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The exculpation of the well-to-do

The corruption of the American justice system by the wealthy

7/23/2014, 1:35 p.m.
Law enforcement turned a blind eye on the criminal conduct of bankers and financiers whose misdeeds precipitated the financial collapse ...
“If we operate behind a corporate cover, we can beat the rap like the bankers and the big guys do.” Photo by Dan Drew

When the American banking system collapsed in 2008, Congress concluded that the large banks were “too big to fail.” The consequences of failure would be too destructive to the nation’s economy. So Congress approved a rescue strategy called the Troubled Asset Relief Program that provided $245 billion to enable banks to recover. Now, according to journalist Matt Taibbi, this rationale has been extended to excuse the criminal conduct of bankers and their banks because of a similar concern for “collateral consequences.”

Many Americans are concerned that the nation’s income disparity will destroy the middle class. But an even greater loss than the higher standard of living is the corruption of the justice system by the wealthy. In a despotic regime, those in power use the judicial system to impose their authority on others. In the American democracy there is supposed to be “freedom and justice for all.” This means that the laws governing criminal misconduct should apply equally to a beggar or a millionaire.

In her book “The New Jim Crow,” Michelle Alexander demonstrates persuasively how the criminal justice system and imprisonment discriminate against African Americans. Taibbi asserts in his book “The Divide: American Injustice in the Age of the Wealth Gap,” that the policy of “collateral consequences” has enabled the oligarchs or their minions to walk away from horrendous conduct without so much as a criminal blemish on their reputations.

However, the criminal law was not so forgiving of the misdeeds of ordinary citizens. Although the rate of violent crime in the U.S. had dropped by 15.4 percent between 2007 and 2011, the rate of imprisonment still remained the highest in the world. In 2010 the U.S. rate of incarceration was 500 prisoners per 100,000 residents. This is about five times greater than the rate in other industrialized nations.

Black men are incarcerated at an even higher rate, 3,074 per 100,000 residents. There seems to be little concern about the “collateral consequences” of removing a black father from his family. His children and his spouse then have to find ways to survive without the father’s support, but that is not a factor that a prosecutor considers.

Under the doctrine of “collateral consequences” in corporate prosecutions “prosecutors may take into account the possible substantial consequences to a corporation’s officers, directors, employees and shareholders…,” according to Attorney General Eric Holder. Major corporations are thus permitted to pay a fine for misdeeds that would require the incarceration of an ordinary citizen. Furthermore, the money comes from corporate funds and no individual gets a criminal record.

The misdeeds cited by Taibbi included the issuance of fraudulent mortgages, money laundering, fraudulent adjustment of the index rate for some variable interest rate loans (Libor rate) and alleged defrauding of the creditors in the Lehman bankruptcy. Not one banker who was complicit went to jail.

While major banks involved in laundering drug money were excused, the number of arrests for marijuana possession increased ten-fold in New York. The policies of William Bratton, the former New York police commissioner, had led to a dramatic reduction in crime. That created a problem for the NYPD because there was no overtime or a list of arrests to enhance a police officer’s record for promotion.

The stop-and-frisk policy employed after Bratton’s departure was allegedly to find guns, but the policy was continued even after few guns were found. Police recorded 684,725 stops in 2011, with 88 percent of those searched either black or Hispanic, and only 0.02 percent of the stops secured guns.

Blacks and the poor suffer extraordinary abuse in the criminal justice system. Corporate executives with talented, high priced lawyers, avoid such inconvenience. The nation is clearly developing a two-tier criminal justice system.