| NEW YORK
NEW YORK May 6 Morgan Stanley Chief
Executive James Gorman said on Tuesday that he does not believe
more bankers should have gone to jail for the financial crisis.
"Bad judgment, incompetence, negligence, greed: these might
be socially unacceptable, lead to a lot of personal
embarrassment and potential financial ruin, but they're not
criminal offenses," Gorman said in a Q&A with the financier and
former journalist Steve Rattner at the New York Ideas event.
Gorman went on to say that in the few cases where people
were proven to have broken the law, such as Bernard Madoff's
Ponzi scheme, culprits were jailed.
"Simply taking people to jail for messing up in their jobs,
you'd be locking a lot of people up in corporations and
outside," he said.
Gorman did not specifically cite recent moves by the U.S.
Department of Justice to prosecute banks on criminal charges.
A former securities lawyer and consultant who took over as
CEO of Morgan Stanley in 2010, Gorman also said the government
should not have repealed Depression-era laws that kept
securities underwriting and trading separate from commercial
The laws, part of the Glass-Steagall Act, were rolled back
over several years, culminating with legislation at the end of
the 1990s that allowed the creation of Citigroup Inc. By
2009, the U.S. government had rescued Citigroup three times
because of losses it suffered in the financial crisis.
Asked multiple times whether Glass-Steagall should have been
repealed, Gorman simply said "No." But he also noted the repeal
of Glass-Steagall was not a factor in the failure of
non-universal banks like Bear Stearns and Washington Mutual
during the crisis.
(Editing by Eric Walsh)