TARP vs. Embezzlement: Steal a Little and They Throw You in Jail, Steal a Lot & They Make You King

If you were a banker, which of the following activities would be more likely to land you a quick trip to the federal penitentiary? Is it:

(a) Misrepresenting your dying bank's financial condition in order to secure almost $300 million in TARP bailout cash and then quickly proceeding to lose it all, or

(b) Embezzling about $235,000 from your employer to support your compulsive-gambling addiction and pay off personal debts?

The correct answer, naturally, is "b." In this country, when it comes to matters of high-finance crime and punishment, little pigs get slaughtered, while hogs get fat—convicted Ponzi schemer Bernard Madoff being this rule's most notable exception.

The facts here aren't hypothetical. This actually happened at a San Francisco-based lender with assets of $10.9 billion called United Commercial Bank, which is in the spotlight again following a report last month by the Federal Deposit Insurance Corp.'s inspector general on the causes of its failure.

The mid-level bank officer who stole the money to support his gambling habit, Alex Yan, 50, was sentenced to 27 months in prison in June 2009 and ordered to pay restitution to UCB of $235,695. He pleaded guilty about two months after a grand jury indicted him in November 2008, which happened to be the same month UCB received its $298.7 million under the TARP Capital Purchase Program.

UCB's failure cost the FDIC $1.5 billion on top of the flushing of TARP funds. More here.

Hat tip: Libertarian Democrat Terry Michael.

Headline allusion: Bob Dylan, who knew a woman who wanted a whole bank, not just a half.