Aug 30th 2014 | From the print edition The Economist
The formula is simple: find a large company that may (or may not) have done something wrong; threaten its managers with commercial ruin, preferably with criminal charges; force them to use their shareholders’ money to pay an enormous fine to drop the charges in a secret settlement (so nobody can check the details). Then repeat with another large company.
In many cases, the companies deserved some form of punishment: BNP Paribas disgustingly abetted genocide, American banks fleeced customers with toxic investments and BP despoiled the Gulf of Mexico. But justice should not be based on extortion behind closed doors. The increasing criminalisation of corporate behaviour in America is bad for the rule of law and for capitalism (see article).
Since the cases never go to court, precedent is not established, so it is unclear what exactly is illegal. That enables future shakedowns, but hurts the rule of law and imposes enormous costs. Nor is it clear how the regulatory booty is being carved up. Andrew Cuomo, the governor of New York, who is up for re-election, reportedly intervened to increase the state coffers’ share of BNP’s settlement by $1 billion, threatening to wield his powers to withdraw the French bank’s licence to operate on Wall Street. Why a state government should get any share at all of a French firm’s fine for defying the federal government’s foreign policy is not clear.
Prosecutors and regulators should also be required to publish the reasons why, given the gravity of their initial accusations, they did not take the matter all the way to court.
Or how about they at least admit there were no facts to support the original charges? Oh, and if they lose in court they have some sort of personal loss like those they are over-charging?
And the follow up here:
A mammoth guilt trip
“Contrary to the conventional wisdom,” write Margaret Lemos and Max Minzner in an article in January’s Harvard Law Review, “public enforcers often seek large monetary awards for self-interested reasons divorced from the public interest in deterrence. The incentives are strongest when enforcement agencies are permitted to retain all or some of the proceeds of enforcement—an institutional arrangement that is common at the state level and beginning to crop up in federal law.”
So Prosecutors have no down side to over-charging and threatening decades in prison. And then get to decide how to spend the money. Sure, that seems like a fair and equitable system to me, not.
Let’s find more obscure laws and let the Prosecutors run the country. Who needs an inept Congress (and apparently supportive President?) who aren’t paying attention anyway?
Just saying, if it can happen to JP Morgan Chase what chance do you have if they come after you? And you don’t have Jamie Dimon’s money to buy your way out, do you?
One final quote for you to think about:
When America was founded, there were only three specified federal crimes—treason, counterfeiting and piracy. Now there are too many to count. In the most recent estimate, in the early 1990s, a law professor reckoned there were perhaps 300,000 regulatory statutes carrying criminal penalties—a number that can only have grown since then.
Hard to believe the constitution omitted so many important things…