At last, we can all feel safe when we take our credit cards out in public again. In September, a federal judge in San Francisco fined a Taiwanese company $500 million and sentenced its former president and executive vice president to three years in prison for cooking up a global LCD screen price-fixing conspiracy. The feds were peeved at the judge nonetheless, because they had asked for a $1 billion fine and a 10-year prison sentence for the executives.
A gratifying blow against price fixers everywhere – or was it? Our soldiers in suits seemed determined in this case to protect the unsuspecting TV buyer against nefarious Chinese capitalists. They show less zeal in prosecuting American capitalists for similar crimes. They don’t lack opportunities. In recent weeks our big banks have confessed to swindling credit card customers, laundering drug cartel money, conspiring to fix interest rates and improperly boosting credit card minimum payments to generate higher fees.
Ah, if we could bring back the old days. In Renaissance Florence, money-changers found guilty of lying about their dealings were tied to the rack. In contrast, Capital One Financial “resolved charges” it conned its own customers by paying fines of $210 million, or about one tenth of one percent of this year’s expected revenues. Leaks out of the Residential Mortgage-Backed Securities Working Group, the special task force set up by the Obamans to look into the dealing that nearly brought down the U.S. economy, suggest that no criminal prosecutions of the people responsible are likely.
There are some good reasons why our criminal justice system seems disinclined to bring financial criminals to justice. Cases are enormously expensive and time-consuming to put together. They are hard to win; when the evidence is ambiguous or, as here, difficult for dim-witted jurors to comprehend, trials tend to end in acquittals; that happened in 2009, when a federal jury acquitted two hedge fund managers who sold investors turkey stocks that they described as prime-rib. The promising career track at the FBI and Justice Department is counter-terrorism, not white-collar crimes, even though white-collar criminals do far graver damage to the nation.
Good reasons – but good enough? The feds have a long history of prosecuting mobsters. To get their man they exploited every statute on the books (remember, Capone was put away for income tax evasion) and were quick to concoct new ones when they needed a pretext for taking the bad guys off the streets. As for terrorists, the feds have been happy to dispense with law altogether to prevent harm to the public. Yet our corporate gangsters pocket their billions – or rather they pocket other people’s billions – and get the equivalent of a parking ticket.
Consider the recently retired U.S. attorney in Chicago, Patrick Fitzgerald. Mr. Fitzgerald was the scourge of wrongdoers in northern Illinois. He prosecuted building inspectors on the take and governors on the make. He prosecuted Washington insiders who tortured the truth on the witness stand and cops who tortured suspects in the station house. His record against corporate malfeasants shows nowhere near so much zeal. Yes, Mr. Fitzgerald went after software and movie pirates, and corporate looter Conrad Black of Hollinger International. But the piracy cases were undertaken by Washington on behalf of Microsoft and media conglomerates, and the prosecution of Black was on behalf of the wealthy investors he stole from. And Fitzgerald did not move against the hapless Mr. Blagojevich until the governor dared to try to shake down the multibillion-dollar Tribune Co.
Why do not our protectors seek to return us to the day when businesspeople made and traded things rather than stealing what others made? The answer seems clear enough. Mobsters and terrorists and rogue cops do not have protectors in Congress. Financiers and our modern malefactors of great wealth do.
A former federal prosecutor in New York recently explained that laypeople don’t understand that just because conventional business practice is now indistinguishable from crime doesn’t make it criminal. Quite so. It is laws that would make it criminal, and U.S. attorneys do not – at least very often – write their own laws. Many of the offenses against prudence, honesty and fair dealing that are a stench in the nostrils of any god who has money in the market are not violations of the federal criminal code and thus beyond the reach of even a conscientious and public-minded U.S. attorney. Because Wall Street owns Congress, or rather rents it as needed, conduct that is plainly fraud or theft when committed by a person who has to ride a bus to work have been defined as a mere administrative infraction when it is committed by a “person” who is a multibillion-dollar corporation. You don’t need to buy the law enforcers when you can buy the law.
Contact James Krohe Jr. at KroJnr@gmail.com.