Friday, January 29, 2016

Sen. Warren Initiates an Important Discussion

Senator Elizabeth Warren has issued a report and written an op-ed in the New York Times titled: One Way to Rebuild Our Institutions. On a broad scale, I think she is attempting to initiate an important discussion. Here is the opening line from the report:
Much of the public and media attention on Washington focuses on enacting laws. And strong laws are important – prosecutors must have the statutory tools they need to hold corporate criminals accountable. But putting a law on the books is only the first step. The second, and equally important, step is enforcing that law. A law that is not enforced – or weakly enforced – may as well not even be a law at all.
In writing about this report, David Dayen zeros in on what is so important about this as we are in the midst of electing our next president.
The focus on how laws are enforced rather than the intricacies of the law itself carries on a theme Warren has stressed throughout primary season – that personnel is policy, that who you will put in power in those key regulatory positions matters as much as your 10-point plan.
This is something I have been writing about for a while now. It actually goes beyond personnel to a recognition that one of the key aspects of the job of any president is to effectively manage the federal government. Because good government is the best defense of liberal policies, this is especially important for Democrats.

I would hope that we could expand what Sen. Warren is saying to also herald the way that government actually DOES work. For example, let's take a look at how people like Tom Perez rebuilt the Civil Rights Division at DOJ and is now effectively leading the Department of Labor. We could also notice that Craig Fugate has done great work to ensure that FEMA is doing its job after the debacle in New Orleans. And perhaps we could spread the news about how federal departments are working together in effective ways. Like how DOJ and the Department of Education teamed up to take on the school-to-prison pipeline. Or how the Departments of Interior and Justice have been so effective in addressing the issues of concern to Native Americans. Those are just a few examples.

But Senator Warren has a specific concern in mind - the extent to which federal agencies fail to hold corporate America accountable. She provides some good examples in her op-ed and report. But I'd like to take the discussion a bit deeper because I think she glosses over some important issues.

In a line similar to what we often hear from Bernie Sanders, Warren writes this in her op-ed:
Justice cannot mean a prison sentence for a teenager who steals a car, but nothing more than a sideways glance at a C.E.O. who quietly engineers the theft of billions of dollars.
That particular argument doesn't work for me. As someone who is committed to criminal justice reform, I have no interest in evening up the score between the over-incarceration of poor black and brown people by simply sending more C.E.O.'s to jail. I'm much more interested in the idea of Americans beginning to examine why we think of prison as the only way to hold people accountable rather than simply parroting the right's "tough on crime" approach and applying it to Wall Street.

In her report, Warren examines 20 cases that she identifies as "the worst federal enforcement failures in 2015." They are comprised of a mixture of criminal and civil cases brought by the government against corporations. She bemoans the "meager fines" they paid and the fact that no one went to jail. But what Warren failed to do is to point out that in civil cases, it is not very likely that anyone would ever go to jail. They are most often solved via a judge/jury award or a financial settlement that is reached between parties prior to trail. We can argue about the extent to which those settlements are "meager." But to suggest that the alternative was jail time for a civil offense is not an honest argument.

What IS an honest argument is to ask why many of these corporations (or individuals within them) were not brought up on criminal charges - for which they might have faced jail time. The argument is often made that this is because the system is "rigged" in their favor - the implication being that those who are appointed to enforce the laws are beholden to the very corporations they are meant to police. That is certainly, as Warren suggests, an issue that should be on the table in this current presidential campaign.

But when she faults the current Department of Justice for not prosecuting more individuals on criminal charges, I think it is important to take a deeper look at why that has happened. Back in 2014, Jed Rakoff - United States District Judge for the Southern District of New York (someone who knows a thing or two about securities law and white collar crime) - looked at that question. He came up with three likely possibilities:

1. After 2001, the FBI had reduced the number of prosecutors assigned to securities fraud and prioritized counter-terrosim, while the SEC was focused on Madoff-like ponzi schemes,

2. The government was complicit in setting the stage for the securities fraud that led to the Great Recession (red meat for defense attorneys to exploit),

3. For the past 30 years or more, there has been a shift away from prosecuting individuals and towards plea bargaining with corporations in an attempt to alter the culture of corruption that led to the crimes.

While it is true that simply saying that "the system is rigged" makes for better campaign PR, if we really want to examine how the federal government works (or doesn't work) when it comes to enforcing the law with corporate America, the answers aren't always so simple.

1 comment:

  1. I find some of her public pronouncements disingenuous. Continuing to scold about Glass-Steagal, after admitting that it wouldn't have worked to stop the meltdownbut it made a good symbol.

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