Why Is Allen Stanford Being Prosecuted While Other Banks Get Bailed Out?

Recently we have been presented with the spectacle of a high flying banker in deep financial trouble proclaiming that he and his organization have been wrongly singled out for reprisal by the Federal government. The charges are clear. His bank aggressively sought deposits from around the world to fund a portfolio of outrageously bad investments, leading to the bank’s insolvency. The bank funded high paid executives’ lavish lifestyles, including Caribbean junkets, sports sponsorships, a fleet of private jets and outsized bonuses unrelated to actual performance. Insider loans were made to bail out the personal financial problems of those in control. Yet that banker has the gall to blame overzealous government actions for his problems.

We are speaking, of course, not of Allen Stanford of Stanford Financial, but of the CEOs of America’s largest banks. While there is certainly a difference in degree and Mr. Stanford’s personal style is less than savory, the biggest difference between Stanford Financial and several of our nation’s largest banks, is that the U.S. government chose to bail these institutions out of their mistakes rather than prosecute them as has been done with Stanford Financial. And these bankers are whining daily about their inability to pay “adequate” compensation due to the restraints placed upon them under the TARP legislation.

Don’t get me wrong, Stanford abused the trust of thousands of investors, many of whom are presumably innocent, and he will likely be punished severely for his apparent wrongdoing. But so did the big banks. Had the big banks been allowed to fail in September, as they surely would have absent the federal bailouts, the damage to investors would have been far more dramatic and the retribution on their executives would likely have been far bloodier. The difference is that they hail from the financial and political centers of the U. S. and are far better at gaining support in Washington. Instead of indictments and fraud charges, they are given audiences with the President and free rein on CNBC and Bloomberg to make their cases for support. And yes, even after they’ve sold some of their jets, I’m not likely to see any of them on row 21 the next time I fly Airtran.

Comments

[infp:]

Agreed, that's why campaign contributions are a banker's best investment.

Apr 22 10:01 AM

[venividivici:]

I agree with you that there is little difference between Stanford and the other banksters but Stanford was a very energetic greaser of politicians on both sides of the political divide. Perhaps that's what kept the heat off him for so long.

Apr 22 11:30 AM

[Cope:]

Agree, and in the meantime he was able to operate and defraud for 10 years!!!! and nobody did anything. can you believe that? I lost 190k invested last year, where was the SEC?, they where investigating him for 8 years, I'm afraid I'm on my own this time :-(

Apr 22 01:22 PM

[greyhorse:]

This is idiotic. Did you actually read the SEC complaint or anything about the Stanford case? Stanford didn't just "make bad investments"...he made them up!

No wonder the rest of the banking/investment industry went bezerk...they were trying to keep up with the Madoffs and Stanfords of the world.

Apr 22 11:28 PM

[John Slater:]

I am familiar with a couple of their investments. His company did make investments and they were most definitely bad. This provides a semantic distinction from Madoff who apparently didn't make any investments at all, though I am certainly not defending Stanford's actions.


On Apr 22 11:28 PM greyhorse wrote:

> This is idiotic. Did you actually read the SEC complaint or anything
> about the Stanford case? Stanford didn't just "make bad investments"...he
> made them up!
>
> No wonder the rest of the banking/investment industry went bezerk...they
> were trying to keep up with the Madoffs and Stanfords of the world.

Apr 23 02:48 PM