Former Federal Reserve Chairman Ben Bernanke said on Thursday that he believes the U.S. government should have sought the prosecution of individuals for their roles in precipitating the 2008 financial crisis rather than companies.
Bernanke, who headed the U.S. central bank from 2006 to 2014, told the BBC that the Department of Justice should have attempted to hold individuals accountable for the crisis instead of companies because it was the decisions of individuals, and not the companies themselves, that brought on the crisis.
"Perhaps that would have given us more clarity about whether these actions were irresponsible, illegal, whatever that would have been," Bernanke said.
When asked if individuals should have gone to jail for their decisions that led to the crisis, Bernanke replied, "Some individuals did go to jail, but certainly we could have gotten a better sense of what responsibility there was and what penalties would be appropriate for that."
Last month, the DOJ issued a memo to all U.S. state attorneys general stating that it will pursue the prosecution of individuals whose actions brought on the Great Recession of seven years ago. The Department has settled with several large banks over the crisis, including JPMorgan Chase (a then-record $13 billion in November 2013), Citi ($7 billion in July 2014), and Bank of America (a record $16.65 billion in August 2014) for selling toxic-mortgage backed securities to investors in the run-up to the crisis.
"Some individuals did go to jail, but certainly we could have gotten a better sense of what responsibility there was and what penalties would be appropriate for that."
Deputy attorney general Sally Q. Yates stated in the memo that, "One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system."