Happy Crash Anniversary. Sort of.

It's been five years since the financial markets nearly melted down, and threatened to take the whole US economy down with it. Feel like celebrating the anniversary?

I don't, either.

The recovery has been unexciting, to say the least, and none of the big players have gone to jail. The best the Justice Department seems to be able to do is go after little fish. (I'm talkin' 'bout you, Fabulous Fab!)

In fact, every since Fabrice Tourre, formerly of Goldman Sachs, was found liable for fraud early last month (click here for an example of the numerous news accounts), I've been thinking about the ones that got away. (I'm thinkin' 'bout you, Jamie Dimon!)

What's changed since 2008? What did we learn from the fall of Lehman Brothers? Not much. In Robert Reich's words for Salon, the biggest banks are still "too big to fail, too big to jail, too big to curtail". (click here for full essay)

Good way to start your Monday, right?

The New York Times' Ben Protess and Susanne Craig have an excellent "DealBook" report in today's paper detailing the Security and Exchange Commission's attempts to build a case against senior executives.

To be fair, the SEC has brought several civil cases, and has extracted multi-million dollar settlements from several banks. And yet....

Yet the continued absence of parallel criminal cases against top executives reflects the challenge of white-collar investigations in which prosecutors struggle to pinpoint where risky dealings cross the line into illegality. When the evidence is murky, prosecutors sometimes hesitate to charge top executives, who have the money to fight rather than settle.

“It’s not like a murder case, where you have a dead body and you know a crime has been committed,” said Rita M. Glavin, a former federal prosecutor who is now a defense lawyer at Seward & Kissel.

It is hard to prove the corpus delecti (literally, the body of the crime) - the legal principle that a crime has been committed before a person can be found guilty of committing it. The areas being investigated can be very very grey.

And it's why the big guns are so careful to be well protected.

As James Kwak wrote in the Atlantic shortly after the Tourre decision (full story, here):

When you tell smart, ambitious people that their job is to produce, they will produce, no matter what it takes. And I don't mean this is in an evil, Tony Soprano, "fix the problem" sort of way. Even if you shade the truth a bit, you're not committing murder. There's a lot to take comfort in: You're dealing with supposedly sophisticated professionals, it's all other people's money (the nice fund investor you're talking to isn't betting his house), and it's quite possible the deal will turn out fine (for the person you're defrauding) anyway.

For the real executives, the optimal strategy is simple: hire people whose ambition outweighs their scrupulousness, measure them by results, and let incentives take care of the rest. Oh, and give them the best securities regulation training money can buy, from the most reputable law firm around, so that you can't be sued for negligent supervision down the line. If things blow up and you're ever summoned to Congress, just say you put your clients' interests first and you had no idea that people were breaking the law.

Because you really didn't know--not for sure, at least. All you did was put them in a position where, you knew, it was likely that some were breaking the law. And you can take that plausible deniability to the bank.

Which, of course, is what they did.

Yeah, I'm depressed too.