Preet Bharara Had It Out For Greenwich... Not So Much Wall Street

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Present and former prosecutors say Bharara did not give much emphasis to investigations arising from the financial meltdown, an approach shared by his boss, Attorney General Eric Holder. Justice Department insiders say many of those inquiries withered not because they were unpromising, but because they had little support.

Bharara missed an opportunity by not bringing any significant criminal charges against individuals in the wake of the collapses of Lehman, investment bank Merrill Lynch, the insurer AIG, the mortgage securities and collateralized debt obligation businesses, or the myriad public misrepresentations from bank CEOs about their finances.

Bharara and senior officials in Washington argue that there were no criminal cases to file after the 2008 crisis. But the U.S. attorney's office in Manhattan did pursue significant civil cases against the banks for their mortgage activities, cases that had to proove misconduct by the "preponderance of the evidence." And DOJ did win guilty pleas from the banks themselves, an indication that prosecutors might have been able to charge individuals for their part in crimes their institutions had acknowledged. Academics who studied those years, including Columbia's Tomasz Piskorski and James Witkin and Chicago's Amit Seru found widespread patterns of fraud in the mortgage business.

The exception makes this failure all the more puzzling. As I detailed in 2014, Bharara's office brought one case for misconduct during the financial crisis -- against a mid-level banker. Prosecutors charged Kareem Serageldin of Credit Suisse with overseeing traders who knowingly misrepresented the value of mortgage securities. Serageldin pleaded guilty and went to prison.

Serageldin's colleagues in the industry and others familiar with Credit Suisse found it hard to believe that he was the only person involved in that particular fraud.

Bharara's reluctance to pursue senior executives was seen in other investigations of big banks. His office wrested a $1.7 billion fine from JPMorgan Chase over its complicity in the Bernie Madoff Ponzi scheme, but it brought no charges against individual bankers.