[quote=gandalf]Bankers somehow ‘not responsible’ for a banking meltdown?[/quote]
Did someone say that somehow bankers were not responsible for the banking meltdown? Where did you read that?
What I said – if you’re referring to my comments – was that it’s difficult to assign individual bankers with blame – outside of the obvious villians – due to the complicated nature of the task. That’s a world apart from suggesting that they’re “not responsible.” They’re responsible, alright. It’s just very difficult to pin that responsibility down at the individual level outside of fairly obvious cases, which are the exception rather than the rule.
[quote=gandalf]
More important question:
Are owners, managers and employees of corporations so completely shielded from liability as to be ‘Not Responsible’ for the conduct of their firms?
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Technically, senior officers and directors of banks are “personally and severally liable” for losses to the FDIC if their bank fails. The problem, of course, is that the FDIC has to prove criminal negligence, which is a difficult standard to prove. Having said that, during the S&L/banking crisis of the late-80s-early-90s, the FDIC sued officers and directors of 26% of the banks that failed. I think we’re going to see a LOT of law suits this time around as well. (The FDIC is just getting geared up for these suits right now.) The problem is that most of these folks who aren’t working at the top-20 banks – who TPTB won’t allow to fail – don’t have nearly enough net worth to plug the holes they’ve created. Not even close. But as a director of two banks, I’m quite aware that my net worth is on the line if something goes wrong. D&O insurance helps out a bit in this regard, but if a bank fails, the losses tend to dwarf the D&O amount by many multiples.
