More financial executives should have gone to jail for crimes related to the financial crisis, former Federal Reserve chairman Ben Bernanke said in an interview aired Sunday.
Bernanke, who left his job as the top U.S. financial regulation in early 2014 after serving through the crisis, said more executives, and not just the firms they worked for, should have been held accountable for financial misdeeds.
When asked by Susan Page in an interview with USA Today if more individuals should have gone to jail, Benanke replied, “I think so.”
“The Fed is not a law enforcement agency, the Department of Justice and others are responsible for that, and a lot of their efforts have been to indict or threaten to indict financial firms,” Bernanke said. “Now, a financial firm, of course, is a legal fiction. It’s not a person — you can’t put a financial firm in jail.”
“It would have been my preference to have more investigation of individual actions, since obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm,” Bernanke explained. “In that respect, I think that there should have been more accountability at the individual level.”
Many of the biggest financial firms, including banks such as Citigroup and J.P. Morgan Chase, have settled for billions of dollars, in aggregate, with the federal government for misdoings related to home loans bought and sold during the housing boom and bust.
Government critics have faulted regulators for failing to pursue charges for specific individuals at those big banks, claiming that allowing the firms to pay settlements makes fraud simply a cost of doing business for the industry. In response to those criticisms, the Department of Justice last month changed its internal policies to focus more on accountability for executives at large firms.
But some in Congress have also faulted financial regulators at the Fed and elsewhere for not pushing criminal referrals to the Justice Department for financial firm executives.
Bernanke, who is now a fellow at the nonprofit Brookings Institution in Washington, did the interview as publicity for his memoir of the financial crisis, The Courage to Act. The book is scheduled to be on sale on Tuesday.
