By Rowan Bosworth-Davies, author of Fraud in the City: Too Good To Be True, (Penguin 1988), a former head of investigations at regulator FIMBRA (Financial Intermediaries, Managers and Brokers Regulatory Association) and a former Scotland Yard Fraud Squad detective. He blogs at Rowan Bosworth Davies blogspot and tweets at @RowanBosworth Cross posted from Ian Fraser’s blog
“Go where you will, in business parts, or meet who you like of businessmen, it is – and has been for the last three years – the same story and the same lament. Dishonesty, untruth, and what may, in plain English, be termed mercantile swindling within the limits of the law, exists on all sides and on every quarter…”
No, this is not a comment from a contemporary website. It comes from an editorial published in Temple Bar – A London Magazine for Town and Country Readers in 1866. It was written at a time when England was experiencing a plethora of fraudulent offerings in railway shares, but the tenor of its complaint is as relevant today as it was then.
There is a growing groundswell of informed opinion among modern commentators and even some politicians that financial regulators should be far more willing to bring criminal charges against those financial practitioners whose actions should be construed as more than just negligent or incompetent.
I have never understood why ‘white collar’ criminals should be treated any differently from any other criminals, but the fact remains that they are treated differently, and it has been so for many years. The phenomenon was first recorded in a book entitled White Collar Crime by the American criminologist Edwin Sutherland, published in 1949. He pointed out that
“There is a consistent bias involved in the administration of criminal justice under laws which apply to business and the professions and which therefore involve only the upper socio-economic group…”
In White Collar Crime, Sutherland argued that the behaviour of ‘respectable’ people, from the upper socio-economic class, frequently exhibits all the essential attributes of crime, but that it is rarely dealt with as such. This situation had arisen, he said, from the tendency for systems of criminal justice in Western societies to favour certain economically and politically powerful groups and to disfavour others — notably the poor and unskilled who comprise the bulk of the visibly criminal population. He added:-
“Probably much more important however, is the cultural homogeneity of legislators, judges and administrators with businessmen. Legislators admire and respect businessmen and cannot conceive of them as ‘criminals’; businessmen do not conform to the popular stereotype of the ‘criminal..”
Another American sociologist William Chambliss put it as follows:-
“One of the reasons we fail to understand business crime is because we put crime into a category that is separate from normal business. Much crime does not fit into a separate category. It is primarily a business activity..”
In his research, Sutherland discovered that the ‘white collar’ criminal has no real fear of regulators ,and that actions by the regulators were considered to be an unfortunate interlude, but had little ability to exclude malefactors from continuing to trade. Sutherland found that the actions of regulators were seen as a bureaucratic part of a governmental process, and not considered to possess a status which would diminish the perpetrator in the eyes of his social peers. He said:-
“white collar criminals customarily feel and express contempt for law, government and regulators in a way similar to that in which professional thieves express contempt for policemen and judges. Businessmen characteristically believe that the least amount of government is the most desirable state.”
This was confirmed by my own experiences of dealing with white-collar criminals at both the Metropolitan Police and at Fimbra. It was further reinforced by some academic research I undertook. This explored whether or not a guilty verdict for the criminal offence of dishonesty would have an exclusionary impact upon a financial markets practitioner. One financial criminal said to me rather ruefully
“the white collar sector always assumed that its wrongdoing would be treated somehow differently from other crimes…’
In what is the most systematic discussion of 19th-century business crime to date, George Robb (1992) notes the reluctance of the legal and criminal justice systems to intervene in the social differentiation of the treatment of white collar criminals. He states;
“From the mid-19th century through the early decades of the 20th, the law put few obstacles in the paths of white collar criminals, trusting instead that the free market would regulate itself and that good business would drive out bad. The liberal outlook was taken up by the law courts which neglected business frauds and treated white collar criminals with comparative leniency. Throughout much of this period, cultural perceptions of ‘criminality’ remained focused on the ‘dangerous classes’ while elite misconduct was seen as a relatively minor social ill.”
He highlighted the fact that the harshest sentences for ‘white collar’ offences were invariably reserved for embezzling clerks rather than leading businessmen. He argued that another factor caused such leniency:-
“Another reason frequently given for the lenient sentencing of most white-collar criminals was that the shame and social disgrace attendant on criminal conviction were punishment enough for middle-class persons. Exclusion from polite society was viewed as a more serious penalty than imprisonment … For white collar criminals, prison was seen as ancillary to their personal sense of shame and loss of social status”
I wanted to test how effective this social exclusionary factor would be for a financial practitioner found guilty of a crime. My research set out to establish how financial practitioners would respond to the news that one of their social and commercial circle had first been suspected of, and then convicted for committing offences of insider dealing (a regulatory issue in their eyes), as opposed to the offence of theft (a criminal offence in their eyes). In doing so I wanted to test Sutherland’s assertion that regulatory offences were considered less important than criminal offences and would not carry the same degree of social and commercial exclusion.
In the course of a questionnaire which was completed by 93 financial services practitioners, I posed the following questions.
“A person in another company who you have known socially for a long time and with whom your company has done business for many years has been reported in a serious newspaper as being suspected of Insider Dealing. How would this report impact on your social dealings with them?”
The conclusions of this research were that, in business dealings, conviction of a criminal offence places the convicted person in a very defined capacity as far as financial practitioners are concerned, which is in a marked contrast to their social position. The research showed that while financial practitioners are prepared to tolerate breaches of the social code — borne out by the fact a greater percentage are prepared to continue a social relationship with a convicted person — in business, the vast majority were unable to continue any relationship with a convicted person. I believe the figures reinforce Sutherland’s theory that breaches of the business code are considered more seriously than breaches of the social code.
Overall the statistics bear out the theory that financial practitioners believe they have little to fear in the actions of regulators, because whatever the outcome, the penalties do not lead to social or commercial exclusion from the financial sector. Fines have no impact on the individuals in the banks, instead, their impact is only felt by the shareholders.
However, what clearly works beyond any other measure is a conviction for what could be termed ‘an ordinary criminal offence’. It immediately places the defendant in the ranks of ordinary mortals, and its commercial exclusionary impact has been amply demonstrated. Being convicted of a crime is the route to the door marked ‘exit’, and it means that the convicted person can never come back into the City because no-one will be willing to work with him or employ him in future.
It must be hoped that we will not have to listen to any more special pleading on the part of the regulators that there are other, better methods of regulating the financial sector, methods which have a greater deterrent effect, because there are none! In addition, criminal convictions lead to asset seizures, and financial recovery proceedings, enabling ill-gotten gains to be recovered. The proceeds of the crimes become launderable and any other person who has facilitated in their distribution or dissemination can be prosecuted for money laundering.
For these reasons, we must insist that government implement an urgent review of the powers of the regulators to bring criminal prosecutions, and their relationship with the Serious Fraud Office and the Crown Prosecution Service to be upgraded and given far more flexibility, in the hope that we shall see many more errant bankers being forced to grip the rails at the Old Bailey.
I strongly believes that a few selected prosecutions and convictions would send such a shock-wave through the ranks of the hitherto spoiled and arrogant financial practitioners so that they will quickly lose the mistaken perception that they are a ‘protected species’.
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While I agree with the central thesis I think that selected prosecutions would be insufficient. Madoff, after all, was convicted as have been a few others. The issue with random prosecutions is that the payoff is still good.
Wall Street, it seems to me, has a chronic gambler’s mentality. Risk in exchange for a high potential payoff is fine. In order to dissuade them it would be necessary for prosecutions to become regular and predictable. We would, I think, need to change the meme from the present one where the egregious or stupid are punished to one where everyone pays and where the punishment runs up the chain.
If not then groups like Citi will still pick young eager traders and commit control fraud by allowing them to run wild and eating up the gain. If a small number of the “rogues” are punished the payoff will still be good enough for their bosses to keep finding replacements.
Good thoughtful post.
Madoff would be a poor example. Madoff’s mistake was confessing his crimes in the absence of a criminal investigation.
Actually Maddoff’s error was to scam the rich and powerful (banks, Zionist International, etc.): those bite (the poor are generally easy prey instead) and he eventually tried to make a soft landing for his sons by confessing but leaving them clean. Hoewever even that did not work properly if I recall correctly, right?
“I have never understood why ‘white collar’ criminals should be treated any differently from any other criminals, but the fact remains that they are treated differently”…
And it is incredible how some journalists and politicians justify this differential treatment. When neither Rodrigo Rato nor any of his accomplices was (nor has been so far) put in jail, some of these TV political debaters who clog Spanish media justified it saying that “prison is not made for them”.
I overheard that pathetic justification at least once, maybe twice, to my powerless outrage. As if somehow prison is made for some kind of people who naturally belong them, the poor I presume, obviously not the rich. This kind of usually unspoken classist segregation is what is happening today quite painfully, when the worst criminals, those who cause the ruin of whole communities and even nations and incredible suffering to millions, just get away with their crimes.
If something has our time is a Victorian feeling of deja vu, as if all the advances in terms of human and civil rights, labor rights, greater democracy… have not managed to make even a dent in an extremely oligarchic, classist system, in which there are basically two kinds of people: the rich, who have all rights and privileges, and the rest (the 99%), who are losing them all very fast.
“I strongly believe that a few selected prosecutions and convictions would send such a shock-wave through the ranks of the hitherto spoiled and arrogant financial practitioners so that they will quickly lose the mistaken perception that they are a ‘protected species’”.
Asolutely. But they have again become so powerful and arrogant that this discussion, while much needed, is like the Council of Mice: the diagnosis is clear but who dares to bell the cat?
“this discussion, while much needed, is like the Council of Mice: the diagnosis is clear but who dares to bell the cat?”
Very nice!
To me, anyone from Occupy who either was deliberately arrested or even inadvertently arrested, has attempted to bell the cat. So too do all the keyboard warriors that attempt to make people see what is really happening.
Even “Sixty Minutes”, the TV news magazine, attempted to bell the cat. They devoted a double length segment that proved beyond a reasonable doubt, how various executives of banks and mortgage firms were committing acts of fraud by signing off on statements in the annual corporate financial reviews to the effect that their companies’ products were substantially vetted, and held no inherent risk. But as Sixty Minutes pointed out, under the Obama term, fewer people have been charged with white collars crime than at any other four year period in the last twenty years… Why is that?
Well, for one thing, how could the President successfully run for re-election if he admitted that one of the biggest problems of the economic situation (with 49 cents out of every single dollar of profit now going to the top Wall Street banks and Financial Firms) is his appointment of Tim Geithner to Treasury and his re-appointment of Ben Bernanke to the Federal Reserve. I feel a case could be made for both those men under RICO statute – if they were not so “royally” protected by both the President and Congress.
And while the Big Criminals of Wall Street go free, it is the whistle blowers who feel the wrath of everyone from Obama himself to those who are in executive positions at those banks and financial firms!
I probably had in mind the Spanish language version which reads not “who dares to bell the cat?” but “who does bell the cat?” Darers there may be many (and my deepest respect to all them) but achievers…
The real problem is not daring but actually belling it. The question is: how do we bell the cat?
IMO anything short of a class-based revolution will fail because we live under a regime of dictatorship of the bourgeoisie in which the members of the ruling class will normally not persecute nor punish each other. Democracy, human rights, rule of law… are just a facade, a facade that is pretty much dilapidated and does not anymore fulfill its legitimating role properly at all.
The difference, as they say, is all the difference.
This is why, I think, many of the more bitter state AGs have turned to passing “homeowners bills of rights” and other state changes that, in theory, will prevent future failures. They may have singed on to the compromise on the expectation that they would arrest some people and, having been usedthey now turn to leaving behind bells for their replacements.
Certainly I don’t expect my AG to try and ride on Obama’s coattails, or to get drug very far in the attempt.
And yet, if a regular J6P were to track down and confront the rich white guy who screwed him out of his job, his pension, and who destroyed his 401K or ripped him off selling him a house, and that J6P were to hurt, or even kill the rich white guy who ruined his life, then it’s J6P who will pay for his crime, whereas RWG will be decried as the victim.
Mark my words. If we don’t START prosecuting the RWG, we’re going to see J6P hunting them down and gettign their own form of Justice. Then the RWGs will be begging for the safety of prison.
Da, and thank you Yves, a bell ringer in her own right.
Maju, the Way of Charles Dickens is effective also. NC walks this Way.
This wonderful post barely scratches the surface. A greater truth is that business at the highest corporate level is simply indistinguishable from organized crime. In thirty five years of law practice I never met a businessman who was not a criminal. Not one. Some were more aggressive (ie, sociopathic), most were comparatively timid. There are no honest people working in the enabling professions: big time law, accounting, consulting. The honest ones quickly become disgusted and quit. Every single corporate board member is nothing more or less than a panderer to executive looting strategies. Pandering is the essential skill required in that line of work. And as for regulators, ninety percent of them are careerists hoping and praying for an entry into the criminal business ranks for themselves. Expecting such people to send the successful criminals to jail is expecting the impossible.
What is different about today is that middle class people are being systematically denuded by the business criminals. For fifty years or so the middle class was coddled and allowed to grow fat on cheap credit and rising land prices, rising stock prices. But the business criminals have finally discovered how to capture all such gains for themselves, and the middle class ox is once again being gored, just as it was in the last quarter of the nineteenth century.
There is no ‘reform’ solution to business criminality. The total war that created a new wave of opportunity sixty years ago seems unlikely to recur. We are probably in for a depression likely to last ten or twenty years and what will happen after that is anybody’s guess. I would not be surprised to see concentration camps and soldiers patrolling city streets. Half the working class might have jobs controlling the behavior of the other half.
Hikes! This sounds like Berlin in 1943 when the Nazis used Jews to hunt down other Jews that were hiding..
After reading about the Rosenstrasse Protest, and your description of the business elite, kinda sounds like the Gestapo
Excellent comment.
Counter to what the article says- about a select few being prosecuted to change the status quo-isn’t sufficient.
There MUST be accountability for ALL who profited from the racketeering ponzi scheme they committed. They also MUST have ALL Assets seized.
EVERYONE including the regulators & politicians who looked the other way & or passed laws that allowed this destruction of our economy are ACCOMPLICES of the financial terrorists acts. This includes even the mortgage underwriters who falsified applications.
So far the bailouts of Wall St & other multi-national banks is costing Americans $170 TRILLION!
We need to do what Iceland has done! See:http://www.fedupusa.org/2011/11/why-iceland-should-be-in-the-news-but-is-not/
I warned that Wall Street would crash in ten years due to fraud, a decade before it did.
Why not just give the partners, directors, and senior managers in banks which engage in risk unlimited liablity for debts and leave it at that?
I know, I know–a Saturday morning fantasy that wouldn’t work in a complicated, multi-owner regulatory environment. But I like the thought of people who go around preaching enterprise whilst starving real risk-takers of cash being made to put their money where their mouth is.
The payback may not come in the form of tumbrels carrying the condemned to the guillotine. It may, instead, come in the form of people simply declining to play in a crooked game. I seem to recall this happening after one such bubble in England.
Of course, this is the real reason that we’re being asked to privatize Social Security. They’ve spent all the money that they acquired by converting our pensions from defined benefits to 401(k)-style defined contributions. Now, they’re coming for our Social Security in the next Lame Duck session of Congress.
We’ll know the stock market is crooked – and we’ll have no choice but to play.
Eventually, if our justice systems do not impose penalties on these criminals, the people will begin to exact justice directly, in the streets. Their criminality fools no one beyond the chattering classes and a few “Tea Party” idiots. Their time will come.
Yves:
“the penalties do not lead to social or commercial exclusion from the financial sector.”
I have been an advocate of this measure along with a potential year in prison at a level 4 prison coupled with a 3 year parole. Doing more than 1 year in prison is costly to society at ~$30,000 annually. Keep them out of banks and off Wall Street for natural life as the a final stipulation in the sentencing.
run7, this requires “eternal vigilance” by “bracelet”/”anklet” worn forever by the offender. As has been claimed, these Financial Psychopaths “are like paedophiles” — they “can’t help themselves” and will repeat offenses when the opportunity presents itself to them. The are habitual, compulsive offenders. They must be arrested.detained.penalized.watched.”tracked” by electronic device. They must never again be placed in a “potentially tempting” environment, because–as the man said–“They can’t help (restrain) themselves.” They are, after all, psychopaths.
Run, I would bet that you see no problem putting poor people in prison at a cost of $30,000 per year do you? Its people like you that make my ass water. Take the fucking money that the crooked cocksuckers stole, and you can house them in a prison in perpetuity. And then after you get them put away, check yourself in too, for spewing bullshit and providing cover for the thiefs.
The author fails to understand the real purpose of the State and the criminal “justice” system: protection of the Capitalist class from the rest of us. When the Capitalist class steals from us, no problem. That’s what it always does. If we dare to steal a loaf of bread from the Capitalist class, down comes the hammer.
In other words, failure to prosecute “white collar” crime is a feature, not a bug.
I’m not sure if the author fails or not in noticing the essence of the system as a predatory capitalist system, but there has been for decades in the developed world an ideological consensus by which a relatively balanced not-too-unequal society was thought and promoted as possible and desirable within the Capitalist system.
This ideology (very useful to counter the communist ideas partly materialized in the USSR, China, Cuba, Vietnam, etc.) was supported in the material aspects by Keynesianism first and then by the Reaganomics credit bubble. Today neither seems to work anymore nor there is any emergency plan other than rob-all-you-can-and-fence-off-the-rebels.
So when Yves evidences that this legal and social system does not anymore works, knowingly or not, she does help to arise consciousness (class consciousness if you wish also but more specifically social consciousness about the terrible limits of the system in this End of an Era).
GS, just a month in a Big Ten Law School studying Constitutional Law with a good professor (Patrick Baude at IUB) reveals that the Law as practiced in the U.S.A. has little to do with “justice” as Lady Justice comprehends it. It is recognized that “The Law is what the Judge says it is in your case” and that the Justice System in the U.S.A. is thoroughly corrupt.
Sorry, I meant to say Constitutional Law and Contract Law studied together, in the first term, first year. One of the peculiarities of Contract Law in the U.S. is that there is NO penalty for actual BREACH of Contract. Only “specific performance” or “satisfactory payment” can be exacted from the malefactor (leaving “damages” aside. Actually, Patrick Baude excelled at Contract Law.
As breach of contract is a Civil rather than a Criminal matter, it’s proper that the damages be “the benefit of the bargain”, where the breacher has to make whole the other party. I for one would not have to face jail time if I need to break my lease.
On the other hand, if my landlord evicts me because someone else wants to pay a higher rent for my place, I should get either “specific performance” (the landlord is forced to honor the lease as written) or my “benefit of the bargain” damages (my moving costs, incidental / consequential damages such as lost income from the time spent house-hunting, and (if the new rent is higher) paying the difference between my old rent and the rent at my new place.
White collar criminals may be the problem, but vigilantism is the solution.
As system of judicial failure is a failed judicial system.
Justice is monetized, vigilantism is not. Glad I’m not rich. Most are only 5 gallons of gas and a Bic away from the grave.
Nick, you just gave *THEM* the words to say what they know, deep down:
“I’m 5 gallons of gas and a Bic away from the grave.”
That’s why they are “tripling down,” down, down.The naked shorts on the 1% are without limit.
AND, Nick, you know “there’s no going back.”
Where is Simon Templar when he’s needed?
If you believe the spin, that those responsible for preventing, causing, creating, and reporting on “the greatest financial collapse since the Great Depression” and how not one of these offenders has been arrested, prosecuted, jailed, or fined, then nothing has changed. The game remains the same. Something like this can only happen in a country where there is no Rule of Law, therefore no crimes too big or small can be committed. Where nothing is prohibited, everything is allowed. God Bless America (but I am beginning to appreciate President Obama’s minister, the one who said “God Damn America.” I am starting to get where he might have been coming from.
Rev. Jeremiah Wright was actually quoting someone else during that sermon.
http://alexwdc.wordpress.com/2008/03/20/jeremiah-wright-full-context-of-remarks-on-youtube/
The Clinton operatives that released that video clip did some creative editing.
This is not difficult…
You commit a crime you go to jail. If the crime is deemed to have harmed the stability of the US, you get 3 strikes and you are out.
Revoke their license.
Also, under no circumstances does a private company get public money.
You take a risk, you are on your own. Is this difficult?
To some extent before but to a large extent after the Big Bang the UK became the city and the city the UK.
They can’t put them in stocks as their imports and balance of trade is based on producing private letters of credit.
If a Norman Fiat King somehow cast these vipers out he would lose his power rapidly as the British people would begin to starve.
The banks control the Fiat ……….Geithner is the classic example of this , the Venetians control the fiat – all of the Fiat.
A black death is coming.
Adding to the above.
Nobody wants to push the government because it means the loss of many services.
Either we are for corruption or we are not..
I would like, just once, to see a prosecutor or a lawyer describe under what laws extant at the time of the Toxic Waste mess would be applied for the infamy concocted by our Golden Boys on Wall Street.
And the Silver Boys on Main Street who managed to submit fraudulent claims to creditworthiness as part of a predatory pricing swindle as well. (How about the Truth In Lending Act – TILA – of 1968?)
Please, someone, anyone in the legal profession, aside from the blatant dishonesty of their professional behaviour, where is The Law that would send them on a well-publicized perp-walk and then a court trial?
Yet another voice of exasperation in the wilderness on this matter … a certain Eliot Spitzer here.
Your garden variety black letter fraud charge would suffice. That is:
(a) a false statement of material fact,
(b) made with knowledge of its untruth,
(c) to deceive the victim,
(d) reasonably relied on by the victim,
(e) to the victim’s detriment.
That would cover all three species of fraud we’ve seen (thus far) by sellers of mortgage-backed securities, namely, (1) selling securities known to be unworthy of their AAA rating, (2) selling securities but not ever conveying the paper that was paid for, and (3) selling the same securities multiple times.
It would also cover fraudulent loans and fraudulent foreclosures.
!. We’ve discussed at length using Sarbanes Oxley, which provides for criminal penalties.
2. Charles Ferguson wrote an entire book, Predator State, which relied on other legal theories and discussed how the conduct of specific institutions was clear prosecutable (he made clear he as selecting them for illustration, that this is a target-rich environment).
The problem is not the law, it’s political will.
Um,the problem is the law,particularly in a Westminster system where there is a supposed seperation of powers between the Legislative,Executive and Judicial.
Commonwealth conservatives make a great show of this wonderful system when it suits them but haven’t much been seen lately.
In a Utopian pipedream,the system of law should change from combative run by lawyers to investigatve run by examining magistrates.
You can add that to the wish list for after the Revolution.
DSP, thanks. There is definitely room for improvement here.
I’d have to differ with your assessment, Yves.
The problem is not political will, it is lack of political power. Political power in the age of mass communication grows from the control of the means of propaganda that allows elites to create mass belief systems based upon delusions. Political will can only ride upon the back of mass movements that reject the instruments of mind control and replace it with new ways of thinking. It is powerless in isolation—- If Jesus Christ appeared riding on a white horse or a donkey he would receive the same treatment as Jill Stein recently experienced.
Political power can also grow out of the mouth of a gun, as Mao was famous for stating. However the kind of political power that grows out of the mouth of a gun rarely creates a society that benefits its citizens, but just replaces one cadre of oppressors with another.
{We’ve discussed at length using Sarbanes Oxley, which provides for criminal penalties.}
I’m no lawyer, but Sarbanes-Oxley is post-fact. I’m not sure one can be prosecuted under a law for acts that were committed prior to its existence.
I think TILA, however, is another matter.
Yes, I quite agree. It is indeed a matter of political will. Especially when one considers this “factor” here. Is it just “hearsay”?
Business Crime: never prosecute unless a public scapegoat is needed.
Violent Crime: always prosecute, especially when the violence or theft is directed against the business class.
The statutes of limitations are running out. Which is the whole point of the cover-ups, non-investgations and lying statements such as Obama’s “No laws were broken,”
Jimbo, “heads on pikes” will have to do, until the real thing comes along.
SURGICALLY EXCISED
Indeed, that is the question.
What laws, existing at the moment when the supposed crimes were committed actually existed?
We have a systemic failure. It came about by people who were “gaming the system”. Yes, it was dishonest. Yes, the consequences in terms of economic calamity were heinous. Yes, there otta be a law. (Well, there is one … belatedly.)
But, look, the entire foundation of our society is based upon the Law of the Land. Sorry, but unless a bona fide lawyer tells me otherwise, I see no law (other than perhaps TILA) that applies.
And I keep asking why TILA does not apply and I get no answers. Despite the conviction that “cronyism” is rampant in the Obama Administration.
Given the tsunami of defamation and character assasination currently being carried in the media, certain doubts as regards their authenticity are permitted.
For the moment, our central authorities (namely the US A.G. and the SEC) stink to high heaven – given what is apparently a lack of regulatory oversight (aka “enforcement”) and perhaps of prosecutorial responsibility.
But, for the moment, they are just voices in the wilderness. Why? Because if the voices are true, then the rot at the heart of our financial system must be surgically excised.
Because the next time, and there will be a next time, that cupidity overcomes our Golden Boys ‘n Gals on Wall Street the consequences may be far worse.
THE PRUDENT MAN RULE
Once upon a time, long, long ago, there was a rule that prevailed on Wall Street. It was called The Prudent Man Rule.
Excerpted from the above link:
But, I ask, what matter the rules when greed is one’s prime incentive?
Which is a sign of our times …
PE collusion, investment house fraud, taxpayer bailouts, a terminal economy, a pillaged planet. Dysfunctional prohibitions. What else besides drugs can we make illegal so there is a flourishing black money market? Fraud has literally become business because that’s where all the money is. Was the LA Times just spoofing when it published the article about Bain laundering Central American drug money?
Actually the presentation on Democracy Now documented that 40% of Bain Capital’s start-up capital came from Salvadorian Oligarchs who financed death squads that murdered close to 50,000 people in the anti-communist crusades that swept over Central America in that era.
But we shouldn’t hold Mitt responsible for those deaths— he was merely being a smart capitalist making a profit while furthering the US policy of genocide.
Can’t expect something like that to be of interest to the national press—-. Not when they have binders full of women to chortle over.
A ROBBER BARON ECONOMY
Quite right, this election is all about jobs, jobs, jobs in the reigning mentality.
One can understand the principle preoccupation of the jobless is to get a full-time job, or even those who have been shoved into a part-time job. Maybe even a decently paid job?
But a country that has become morally spineless will find that inevitably an “anything goes” mentality reigns. Our society then becomes – and has become – Darwinian. Only the fittest must survive, “fittest” defined as those clever enough to make one helluva lotta money regardless of how.
This is not the first time a Robber Baron economy has existed in the US. It seems to be a habit with us to forget what has come before as we rush into the future.
George Santayana (American philosopher): Those who cannot remember the past are condemned to repeat it.
Sociologically, this meshes well with the Moyers plutocracy piece.
It just seems like there are a ton of interlocked systems that sane people — that is, people who don’t have an awful lot of power and money — should ever, ever get involved with or even go near, including the criminal justice system*, the financial system, the health insurance system, and on and on and on.
NOTE * One keeps seeing stories of people calling 911 and getting shot, for example.
Mr. Strether;
Sadly, we’ve reached the point where trouble comes and finds us, no matter where we try to hide. Notice the several admonitory comments above about vigilantism. Agree with it or not, by constructing an oppressive Police State Apparatus, the State has engendered an anti-State movement. I think it’s a feature, not a bug. Tools are made to be used.
He isn’t really a big time crook unless you must let him alone to prevent the loss of public confidence.
No financial wizard would look so much like a wizard if all the suckers didn’t look so much like suckers.
The great sore spot in our modern commercial life is found on the speculative side. Under present laws, which foster and encourage speculation, business life is largely a gamble, and to “get something for nothing” is too often considered the keynote to “success”. The great fortunes of today are nearly all speculative fortunes; and the ambitious young man just starting out in life thinks far less of producing or rendering service than he does of “putting it over” on the other fellow. This may seem a broad statement to some: but thirty years of business life in the heart of American commercial activity convinces me that it is absolutely true.
If, however, the speculative incentive in modern commercial life were eliminated, and no man could become rich or successful unless he gave “value received” and rendered service for service, then indeed a profound change would have been brought in our whole commercial system, and it would be a change which no honest man would regret.- John Moody, Wall Street Publisher, and President of Moody’s Investors’ Service. Dated 1924
Tom, all of that, plus the EgoIdeal of being “so damned smart” you can make a fortune off Other People’s Labor, while you don’t lift a finger. This is a HUGE Ego Trip. “My Egotrip is bigger than Your Egotrip” is the abiding adrenaline RUSH of “Capitalism The Unknown Ideal” (by Ayn Rand, ℅ Alan Greenspan).
no surprise that white collar crime has been a growing specialty in biglaw firms
its a lucrative practice
Businessmen are the worst criminals. If one murderer kills two victims, the next murderer doesn’t feel compelled to kill three. If one thief steals $1,000, the next thief doesn’t feel compelled to steal $2,000. But if one businessman cheats, the next businessman must cheat too, “just to compete”.
Criminal Bankers Procecuted???
I wouldn’t hold your breath or wait up with sandwiches.
Prosecuting criminal bankers and politicians is something that’s only worthwhile if you still believe that the system is worth saving. If on the other hand you are like me and are looking forward to its utter and complete collapse, then you will have no particular desire to anything about the rampant criminality of those in power. In fact, you might even be happy about it.
And that’s why I hope that you all will run out and vote to reelect Obama/Romney. There’s no more certain way to make sure this pig goes under. Soon.
JGordon, indeed, by the Declaration of Independence, the Constitution of the United States, and the Bill of Rights, it is not only our RIGHT, but our solemn DUTY to overthrow Tyrants in our Government and to prosecute Traitors.
The Third American Revolution is at hand, fully justified.
DR. JILL STEIN PRESIDENT 2012: We the People TIP HISTORY.
When it comes to financial crimes there’s an even bigger focus that’s missing, identity theft and credit card fraud. The Federal Government needs to take their efforts up a few notches on this one.
In terms of impact, neither is in the same league as the commercial fraud that goes by the title ‘business as usual.’
Just one example, banks forging mortgage documents, is in the trillions and portends damage to millions. While not a victimless crime like growing/smoking weed, cheap scams like those are to train beginning Secret Service.
“The Federal Government needs to take their efforts up a few notches on this one.”
Conscience, haven’t you heard? WE the People are “the Federal Government” BY our Elected Agents sworn to “preserve, protect, and defend the Constitution of the United States.” Since THEY have betrayed We the People/The Sovereign Nation, they must be removed from Office, and We must either replace them or re-invent “Our Government,” which we are bound by our Constitution to do.
GK Chesterton noted that reputation was far more important in the mass of society than at the top. His example was of an aristocrat and his butler being accused of theft. For the butler, it was devastating, while for the aristo, it was at most an annoyance.
Most of us understand reputation is part of what we bring to our work. For financial operators, reputation is just another commodity to be created by skilled craftsmen. The advertising industry and media workers seem to relish creating a public silk purse out of a private pig’s ear. A few seconds staring into the camera lens with a sincere facial set might have results measurable in dollars.
At worst, there’s always someone who hasn’t heard the news.
The social code has never been a serious impediment outside a face-to-face society.
Well stated, Scraping By… Anyone who pays attention knows how corrupt and for sale most politicians are. They have done things that would get ordinary citizens severe jail time. It gets worse as their importance increases. In fact, most would be suitable targets for tar and feathers, yet the media manages to stir the pot till people do not even seem to care or pay attention anymore. The Lawlessness of the USA came into clear focus under the Bushites, and the privilege seems to have been extended to anyone with a suit. Those who are predicting rough times ahead for those people may be right I’m afraid.
Regulation itself is a form of decriminalization – in some cases, outright legalization
Criminal prosecution of administrative violations is very rare.
I am a former regulator.
“Laws are cobwebs for the rich, and chains of steel for the poor.” August Spies.
Privatize Profits; Socialize Costs.
All of the ‘offenses’ were pre-legalized: R-MERS, Gramm-Leach-Bliley. Rather than target the individual malefactors, we must clear the decks in a way that will – incidentally – punish them.
“Revenge” does not equal “Retribution.”
The only way to force the corrupt system to right its wrongs is to arrange contingencies that leave no alternative.
Rather than trying to get the malefactors to cough up their ill-gotten gains, we must – in a single stroke – wipe out individual debt. This is the strategy that has worked in every instance for thousands of years: Jubilee.
I strongly believes that a few selected prosecutions and convictions would send such a shock-wave through the ranks of the hitherto spoiled and arrogant financial practitioners so that they will quickly lose the mistaken perception that they are a ‘protected species’.
Read more at http://www.nakedcapitalism.com/2012/10/why-it-is-essential-that-criminal-bankers-are-prosecuted.html#mKJKiwXbZCtIogw7.99
Allow me to note that the Enron and several other scandals in early 2000s sent some white collars to prison some for many years but there is greater doubt that this has any effect on Wall St and corporate America. Surely the USA ascribes to banana republic much more than the exceptional country in mythology dear to the hearts of patriots.
I know this is a VERY late post but I can’t resist citing St. Adam Smith:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
The Wealth of Nations, Book I, Chapter X