Today’s actions by the Department of Justice and the U.S. Securities and Exchange Commission against Bank of America describe misconduct conducted by numerous individuals but fail to name names and do not allege any claims against individuals. This begs the question — why are the individuals who almost destroyed the financial industry in 2008 not being held liable?
It is the individuals who committed fraud, not the bank’s shareholders (who may not be the same shareholders who will be burdened by any settlement of these matters). It is easier for the government to bring actions against the bank with the hopes of reaching a relatively quick settlement rather than litigate, and be forced to prove a case, against an individual. But while this approach may add money to the federal treasury, it ignores the five traditional goals of punishment, i.e. 1) retribution, 2) deterrence, 3) rehabilitation, 4) restoration, and 5) incapacitation.
There is no retribution because the perpetrator of the wrongdoer is not held responsible. There is little to no deterrence because individuals are not held out as exemplar wrongdoers. There is no rehabilitation because you can’t rehabilitate an entity. There is no restoration because the money that the federal government may obtain from the bank will not be returned to those harmed by the wrongdoing. And there is no incapacitation because no one is going to jail. It is likely that the individuals who are responsible for the bank’s misconduct still work in the financial industry.
The trend to replace criminal and civil actions against individual wrongdoers with civil actions against corporate entities might be the financially-savvy choice but it is not a move towards justice.