Accountability and justice missing

December 28, 2008 06:54 am

— One of the most resonant objections about the recent spate of government bailouts is that the moves allow executives who oversaw or made poor decisions to remain in place while collecting hefty pay, bonuses and perks. Conventional understanding about accountability and justice suggest that the errors leading to the financial ruin of thousands, maybe millions, of people should cause heads to roll.
This is not a call driven by blood-lust as much as a democratic requirement for accountability and justice. How can executives run companies (or the entire financial system) into the ground and escape with their inflated bank accounts and their jobs? And where was the Securities and Exchange Commission, Congressional oversight, rating agencies or other regulatory agencies while this financial house of cards was being built?
A story in The New York Times reports the number of cases prosecuted by the SEC tumbled from 513 six years ago to fewer than 133 in the first 11 months of this year. The number of prosecutions for securities fraud in 2008 will likely be the fewest in 17 years. The Federal Bureau of Investigations has not exactly been picking up the slack. Since the 9/11 attacks, resources devoted toward white-collar crime at the FBI were reallocated to counter-terrorism work, the Times reported.
Close oversight of the financial sector was not a top priority of the Bush Administration even after companies, such as Worldcom and Enron, demonstrated the maverick attitudes about accounting that can be common in Big Business boardrooms. History will offer its own form of accountability for the current president. In addition, others ought to be called forward to answer for their inability or unwillingness to stop the calamitous practices that have cost us all.
The Democrats do not deserve a free-pass. Congress could have done more to reign in the reckless financial practices and the legislative branch ought to play a role in tightening controls to ensure that the bailouts do not reinforce a culture in which the rich gamble with taxpayer dollars without ever having to pay a meaningful price when the dice come up snake eyes.
Government bailouts are a bitter pill for taxpayers struggling with their own bills, if not facing layoffs or the unemployment line. Enforcement, prosecution and simple public accountability -- identifying who shoulders most of the blame -- would lend a minimal standard of justice to the government's intervention plans. That would make the bailout effort more credible and more palatable.