Trust them, they won't do it again

Not in court

Settlements instead of prosecutions

There are prosecutable cases
In spite of what President Obama says, there are cases where you can prosecute; even if we disregard the Sarbanes-Oxley Act, there is a lot to do. Document fabrications and forgeries. Overstating how much the borrower is in arrears. False claims in court that the bank had offered borrowers mortgage modifications. Persistent and "outrageous" misstatement of material facts by foreclosure mills.
Foreclosing on homes where there is no mortgage, foreclosing on burned-down homes where the insurer has made payment in full. Telling borrowers they had to default to be eligible for modification through the federal Home Affordable Modification Program. Double dipping (charging both investors and borrowers for the same fee), misrepresentations to investors (false certifications by trustees and banks that they have the collateral in good order). link
Especially affidavits, legal documents used instead of personal testimony, should be easy to check. Even if the part presenting it claims the signer is no longer with the firm, it should be easy to check with the IRS if the signer was employed by the firm. Further, as the signature on the affidavit has to be officially witnessed, by a notary public or equivalent, it should be easy to check with the witnessing part. He should be able to confirm or deny his signature; he might be able to identify the signer, if you are lucky he has recorded his signings. link

Law hurting business
In 2005, Department of Justice officials discussed if their investigations were hurting American business. Of course interfering with criminal profits is hurting criminal business. "Gee, we better not bust that drug dealer. His mom would be distraught, and think what it would do to his kids". Besides, not investigating criminal business not only helps crime, it also hurts crime victims and honest competition. Bank victims are not only those directly abused and defrauded, bank victims are all those suffering from the crisis; just like with drug dealing, the society as a whole is suffering.
A naive New York Fed examiner asked Goldman for information regarding their conflicts of interest policies. What she got was stonewalling and outright lies. Her superior was afraid that Goldman would "explode" should her findings become known. He asked examiner to change her recommendations and to destroy supporting documents, when she refused she was abruptly fired. link

Investigate yourself, promise not to do it again
To step away from aggressive prosecutorial practices, in 2008 the DoJ adapted a new approach, the "deferred prosecution agreement". This meant that the companies could investigate and report their own wrongdoing, while the government could delay or cancel prosecution if the companies promised not to do it again. link

A strong record of compliance with securities laws
You might wonder how much you can trust a promise not to do it again.
In 1987, in spite of repeated lies from leading Savings and Loan fraudster Charles Keating, a leading Keating investigator found it reasonable to trust him. note
In 2011, a New York Times analysis found 51 instances where 19 companies had broken laws they had promised never to break. link Investigating 15 Auction Rate Security dealers, SEC found that every one of them had violated securities laws; they were told to go and sin no more (cease and desist). A new investigation found continued industry-wide violations of the law. link
JPMorgan Chase has settled six fraud cases while obtaining at least 22 waivers, in part because it has "a strong record of compliance with securities laws". Bank of America and Merrill Lynch (merged in 2009) have settled 15 fraud cases and received at least 39 waivers; it is not clear if they have a strong record of compliance with securities laws. link
Banks do not limit their shady dealings to security trade. The American branch of British megabank HSBC laundered Mexican drug cartel money, it helped to bust sanctions against terrorists and mass murderers and much more; when investigated, it would not cooperate. The U.S. Attorney in charge would not use available whistleblowers, so HSBC got away with a pathetic non-prosecution agreement, fines and an agreement (not to do it again?). This had no effect, HSBC continues with business as usual and is commended for continuing "to act in good faith to meet the requirements of the D.P.A.". link

USA citizens' rights 20 out of 35
With the courts mostly taking the side of the banks against the individual, the US legal system is not very highly regarded. A survey places the US at place 20 out of 35 when it comes to implementation and enforcement of its laws for ordinary citizens. This is behind countries like Mexico, Croatia and the Dominican Republic. link

© Anders Floderus