Financial Crisis Era

The 2008 financial crisis destroyed $17 trillion in household wealth, threw 8.7 million Americans out of work, and triggered the worst economic downturn since the Great Depression. The crisis was caused by systemic fraud in the mortgage industry, reckless gambling by major banks, and catastrophic failures of regulatory oversight. Major financial institutions had packaged worthless mortgage-backed securities and sold them to investors as safe investments, while simultaneously betting against their own products.

In any rational system of accountability, the architects of this catastrophe would have faced criminal prosecution. Instead, not a single senior executive at any major Wall Street bank was criminally convicted for conduct related to the financial crisis. The banks paid billions in civil settlements, which they treated as a cost of doing business, while the executives who presided over the fraud kept their bonuses, their jobs, and their freedom. The phrase "too big to jail" entered the American lexicon.

Meanwhile, the Supreme Court's 2010 decision in Citizens United v. FEC opened the floodgates to unlimited political spending by corporations and wealthy individuals, creating a new era of dark money that made the soft money scandals of the 1990s look quaint. And at the state level, corruption reached spectacular heights, with the governors of Illinois, Virginia, and the legislative leaders of New York all facing criminal charges. The era demonstrated that American corruption operates simultaneously at every level; from the trading floor to the statehouse to the highest courts.

2008 Financial Crisis: The Accountability Failure

The mortgage fraud that caused the 2008 crisis was pervasive and well-documented. Internal emails at major banks showed that executives knew the loans they were packaging and selling were toxic. A 2011 Senate investigation led by Senator Carl Levin (D-MI) found that Goldman Sachs had sold mortgage-backed securities to clients while simultaneously betting against them; and that bank executives had misled Congress about these activities. The Financial Crisis Inquiry Commission concluded in 2011 that the crisis was "avoidable" and was caused by "widespread failures in financial regulation," "dramatic breakdowns in corporate governance," and "an explosive mix of excessive borrowing and risk."

Despite this evidence, the Department of Justice chose not to bring criminal charges against senior executives at any major bank. The reasons were debated extensively: Attorney General Eric Holder acknowledged in 2013 testimony that the size of major banks made prosecution decisions "difficult" because of potential economic consequences; an admission that critics saw as a confession that Wall Street was, in fact, too big to jail.

Banks did pay enormous civil penalties: Bank of America paid $16.65 billion; JPMorgan Chase paid $13 billion; Citigroup paid $7 billion; Goldman Sachs paid $5 billion. But these settlements, while large in absolute terms, represented a fraction of the banks' profits and were often tax-deductible. No major bank executive went to prison. The contrast with the Savings and Loan crisis of the 1980s, which produced over 1,000 criminal prosecutions and more than 800 convictions of bank insiders, was stark and damning.

Citizens United: Dark Money Floodgates

On January 21, 2010, the Supreme Court issued its decision in Citizens United v. Federal Election Commission, ruling 5-4 that the First Amendment prohibited the government from restricting independent political expenditures by corporations, labor unions, and other associations. The decision effectively overturned key provisions of the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold) and opened the door to unlimited political spending by outside groups.

The consequences were immediate and dramatic. Total outside spending in federal elections surged from $338 million in 2008 to $1.04 billion in 2012 and continued to grow in every subsequent cycle. A new class of political organizations, Super PACs and 501(c)(4) "social welfare" organizations, could raise and spend unlimited sums while, in the case of 501(c)(4)s, keeping their donors completely anonymous. This "dark money" made it impossible for voters to know who was funding the advertisements that shaped elections.

Justice John Paul Stevens, in his dissent, warned that the decision "threatens to undermine the integrity of elected institutions across the Nation" and that "a democracy cannot function effectively when its constituent members believe laws are being bought and sold." By 2020, total outside spending in federal elections had reached $3.4 billion, and dark money groups had spent over $1 billion with no public disclosure of their funders.

Rod Blagojevich: Selling a Senate Seat

Rod Blagojevich, the 40th Governor of Illinois, achieved a level of brazenness in corruption that was extraordinary even by Illinois standards; a state that has sent four governors to federal prison. Blagojevich's downfall began with FBI wiretaps that captured him attempting to sell or trade the U.S. Senate seat vacated by President-elect Barack Obama in November 2008.

On the FBI recordings, Blagojevich was heard saying of the Senate appointment: "I've got this thing and it's [expletive] golden, and I'm just not giving it up for [expletive] nothing." He explored trading the appointment for a cabinet position, an ambassadorship, a high-paying job for himself or his wife, or campaign contributions. He was arrested on December 9, 2008, at his home by FBI agents.

Blagojevich's first trial in 2010 resulted in a hung jury on 23 of 24 counts. In his retrial on June 27, 2011, he was convicted on 17 of 20 counts, including attempted extortion, bribery solicitation, and wire fraud. He was sentenced to 14 years in federal prison on December 7, 2011. On February 18, 2020, President Trump commuted Blagojevich's sentence after he had served approximately eight years.

New York's Twin Towers of Corruption

Sheldon Silver

Sheldon Silver served as Speaker of the New York State Assembly for 21 years (1994–2015), making him one of the most powerful figures in New York politics. On January 22, 2015, he was arrested on federal corruption charges. Prosecutors alleged that Silver had received approximately $4 million in illicit payments disguised as legal fees from two law firms; one that handled asbestos cases referred by a doctor whom Silver had directed state research funding to, and another that received real estate tax work from developers with business before the state.

Silver was first convicted on November 30, 2015, on seven counts of honest services fraud, extortion, and money laundering. That conviction was overturned after the Supreme Court's McDonnell decision narrowed the definition of "official act." Silver was retried and convicted again on May 11, 2018, on all seven counts. He was sentenced to six and a half years in federal prison and ordered to forfeit $5 million and pay a $1.75 million fine. He reported to prison in August 2020 and died while serving his sentence on January 24, 2022.

Dean Skelos

Dean Skelos served as Majority Leader of the New York State Senate. On December 11, 2015, he was convicted along with his son, Adam Skelos, of extortion, wire fraud, and bribery solicitation. Prosecutors proved that Skelos had used his position to pressure companies with business before the state, including a major real estate developer and an environmental technology company, to provide his son with a $218,000-per-year job he barely performed and consulting payments. Like Silver, Skelos was retried after the McDonnell decision and convicted again on July 17, 2018. He was sentenced to four years and three months in federal prison.

Bob McDonnell: The Governor, the Rolex, and the Supreme Court

Bob McDonnell, the Republican Governor of Virginia from 2010 to 2014, was indicted on January 21, 2014, along with his wife Maureen, on 14 counts of public corruption. The charges stemmed from their relationship with Jonnie Williams, CEO of Star Scientific, a dietary supplement company. Williams had lavished gifts on the McDonnells totaling over $177,000, including a $6,500 Rolex watch, a $19,000 New York City shopping spree for Maureen McDonnell, $15,000 for catering at their daughter's wedding, $70,000 in loans, and rides in Williams's Ferrari.

In exchange, prosecutors alleged, McDonnell had promoted Star Scientific's products through official actions: hosting a product launch at the governor's mansion, arranging meetings with state health officials, and lending the prestige of his office to the company. On September 4, 2014, both McDonnells were convicted on multiple counts of public corruption.

However, on June 27, 2016, the Supreme Court unanimously overturned McDonnell's conviction in McDonnell v. United States, ruling that the jury instructions had defined "official act" too broadly. The Court held that merely arranging meetings or hosting events did not constitute "official acts" under federal bribery law. The decision significantly narrowed the legal tools available to prosecutors in public corruption cases and was widely criticized as creating a roadmap for legal bribery. The government declined to retry McDonnell.

Jesse Jackson Jr.: Campaign Funds as Personal Piggy Bank

Jesse Jackson Jr., the Democratic congressman from Illinois and son of the civil rights leader, pleaded guilty on February 20, 2013, to one count of conspiracy to commit wire fraud, mail fraud, and making false statements. Jackson had misused approximately $750,000 in campaign funds for personal expenses, including $43,350 for a gold Rolex watch, $9,588 for children's furniture, $5,150 for fur capes and parkas, $4,600 for a Michael Jackson and Eddie Van Halen guitar and memorabilia, and hundreds of thousands of dollars in other personal purchases.

Jackson was sentenced to 30 months in federal prison. His wife, Sandra Jackson, a former Chicago alderman, pleaded guilty to filing false tax returns related to the misused funds and was sentenced to 12 months. The case was notable for the sheer brazenness of the spending, Jackson had treated his campaign account as a personal shopping fund, and because it occurred at a time when campaign finance enforcement was already under intense scrutiny.

The Flint Water Crisis: Government Negligence as Corruption

The Flint water crisis, which began in April 2014, was not a corruption scandal in the traditional sense of bribery or embezzlement. It was something arguably worse: a systematic failure of government at every level to protect the health and safety of its citizens, followed by a deliberate cover-up of the consequences.

To save money, the city of Flint, Michigan, then under state-appointed emergency management, switched its water source from the Detroit water system to the Flint River on April 25, 2014, without implementing required corrosion control treatment. The untreated river water leached lead from aging pipes, exposing approximately 100,000 residents, including 9,000 children under age six, to elevated lead levels. State environmental officials dismissed complaints, falsified reports, and actively suppressed evidence of contamination for over a year.

Criminal charges were eventually brought against 15 current and former state and city officials, including Michigan Governor Rick Snyder, who was charged in January 2021 with two counts of willful neglect of duty. Nine officials, including the state's chief medical executive and a water quality supervisor, faced charges ranging from involuntary manslaughter to misconduct in office. However, in June 2022, the Michigan Supreme Court ruled that the one-judge grand jury used to bring the charges against Snyder and several others was unconstitutional, and those charges were dismissed.

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