The governing body of soccer is the focus of a criminal probe that could result in serous jail time. It's too bad the same standard wasn't applied on the playing fields of Wall Street.
Corrupt the “world’s sport” and Uncle Sam comes after you with handcuffs and tactics usually reserved for organized crime. Wreck the world’s economy and you get cost-of-doing-business fines.
That’s the unavoidable contrast between the dragnet of officials from FIFA, the governing body of what Americans call soccer, and the treatment of the Too Big to Jail Banks.
Without intending to drive up your blood pressure by reviving recent history, let’s recap. These huge, interconnected institutions — aided by compromised regulators — created a historic speculative bubble, preyed on customers, gave executives obscene bonuses based on the degree of the risk they were taking on, gambled with derivatives that even they didn’t understand, until….boom.
But while the profits were privatized, the losses were socialized. The damage continues to this day, from continued lawlessness to the damage done to the wealth of average Americans.
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But little changed. The Too Big to Fail banks became bigger. They spent heavily to buy members of Congress and water down new regulation. The Justice Department seemed strangely reluctant to bring the rule of law to Wall Street. The most dangerous practices continue.
Nobody went to jail.
Most recently, six banks accused of rigging the Libor interest rate and foreign exchange markets were fined $6 billion by American and British regulators. Although this scandal was arcane, the scale of it was enormous and the victims were very real. Once again, however, nobody went to jail. Expect the bad behavior to continue.
Indeed, according to the Financial Times, the indictment of the FIFA officials and sports moguls who paid them says they used major banks to make payments and move wire transfers. This raised “the prospect that Wall Street could be in the spotlight again over its involvement in yet another scandal.”
Today’s Econ Haiku:
To pull its buns from the fire
Second grease crisis