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Illustration: Rebecca Zisser/Axios

No major Wall Street, real estate or insurance executives were jailed for their roles in nearly destroying the U.S. economy.

The big picture: Kevin Puvalowski, a former federal prosecutor, says that the financial crisis was caused by weak regulation combined with unwise decisions, but not ones that were necessarily illegal.

  • Jesse Eisinger, author of a book on the subject, places much of the blame on prosecutorial cowardice, in the wake of having convictions overturned in cases related to Enron and Arthur Andersen.

Many still question the light touch. Richard Bowen, a former employee in Citigroup's mortgage unit, tells Axios he provided 1,000 pages of documents to the SEC and spoke to prosecutors about certifications of low-quality mortgages that were sold to investors, Freddie Mac, and Fannie Mae. But he doesn't know what was ever done with his information.

The only institution indicted in the crisis' aftermath was Abacus Federal Savings Bank, which was charged with selling fraudulent loans to Fannie Mae — although Abacus's default rates were minuscule compared to the national delinquency rate.

  • Abacus was an easy target, without armies of lawyers or millions of dollars for a defense.
  • "Without question, the Manhattan [district attorney's] office wanted to indict a bank in light of the financial crisis. That was a significant factor here," says Puvalowski, who represented Abacus after he transitioned to private practice.
  • Three years after the indictment, Abacus (and its executives charged in connection with the case) was acquitted of all charges.

The government also lost a case against two Bear Stearns executives who were accused of lying to investors about investments in subprime mortgages, and it also dropped criminal charges against former Countrywide CEO Angelo Mozilo.

Go deeper

26 mins ago - Politics & Policy

McConnell drops filibuster demand, paving way for power-sharing deal

Senate Majority Leader Chuck Schumer (R) and Minority Leader Mitch McConnell attend a joint session of Congress. Photo: Olivier Douliery/AFP via Getty Images

Senate Minority Leader Mitch McConnell has abandoned his demand that Democrats state, in writing, that they would not abandon the legislative filibuster.

Between the lines: McConnell was never going to agree to a 50-50 power sharing deal without putting up a fight over keeping the 60-vote threshold. But the minority leader ultimately caved after it became clear that delaying the organizing resolution was no longer feasible.

2 hours ago - Technology

Scoop: Google won't donate to members of Congress who voted against election results

Sen. Ted Cruz led the group of Republicans who opposed certifying the results. Photo: Stefani Reynolds/Pool/AFP via Getty Images

Google will not make contributions from its political action committee this cycle to any member of Congress who voted against certifying the results of the presidential election, following the deadly Capitol riot.

Why it matters: Several major businesses paused or pulled political donations following the events of Jan. 6, when pro-Trump rioters, riled up by former President Trump, stormed the Capitol on the day it was to certify the election results.

2 hours ago - Politics & Policy

Minority Mitch still setting Senate agenda

Illustration: Aïda Amer/Axios

Chuck Schumer may be majority leader, yet in many ways, Mitch McConnell is still running the Senate show — and his counterpart is about done with it.

Why it matters: McConnell rolled over Democrats unapologetically, and kept tight control over his fellow Republicans, while in the majority. But he's showing equal skill as minority leader, using political jiujitsu to convert a perceived weakness into strength.