2012 and the Scope of the New Lawless Capitalism
So the Obama Administration’s claim that the conduct here “is not necessarily criminal” can only be termed utter hogwash with less than a 5 percent likelihood. MF Global definitely broke federal law. The only question is who directed the criminal conduct. Immunizing Edith O’Brien is the logical next step–if the government had any inclination to learn the truth and pursue criminal charges.
That brings us to the HSBC fiasco, which I blogged about a little more than two weeks ago. Again, here there was no doubt of pervasive and costly illegality. The bank admitted to money laundering for drug cartels and trading with the enemy–including Iran. Given our nation’s eagerness to incarcerate young people of color pursuant to the the so-called War on Drugs, certainly banks that conspired with drug cartels would face harsh punishment for money laundering the proceeds of drug transactions, right? Wrong! HSBC and all of its agents face zero criminal sanction while those involved in petty drug transactions, even tangentially, get ridiculously harsh sentences.
Why did DOJ decide to let HSBC go completely unaccountable for massive criminality? Well, it turns out that DOJ believes that punishing criminality in the financial sector (at least within the megabanks) may disrupt financial markets or cause importnt firms to fail. As I argued two weeks ago, this is absurd. The best means to destroy big finance is to telegraph to investors that financiers are not accountable for criminality. Why would anyone invest in a massive racketeering scheme?
So, the government has yet to even proffer a colorable claim why it does not pursue criminal charges against criminal bankers.
But, aside from the patent nonsense that DOJ now peddles to justify its abuse of prosecutorial discretion, is MF Global. MF Global was the largest bankruptcy since Lehman. Yet, the failure of MF Global had minimal impact on the stability of the financial system. It failed, and MF Global declared bankruptcy on October 31, 2011, but still the DOJ brought no criminal prosecutions against the firm or any individual.
Basically, the DOJ jumps from excuse to excuse for why criminal charges are not pursued in the financial sector. Sometimes they argue no crimes were committed–even when criminality is manifest. Other times they try to use the prospect of systemic risk to justify non-prosecution–even though going after individuals actually reduces systemic risk by bolstering confidence. The only theme that makes sense is this: rich and powerful senior bankers now hold immunity for white collar crime. There is no policy at work, just pure political power.
Whether future jobs, lobbyists, campaign contributions or board seats are used, Wall Street elites simply hold too much sway in Washington to go to jail. Jon Corzine epitomizes this. He was one of the Obama campaign’s top fundraisers. He raised over $500,000, although the campaign did return Corzine’s direct contributions of $70,000. According to Bloomberg and the Government Accountability Institute, Attorney General Eric Holder’s former law firm, Covington & Burling, represented MF Global (as well as virtually all of the megabanks). As of the date of bankruptcy, MF Global owed Covington over $114,000. (p. 26, para. 23).
This must qualify as the most under reported story of 2012. A new lawlessness grips the apex of the American economy and its scope remains highly obscure. The new lawlessness can only be discerned through leaks to the NY Times, like this and this. Between MF Global and HSBC there is is no longer any doubt that rich and powerful financiers enjoy criminal immunity from white collar crimes.
Compare this American reality with the Icelandic legal system’s response to the financial crisis. Iceland just jailed a bank CEO and CFO for their role in the meltdown. As I highlight in Lawless Capitalism the rule of law in the US is collapsing.
In recent weeks the situation has gone from bad to worse.
2012-12-31 02:51:26
Source: http://corporatejusticeblog.blogspot.com/2012/12/2012-and-scope-of-new-lawless-capitalism_31.html
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