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DANTE RAMOS

Jailing bankers when all else fails

AP/file 2011

Ben Bernanke wasn’t exactly shaking a pitchfork at Wall Street during the 2008 financial meltdown. So when the former Federal Reserve chairman declared this week that more bankers should have gone to jail after that crisis, one had to speculate about why.

The cynical explanation is that Bernanke has a new book out. Talk of punishing financial executives generates more publicity than, say, Bernanke’s take on successor Janet Yellen’s interest rate policy would.

But the other explanation is that, in the seven years since US taxpayers saved the financial sector, the economic fortunes of the wealthiest Americans have continued to diverge from those of a beleaguered middle class. Hauling bigwigs into court may not reverse the long-term trend toward greater inequality, but nobody’s figured out a better way to imbue Wall Street bankers with a deeper sense of the common good.

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In a video interview Sunday with USA Today, Bernanke argued that prosecutors focused on corporate entities when they should have sought penalties against individual executives. “The Fed is not a law enforcement agency,” he said. “The Department of Justice and others are responsible for that, and a lot of their efforts have been to indict or threaten to indict financial firms. Now, a financial firm of course is a legal fiction. You know, it’s not a person, you can’t put a financial firm in jail.”

Then again, Bernanke declined to specify which Wall Street players should have been charged, and with what. After sifting through Bernanke’s book, Michael Hiltzik of the Los Angeles Times noted Monday that the former Fed chief previously expressed a less punitive attitude. In “The Courage to Act,” Bernanke recalls taking issue with those who believed that “the economy will be just fine if a few Wall Streeters get their just deserts.” He also wanted to “postpone the verdict on blame and guilt until the fire was out.”

In some ways, that made sense. Shoveling insane amounts of money into subprime loans wasn’t necessarily illegal. But the outcome was ironic: During the recession, troubled homeowners and laid-off workers became collateral damage; financial executives, whose companies obscured the danger in those mortgages through multiple layers of securitization, avoided criminal accountability, while the overall sector proved quite resilient.

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The appetite for retribution persists, even among establishment figures like Bernanke, because events keep working out the same way. We can’t prevent the most destructive risk-taking, because the financial sector is far more nimble than its regulators. We can’t address inequality through the tax system, because the politics of higher rates are prohibitive — and because people who’d pay more are adept at finding loopholes.

To average Americans, the message is: Sorry, that’s just life.

In a policy vacuum, making examples of people starts to look like an attractive option. Senator Elizabeth Warren has publicly criticized Antonio Weiss, an investment banker whom President Obama nominated unsuccessfully for a Treasury job, and Robert Litan, an economist who’d received money from an investment company and testified against a financial regulation that Warren favored. This is frontier justice — a rough way of highlighting Wall Street’s influence over Washington at a time when middle-class workers are bearing a greater share of the risk in the economy.

A 21st-century safety net would help more, but the elements of it — portable pensions and health benefits, mandatory-savings accounts, aggressive retraining opportunities for redundant workers — remain in nascent form. Maybe, as Bernanke suggests, the Justice Department could have looked harder for rogue bankers. But addressing Americans’ underlying anxieties will take more than a few high-profile scalps.

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Dante Ramos can be reached at dante.ramos@globe.com. Follow him at facebook.com/danteramos or on Twitter @danteramos.