chapter  10
12 Pages

Financial crime, near crime, and chicanery in the wall street meltdown

ByRichard B. Freeman*

This chapter shows that the US experienced a wave of financial crime, near crime and chicanery before the 2007–2009 implosion of Wall Street. It summarizes evidence that the huge bonuses, option-related incentives, and tournament-style rewards evidence is consistent with Senator Leahy's view that we haven't paid enough attention to the economic costs of fraudulent financial behavior. The 2000s experienced a financial crime wave that ranges from legally actionable criminal offenses to near crime to chicanery. The US had early warnings from the FBI that the financial crimes in mortgages risked a 1980s Savings and Loan style collapse of banking but ignored those warnings. Many of the decisions behind the financial crime wave are closely associated with the huge incentives that were available to those at the top of finance and many corporations. Those incentives are themselves linked to the rise of inequality in the period.