To Deter Crime, Get Tough on Wall Street

Often, the most provocative ideas arise after swigs of whiskey. This is especially true when a Rolling Stone reporter is around — and, as I recently learned, it’s all but guaranteed when that Rolling Stoner is Matt Taibbi, aka the heir to the magazine’s gonzo throne.

I had the chance to hang with Taibbi last week after he spoke to a Denver audience about his new book, “Griftopia,” which argues that Wall Street’s bubble-bailout cycle has been one of the greatest — and least prosecuted — crimes in history. His presentation was serendipitously timed, coming the same week as a local Bonfire of the Vanities-esque scandal was underscoring the speculator class’s privilege. In Colorado’s own Bonfire of the Rockies, a local prosecutor had just reduced hit-and-run charges against a fund manager because the prosecutor said a felony would have “serious job implications” for the Sherman McCoy in question.

Over drinks in my living room, Taibbi and I pondered the financial Masters of the Universe and their maddening infallibility. I asked him why they never fear facing legal consequences. Do they believe they’re untouchable? Or do they know law enforcement won’t pursue them?

“They’re not afraid because other than Bernie Madoff, when was the last time someone on Wall Street faced any real punishment?” he responded. “Sure, a few go to jail once in a while, but they’re usually out in a few months and then on the speaking circuit. That’s not exactly a deterrent against bad behavior that’s making you millions.”

Deterrence — it’s the vaunted idea behind “tough on crime” sentences for violent offenses. Lock the door, throw away the key, and the theory says that heinous acts will be prevented.

However, things haven’t worked out that way because the toughest “tough on crime” policies are most focused on crimes of passion, derangement and destitution — crimes that are often not calculated and therefore not deterrable. This is probably one of the reasons why the murder rate has been higher in death penalty states than in non-death penalty states, leading most criminologists to conclude that capital punishment does not hinder conventional homicide.

But what about crimes of economic homicide? These are the opposite of crimes of passion. When, say, a speculator securitizes bad mortgages and peddles them to pension funds as safe investments, that fraud involves exactly the kind of calculation that might be deterred via the prospect of harsh punishment.

“What if a bank CEO was given life without parole?” I asked Taibbi. “What if instead of country club jail, one of these guys was shown experiencing prison like a regular convict? That would have to stop some of the worst stuff, right?”

“Right, and go a step further,” Taibbi countered. “How about putting a few of them in the electric chair? Are you telling me Goldman Sachs execs aren’t then going to change?”

We both busted out laughing — and hard. Not at the truth behind the theorizing, but at the idea that any of it would actually happen today. In 2005, Washington couldn’t even pass a post-Enron proposal to hold CEOs legally liable for their companies’ corporate tax fraud. So the notion that the same money-dominated capital will now subject CEOs to anything remotely “tough on crime” is, well, far-fetched.

And yet, the hypothetical is compelling, isn’t it? That’s because it highlights how our society misapplies deterrence — and how it might apply the concept more successfully.

The necessity of such a criminal justice shift should be obvious. With financial fraud now so sophisticated and pervasive, we clearly need zero-tolerance solutions to change Wall Street’s culture. Indeed, without true shock-and-awe deterrence, most regulatory reform will likely be an ineffectual thumb in the economic dike — just as the thieves desire.

David Sirota is the author of the best-selling books “Hostile Takeover” and “The Uprising.” He hosts the morning show on AM760 in Colorado and blogs at OpenLeft.com. E-mail him at ds@davidsirota.com or follow him on Twitter @davidsirota.

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Help In These Times publish more articles like this. Donate today! Subscribe today and save 46% off the newsstand price! Or win a subscription to In These Times by taking this short survey! David Sirota is a senior editor at In These Times and author of the bestselling books The Uprising and Hostile Takeover. He hosts the morning show on AM760 in Colorado and blogs at OpenLeft.com. E-mail him at ds@davidsirota.com.

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Civilian Court Convicts Terror Suspect of a Single Crime

The White House is currently facing criticism after a federal jury convicted former Guantanamo Bay detainee Ahmed Ghailani of just one out of 285 charges. Critics assert that the single conviction is an example of why suspected terrorists should be tried in military court instead of civilian court. Others, however, cite the conviction as evidence that civilian courts effectively deliver justice.

Ghailani was convicted on November 17 of conspiring with al-Qaeda in the 1998 bombings of two U.S. embassies in Africa, a crime punishable by 20 years to life in prison, though the Justice Department assures skeptics that it will seek the maximum punishment.

Conservative pundit Laura Ingraham, one of the critics, contends: “Military tribunals are much more effective in these cases because of the sensitivity of the evidence, and their less stringent admissibility rules.” For example, in Ghailani’s case, explains Ingraham, “One key witness was excluded by the judge because his identity was discovered through enhanced interrogation.”

However, Salon.com contends that military tribunals bar the use of torture-obtained evidence to roughly the same extent, citing Rule 304 (a)(1) and (5) of the Military Commissions Manual. The first reads: “No statement, obtained by the use of torture, or by cruel, inhuman, or degrading treatment ... whether or not under color of law, shall be admissible in a trial by military commission.” The second states, “Evidence derived from a statement that would be excluded under section (a)(1) of this rule may not be received in evidence against an accused who made the statement if the accused makes a timely motion to suppress or an objection.”  

According to Ingraham, the jury was confronted by mounting evidence that was wholly ignored: Ghailani purchased the flammable gas that made the bombs more deadly; stored the electric detonators; provided the cellular phone to the suicide bombers; and was a close associate with al-Qaeda and other convicted bombers; and spent some time in al-Qaeda safe houses. Yet despite the evidence against him, says Ingraham, he was convicted of solely “conspiring to blow up a government building.”

The backlash against the Obama administration following the conviction was fierce. Utah’s Republican Senator Orrin Hatch said, “It’s time for the administration to listen to the 9/11 families and the American people and change course by putting all terror trials through our military commission system.” And Representative Trent Frank of Arizona contends that Attorney General Eric Holder should “repudiate” the White House’s terror trial policy or resign immediately.

Frank went on to say, “If this insane policy of appeasing terrorists and granting them American constitutional rights to be tried as quasi American citizens continues, the cost of this failure will pale in comparison to the cost of the failure that will undoubtedly yet occur as a result of this ruling. Terrorists now have incontrovertible evidence that they can exploit the American justice system and they will use this knowledge to train new terrorist recruits and manipulate their cases if and when they are caught.”

On the other hand, New Yorker’s Amy Davidson argues that the outcry against the single conviction implies that Americans perceive the legal system to be “a machine for producing the maximum number of convictions, regardless of the law.” The fact of the matter is that our legal system is based on the concept that the accused is innocent until proven guilty, and in order for a jury to reach a guilty verdict every member of the jury must find the defendant guilty beyond any reasonable doubt. Both the presumption of innocence until proven guilty and the jury system are desgined to protect the rights of all of us, since anyone of us could be wrongly accused of commiting a crime. But it is not intended, and does not shield from justice, those for whom the evidence of having committed a crime is beyond a reasonable doubt. Consider Timothy McVeigh, the Oklahoma City bomber who was found guilty in a civilian court and got the death penalty.

Salon.com explains that it was the intent of America’s Founding Fathers to make it difficult to imprison individuals, and that they did it “with the full knowledge that clearly guilty and even extremely evil people would sometimes receive something other than the punishment they deserve.”

In response to the backlash, the Justice Department cites the likelihood that Ghailani will spend the rest of his life behind bars as an example of success.

Matt Miller, a spokesman for the Justice Department, indicates, “I think the people who are criticizing the outcome of Ghailani are not paying sufficient attention to the fact that he was convicted, and he was convicted of a serious crime that will lead to a long sentence. That is our goal in these cases. Our goal is to incapacitate terrorists, to keep them behind bars, to obtain justice.”

Nevertheless, Sue Bartley, wife and mother of two of the bomb victims, claims she was “stunned” by the verdict.

According to Salon.com, however, “The verdict in this case — no matter what it was — would be largely inconsequential in terms of Ghailani’s imprisonment. He has already been imprisoned without charges for six years, including two years at a CIA ‘black site,’ and yesterday’s verdict means he will spend decades more in prison.”

The website adds, “Even had he been acquitted on all counts, the Obama administration had made clear that it would simply continue to imprison him anyway under what it claims is the President’s ‘post-acquittal detention power.’ ”

Meanwhile, five suspected 9/11 terrorists, including Khalid Sheikh Mohammed, were considered for trials in civilian court, but, due to opposition from Congress and New Yorkers, are now put on hold while the administration ponders the next move.

Miller contends, “We make those decisions based on facts, based on the law. And we’ll continue to work through that with the detainees who are still at Guantanamo.”

Photo: Ahmed Ghailani

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