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America’s Top Prosecutors Used to Go After Top Executives. What Changed? (2017)
- anoncoward111 8y agoThey go after the little guy now because typically he or she can't fight back and is deathly afraid of prison.
- kevmo 8y agoYes. Guaranteed convictions yield inflated statistics, which bureaucrats then tout as evidence of their value and need for (greater) funding. Paywalled, but excellent paper on this phenomenon: https://scholar.google.com/scholar?hl=en&as_sdt=0%2C10&q=low+hanging+fruit+Harvard+policy+securities+exchange+perverse+incentives+&btnG=#d=gs_qabs&p=&u=%23p%3DVPGFe1uwAlMJ https://scholar.google.com/scholar?hl=en&as_sdt=0%2C10&q=low...
- dralley 8y ago9/11 and the Bush admin. All of a sudden all the feds cared about was terrorism.
- oldgradstudent 8y agoThis doesn't explain why the Obama administration did not bother persecuting bank executives. And there was plenty to persecute then for (e.g. laundering money for drug cartels).
- TAForObvReasons 8y agoThe answer according to James Comey was a "chickenshit" culture wherein people were afraid to take on cases that weren't a slam dunk. And it was difficult to make a case that bank executives were guilty thanks to the complex structure involved.
- P_I_Staker 8y agoDo you think there could be some semi-legitimate reasons for that behavior, beyond just laziness and cowardice? Cost is a big issue in the justice system. Of course, you should still go after murders (and other serious offenders), even if it's hard and costly. At least some of the issues in our justice system stem from not having the resources to handle every case fairly. Every criminal case should be fully investigated and tried in court, but the system would break under these conditions. So you end up with a highly perverse system based on extortion, and heavily biased depending on socioeconomic status. Sometimes it works "too well", other times it doesn't work at all.
- TAForObvReasons 8y agoYes, and it's a problem that affects tech as well: KPI When you award promotions based on, say, the total number or total percentage of successful convictions, then the whole culture starts to optimize for that. Given the sheer number of cases that could be pursued, naturally the easiest-to-win cases will be selected, and more often than not those are small potatoes.
- msiyer 8y agoCost is the most important concern. Various factors add to it. Time taken to deliver justice, if it ever can be, is the major factor. The justice system is set up like a religion. Even a group of victims with a common influential adversary would find it difficult to carry on for decades with unwavering intensity.
- rtkwe 8y agoProsecuting someone for a crime like that is tough you have to prove out of the whole company that the people you're prosecuting actually committed the crime. That's hard because the nature of corporations is to diffuse responsibility and decision making.
- mtgx 8y agoBS. European countries have prosecuted banking crime just fine. Plus, we have Eric Holder on the record for saying he wouldn't go after bank executives because it could "hurt the economy", a reason I rank right up there with "terrorists attacked us for our freedoms."
- qaq 8y agoHmm care to show high level execs of say HSBC being prosecuted for money laundering?
- oldgradstudent 8y agoThey could have treated it just as any other type of organized crime. Start at the bottom and go up the chain of command.
- pas 8y agoThere is a long list of "reporting requirements" for financial institutions, and a lot of these is about responsibility. Group heads have to sign for their group, department leads for their department, branch managers for their branch, etc. And the CEO of course is responsible for all the branches / departments. This makes it possible to make a case out of ignoring warning signs, ignoring possible whistleblowers about illegal conduct, etc. Usually the Oversight Authority should be able to set at least some rules of these reports to help them set up the right responsibility (and thus incentive) structure (both for prevention and for whistleblowing).
- jarsin 8y agoThe main leverage prosecutors have now days is you are going to be financially ruined trying to defend yourself. Innocent or not it's a lose lose for normal people. The prosecutor's don't have this leverage over the rich.
- chii 8y ago> The main leverage prosecutors have now days is you are going to be financially ruined trying to defend yourself. which is the very epitome of injustice. Prosecution should be about finding out the truth, and finding out parties responsible for a wrong (and force them to make amends somehow).
- joobus 8y agoGov can have that power over the rich too. Gov will freeze all their assets, claiming they were gotten illegally, and then even rich people can't pay their lawyers. See Kim Dotcom, for example. It's not that gov can't prosecute the rich; they just don't want to.
- jarsin 8y agoYes the Gov prosecutes the rich from time to time, but it typically only happens if one rich guy pisses off a bunch of other richer guys. As is the case with Kim Dotcom.
- monetus 8y agoHe hired Eric Holder, who seemed to have significantly changed during his time at Covington and Burlington. Holder wanted fines, not prison.
- pas 8y agoYes, and the DoJ got a lof of DPAs (Deferred Prosecution Agreements) and billions of USD. And they spent that on various programs, that helped some very much in need, but not exactly those who the banks profited off of. And so a lot of people ended up feeling that the government did nothing for their plight.
- bobwaycott 8y agoI believe you mean prosecuting & prosecute, not persecuting & persecute.
- jostmey 8y agoExcept that the article uses the Enron collapse and scandal as an example of prosecutors going after top executives, and that happened during the "Bush admin"
- seanmcdirmid 8y agoDidn't Enron go down before 9/11?
- TylerE 8y agoSort of. The stock started to go down in the Summer of 2001, but they didn't actually declare bankruptcy until December 2001. The Enron scandal became widesread news in October 2001. So, 9/11 was actually first, at least in terms of the public consciousness. Much of Enron's fraud had happened before then but it wasn't really known. The indictments of the CEO, etc, didn't actually happen until 2004.
- seanmcdirmid 8y agoI'm pretty sure Bush and Cheney were hurting during the Enron scandal, then all that hurt basically disappeared after 9/11. At that point, if there was anything else to be heard about Enron, it wasn't going to be front page anymore.
- TylerE 8y agoAgain, the scandal didn't really break until AFTER 9/11. The SEC didn't announce it was probing Enron until October 22nd, 2001.
- seanmcdirmid 8y agoUgh, my memories back then are really garbled then. Sorry about that.
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- zakum1 8y agoOne scary side of this is that it appears to have led ordinary people who see the system as rigged to elect an “anti establishment” president who is even more zealously rigging the system. American politics needs profound change and brave new leaders with a new vision.
- kevmo 8y agoSenator Sanders is America's best bet.
- geggam 8y agoNo standing politician can cure our existing politics
- Sabinus 8y agoWhy?
- lxmorj 8y agoWhat is asserted without evidence...
- geggam 8y agoThe fact they are part of the problem existing today is only logical. They are there and we have problems.
- bigbluedots 8y agoFood exists and we have political problems, therefore food is part of the political problems we have today.
- Rescis 8y ago> Food exists and we have political problems, therefore food is part of the political problems we have today. Senators are a very integral and powerful part of our current government, and have a far larger per pound effect than food on the politcal environment. Your argument seems quite disingenuous.
- joe_the_user 8y agoI would really like to see some statistical studies of this stuff. My impression is prosecutors have always been leery about going after the rich and powerful but things have indeed gone further that way in the last twenty years. So measuring exactly how much seems important here. The thing is, the "regulatory revolving door", where ex-regulators are appointed to private industry, gives at least a strong proxy measure of intertwined interests of business and US government. It's always hard to be sure what a few even important cases mean.
- BurningFrog 8y agoA cynical view is that if someone is prosecuted, it's proof they're not that powerful. Real power is of course to write the laws so what you're doing is not a crime to begin with. Ideally it's even subsidized by the government.
- jopsen 8y agoStats would be nice... It's easy to remember a few top executives being prosecuted over 50 years, and hard to remember historical cases from the past 10 years.. because they are not historical yet.
- coldtea 8y ago>It's easy to remember a few top executives being prosecuted over 50 years, and hard to remember historical cases from the past 10 years.. because they are not historical yet. That doesn't make sense. Cases from the past 10 years should be easier to remember, because "historical" or not (this is a needless distinction here), they are (a) more recent, (b) more likely to have been written about in the news/social media/shows/etc one reads than older cases. The use of "historical" here is a distinction that confuses more than illuminates. Even if "it's hard to remember historical cases from the past 10 years.. because they are not historical yet", it should be easier to remember big cases from the past 10 years, period.
- jopsen 8y agoOkay, I may have confused myself :) I think the point was events always looks better at a distance..
- monetus 8y agoI suggest reading Matt Taibbi's book The Divide, mentioned in the article, if you want a bit more context around Eric Holder and Lanny Breuer's involvement in this. He rests the 'original sin' at the feet of Eric Holder and a memo he wrote during the Clinton administration, as it outlined the collateral consequences doctrine embraced by justice department. It also had the most fascinating account of Fairfax Financial and a group of traders who shorted the company before trying to destroy it.
- harryh 8y agoMatt Taibbi is a crappy journalist that distorts the truth to fit his narrative. He's entertaining but not trustworthy. It's worth noting that Fairfax sued the group of traders in that story but the lawsuit never went anywhere and was eventually dismissed.
- fipple 8y agoEventually the “Second Amendment People” are going to do what the “Chickenshit Club” refuses to.
- Buldak 8y agoI haven't seen much to suggest that this is the sort of issue that animates second amendment sort of people.
- brian-armstrong 8y agoI doubt it. Do you think the wealthy aren't well protected? Citizens with firearms are useful against soft targets, not ones that can defend themselves
- bigbluedots 8y agoThe second amendment refers to the right to bear arms in reference to those arms being put to the service of the state: "A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed." Doesn't anyone in the US read the whole thing?
- fragsworth 8y agoProsecutors need to be given percentages of the judgments they win for the U.S. government against corporations. It doesn't even have to be a big percentage, and it ends the revolving door. Let our prosecutors make a fortune by ending criminal corporate behavior. As long as it's decided by a jury, they still won't waste their time with sketchy cases. If they retire early, so be it - there will be hundreds of people eager to fill the vacant positions.
- dhnsmakala 8y agoI agree with this, so many problems can be fixed with proper incentive structures.
- setr 8y agoThe issue is the same as ML: the damn things will figure out how to misinterpret the incentive into something perverse, if given the chance. Even worse, they have the opportunity to influence the incentives, or change them outright, to give themselves the chance; and since the incentives have to change over time, to keep up with changes in the environment, any stable set of incentives is likely to become unstable in due time. So incentives are alone not the answer; it needs to also somehow be self-stabilizing, and self-correcting, and also not be wrong (because such a structure would be difficult to fix, as its designed to be difficult to edit in the first place !)
- technofiend 8y agoWe have plenty of laws borne out of outrage and a desire to punish the guilty. They usually create even worse outcomes: look no farther than seizure laws created during the War on Drugs for a perfect example. Law enforcement can take any asset you have based on an allegation of criminality: not against you but the item itself! You get to prove the innocence of the item in court if you hope to reclaim it. Of course those abusing that law know very well that the defense is far dearer than the item itself, resulting in your abandoning any claim to the item and net profit to law enforcement. Now you want to reward prosecution with more perverse incentives? We used to say the power to tax was the power to destroy. These days the power to prosecute is the same, and sort of like I look at every piece of code with the idea "How will the cyber security red team abuse this?" we need to look at any potential law for abuse by over zealous prosecution.
- IBM 8y agoThe SEC will have a great opportunity with Elon Musk.
- ponderatul 8y agoAn article from the NYT before they hired someone racist.
- dang 8y agoPlease don't do this here.
- TomMckenny 8y agoCitizens United v. FEC is what changed. Essentially all elected officials are completely dependent on contributions now. A party, candidate or prosecutor who makes contributors nervous has no chance of re-election.
- tzs 8y agoThe effect of Citizens United has become massively overstated. It lifted the prohibition on corporations (for-profit or nonprofit), labor unions, and other associations from spending money to communicate on political issues. It didn't change the rules on contributions to candidates or parties.
- noisy_boy 8y agoIsn't that just supporting/opposing the candidate by proxy? If a corporation creates a PAC favoring issue X which airs ad/buys social media exposure supporting the candidate who favors issue X, they have in-effect bought airtime for candidate X without any direct contribution to him/her. In this day and age, that kind of exposure is as good as paying the candidate.
- anarazel 8y agoBut speechnow then effectively did, and that was basically just applying the framework of citizens united.
- grigjd3 8y agoSuper PACs can buy attack ads. In binary elections, that as good as supporting the other guy.
- dev_dull 8y agoIf our legal system is working, and there’s adaquate detterances and incentives, then we should expect these cases to go down with time and celebrate that fact. I can’t read the article but I’m not sure if they address that.
- onetimemanytime 8y ago* >>"Blankfein hired Reid Weingarten, a famous white-collar defense attorney...Weingarten was a friend of Attorney General Eric Holder; his children went to Georgetown Day School with the children of Lanny Breuer, head of the criminal division of the D.O.J. ...Weingarten pestered Breuer, saying, “Close this …case, will ya?” * Curious: So how much would Blankfein be charged in a case like this? Saved at least tens of millions in lawyer fees and that's if he was found not guilty. Maybe his firm is hired to do legal work for Goldman but that can be problematic. $1 Million if the case dropped + hours worked?
- qaq 8y agoI have no doubt this could have happened but what is Weingarten pestered Breuer, saying, “Close this …case, will ya?” is actually based on? I doubt this was done publicly. Also I doubt they would have an actual case against Blankfein GS has very strong legal team I have strong doubts Blankfein would have acted in a way that would put him personally into harms way.
- Animats 8y ago"The Chickenshit Club" is a good book. The prosecution team head made the point that if a white-collar prosecutor isn't losing some cases, they're not going after the hard ones.
- rurban 8y agoWhat changed? The fish smells from the head. Justice is not independent and as much corrupt and criminals as politicians, press and law enforcement. As in every other 3rd world country.
- cm2187 8y agoI don't think one can really compare Enron with Goldman. Enron was an obvious case of accounting fraud. Goldman was a more subtle case of miselling. It's not like of there was any political will and anger to prosecute banks after 2008, but for that you need an actual crime to have been committed. Weak underwriting standards and over leverage is bad business but not a crime.
- cascom 8y agoJust a couple of thoughts: 1. Prosecutors are afraid of losing and protracted court battles with all avenues of appeals pursued - making all but the slam dunk cases unattractive to pursue 2. A great deal of the acts the the public would like top executives to be prosecuted for when examined objectively typically are mix of moral shortcomings, Grey areas, and civil (rather than criminal infractions) - making them easy to try in the court of public opinion and less so in a court of law. 3. A lot of prosecutors don’t have the technical support to parse some do the data/complex aspects of the case - let alone make it digestible for a jury
- julienfr112 8y agoHas anyone watched Billions_(TV_show) ?
- purplezooey 8y agoThe fox is guarding the henhouse, that's what changed. Stop voting up these corrupt right wing people and this will gradually get better. Until then it will get worse.