M-RCBG Senior Fellow-Led Study Group: Timothy Massad

Dostoevsky v. Dimon: Crime and Punishment and the 2008 Financial Crisis 

Wednesday, January 31, 4:00-5:30, M-RCBG Conference Room (B-503)

Should more bankers have gone to jail because of the financial crisis? 
Many polls suggested Americans thought so.  As did many journalists. Some said it didn’t happen because of the revolving door between Washington and Wall Street— there was too much “chumminess” between supposed adversaries.  Some U.S. Senators accused the U.S. Attorney General of believing that major banks were “too big to jail”—the risks to financial stability were too great. A prominent Federal judge said it was because of the federal government’s own complicity in the creation of the conditions that led to the crisis.    
But others said it was because the actions that caused the financial crisis were not crimes.  And our society should not seek to impose criminal liability when the real issue was excessive—but legal—risk taking.  
This study group will first examine what happened during the financial crisis and why:  who was (or was not) prosecuted?  Who went to jail?  How did the Justice Department explain that record? What have the critics said?    
The study group will then discuss the policy arguments for and against imposing greater criminal liability for financial sector actions, especially among those “at the top”.  When is it appropriate to charge a CEO for criminal activity by his or her employees? When is it appropriate to charge a corporation with criminal liability (as opposed to civil fines)? Should activity that might otherwise constitute a violation of a regulation be criminalized?  Should criminal liability depend not only on the egregiousness of the particular act but also the size of the indirect costs to society?  And if it is not appropriate to impose greater criminal liability, how do we insure accountability? 

Chairman Timothy Massad Photo.jpg
Timothy Massad was sworn-in as Chairman of the Commodity Futures Trading Commission on June 5, 2014, after being confirmed by the United States Senate as Chairman and as a Commissioner of the CFTC. Previously, Mr. Massad was nominated by President Obama and confirmed by the U.S. Senate as the Assistant Secretary for Financial Stability at the U.S. Department of the Treasury. In that capacity, Mr. Massad oversaw the Troubled Asset Relief Program (TARP), the principal U.S. governmental response to the 2008 financial crisis designed to help stabilize the economy and provide help to homeowners. Under TARP, Treasury’s investments in financial institutions, the credit markets and the auto industry prevented the economy from falling into a depression. Mr. Massad was responsible for the day-to-day management and recovery of TARP funds, and during his tenure, Treasury recovered more on all the crisis investments than was disbursed. Mr. Massad also served as Chief Counsel for the program prior to becoming Assistant Secretary. Prior to joining Treasury, Mr. Massad served as a legal advisor to the Congressional Oversight Panel for the Troubled Asset Relief Program, under the leadership of (now Sen.) Elizabeth Warren. Mr. Massad assisted the panel in its first report evaluating the investments made by Treasury under TARP. Prior to his government service, Mr. Massad was a partner in the law firm of Cravath, Swaine & Moore, LLP. Mr. Massad had a broad corporate practice with a focus on corporate finance and financial markets. He helped to draft the original standardized agreements for swaps and helped many businesses negotiate and execute transactions to hedge exposures in the derivatives markets. Mr. Massad earned his bachelor’s and law degrees at Harvard. Mr. Massad was born in New Orleans, Louisiana, and also lived in Texas, Oklahoma and Connecticut as a child. He and his wife, Charlotte Hart, live in Washington with their two children. Email: timothy_massad@hks.harvard.edu