There are many facets to the populist, anti-establishment anger that swept Donald J. Trump into the White House in Tuesday’s election. A crucial element fueling the rage, in my view, was this: Not one high-ranking executive at a major financial firm was held to account for the crisis of 2008.
As millions of foreclosures and job losses followed, the failure to go after fraudsters confirmed the suspicion that the powerful got protection while those on Main Street were kicked to the curb. When Mr. Trump asserted that the system was rigged, he tapped directly into such misgivings.
Many readers of The New York Times, particularly if you live in Manhattan, San Francisco or another affluent enclave, may not see how an accountability failure of years ago could still resonate. But the failure to prosecute even one or two high-profile bankers — or force them simply to pay fines and penalties out of their own pockets — left millions of Americans believing that our justice system was unjust.
Recall that more than 800 bankers went to jail after the savings and loan crisis of the 1980s. And that mess wreaked nowhere near the devastation that the housing debacle did on the overall United States economy.
Embarrassed, perhaps, by their passivity, Justice Department officials recently pledged to take a more aggressive approach to white-collar crime. But the memo issued last September by Sally Quillian Yates, deputy attorney general, outlining new ways the department would hold individuals to account, has not translated into results.
These kinds of cases, of course, take time to mount. Still, data supplied by the Justice Department and compiled by Syracuse University shows that white-collar crime prosecutions are actually down significantly in 2016 from previous years. The Transactional Records Access Clearinghouse indicates that through August — the first 11 months of the government’s most recent fiscal year — prosecutions of all types were down almost 18 percent from five years ago.
I delved further into the figures and found that precious few of these were white-collar crime cases. According to the database, the largest number of cases pursued by prosecutors — representing almost 53 percent of the total — involved immigration. White-collar crime, by contrast, accounted for about 6,000 cases, or just 4.6 percent of the total so far this year.
That tally is far fewer than in previous periods. Compared with five years ago, for example, the number of cases is down 39 percent; going back a decade, near the height of the mortgage mania, cases have fallen by 19 percent.
“Criminal enforcement is required to deter criminal behavior, and the current Justice Department has more and more abandoned such activities,” said David Burnham, co-director of the records clearinghouse, who compiles the data.
A lighter form of punishment — termination — was also rare. “After the crisis, nobody on Wall Street lost their job in a Trump way — ‘You’re fired!’” said Dennis Kelleher, president at Better Markets, a nonpartisan organization that promotes the public’s interest in financial markets. “In addition, there has been this bipartisan interest in understating the deep economic damage from the financial crash. If you don’t have a compelling message that resonates with people in economic pain then you’re going to pay an electoral price.”
Consider one small measure of that pain. In May, the Federal Reserve published the “Report on the Economic Well-Being of U.S. Households,” its third in an annual series.
While the Fed concluded that more Americans than in previous studies were comfortable or “O.K.” with their financial positions, the researchers made a disturbing finding. If faced with emergency expenses of $400, almost half of the 5,600 respondents said they either would not be able to cover the costs or they would have to sell something or borrow to do so.
Another troubling statistic from the study: 22 percent of workers in the survey said they were holding down two or more jobs.
“It’s important to identify the reasons why so many families face continued financial struggles and to find ways to help them overcome them,” said Lael Brainard, a Federal Reserve governor, at the time the study was published.
I’d call that an understatement.
Marcus Stanley, policy director at the nonprofit Americans for Financial Reform, agreed that outrage over the accountability gap played a role in the election’s outcome.
The degree to which these voters favored Mr. Trump is something of a paradox, given his persona of the wealthy real estate mogul. Jailing bankers wasn’t one of his campaign’s main themes.
Still, Mr. Trump did call for bringing back Glass-Steagall, the Depression-era law that separated commercial banking from investment banking. And he threatened to revoke the special tax treatment known as carried interest that enriches private equity executives and hedge fund managers.
On the other hand, he also promised to dismantle aspects of the Dodd-Frank legislation, Congress’s response to the 2008 mayhem.
“Trump’s personal background does not necessarily strike a populist chord,” Mr. Stanley said. “But his campaign rhetoric portrayed a situation where the economy was being rigged by powerful insiders. We’re going to be holding him accountable to deliver on some of that rhetoric.”
That points to one of the risks to Mr. Trump of riding a populist wave. If voters come to believe that he is actually more interested in protecting his friends or dispensing favors to the powerful, they will turn on him.
The first inkling of whether Mr. Trump is truly on the side of Main Street may emerge when his administration sets out to change Dodd-Frank.
There is much to dislike in the legislation — its rules are maddeningly complex and were weakened by Wall Street lobbyists. Changes to the law could help protect the system, Mr. Stanley said, or leave it vulnerable to another collapse.
“Are you going to return to the situation under Bush and Clinton where Wall Street wrote its own rules in the back room?” Mr. Stanley asked. “Or are you going to put forward something that constitutes a genuine alternative and that will prevent Wall Street from rigging the economy?”
It seems pretty clear that’s what voters are looking for. Will they get it? Stay tuned.
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