. Farkas, was convicted of directing nearly $3 billion in fraud that put thousands out of work and contributed to the collapse of Colonial Bank. A judge sentenced Farkas to 30 years in prison on June 30. Several other executives associated with the firm pleaded guilty in related cases.
There were also criminal charges brought against two hedge fund managers at Bear Stearns, who were accused of lying to investors and put on trial for securities fraud. But a jury acquitted them in 2009, and the two men were midlevel managers, not top executives.
There have been many other prosecutions of mortgage fraud and insider trading. The U.S. Justice Department pointed us to its StopFraud.gov website and sent us a long list of other ongoing actions against mortgage fraud, investment fraud, insider trading and other corporate offenses. But the cases have not involved the highly prominent executives Moore described as bringing down the U.S. economy.
Why not more?
In reviewing the research and talking to experts about why there have not been more prosecutions associated with the financial crisis, we found several reasons.
For one thing, such cases tend to be difficult, and it's not immediately clear what offenses executives could be charged with.
"You can't get up in front of a jury and say, 'These guys were responsible for bringing down the economy, so please convict them of a crime,' " said Samuel Buell, a professor of law at Duke University who studies criminal law and the regulation of corporations and financial markets.
Criminal intent can be particularly hard to prove, and federal officials may be struggling to bring specific charges against individuals who believed they were following the law.
"There's no downside to putting a few people in prison and showing you're tough on corporate crime," he said. "You can only imagine that would be a political benefit to this administration, which makes me think the only thing holding them back is problems of proof. The last thing they would want to do is bring a big, splashy case against the banks, and then lose and be called incompetent."
William Black, a professor of law at the University of Missouri-Kansas City School of Law who studies elite financial fraud, was involved in a string of successful prosecutions against savings and loan officials in the 1980s. He said the problem now is that financial regulators are not working closely enough with prosecutors to investigate and bring charges against executives.
"It is hard, and it does take resources, and it takes expertise in fraud mechanisms so you can explain it to a jury," Black said. "But this is frankly easier than the savings and loan crisis. There's nothing complicated about a liar's loan."
Black said that back in the 1980s, financial regulators routinely referred information to prosecutors to prosecute savings and loan executives. That hasn't happened this time around.
This year, the New York Times published a detailed report on why there have not been more high-profile prosecutions. Its investigation found stark differences between how prosecutors and regulators handled the S&L crisis and how the same authorities are handling the current crisis. It also included a list of potential crimes suggested by legal experts outside of the federal government.
On Thursday, President Barack Obama spoke about whether federal efforts have been strong enough when it comes to prosecuting crimes associated with the financial crisis.
"One of the biggest problems about the collapse of Lehmans and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn't necessarily illegal, it was just immoral or inappropriate or reckless. That's exactly why we needed to pass Dodd-Frank, to prohibit some of these practices," Obama said. (Dodd-Frank was an overhaul of the finance industry that Obama signed into law on July 21, 2010.)
Moore said, "Not a single banker, a CEO from Wall Street, anyone from corporate America — nobody, (there was) not one arrest of any of these people who brought down the economy in 2008." Well, there have been a few arrests. Certainly the executives of Taylor, Bean & Whitaker who were arrested would qualify as "corporate America."
But Moore's larger point is correct — there have been very few arrests among executives of firms the public would associate with causing the financial crisis. Obama suggested in his recent remarks that it was because many of their actions weren't criminal.
We rate Moore's statement Mostly True.