Around The Web: Shorting Justice

Too big to fail is apparently good not only for a taxpayer-funded bailout, it can also get you a get out of jail free card.

In the latest example of just how far above the law titans of finance now live, a Colorado prosecutor has declined to file felony hit and run charges against a wealthy Morgan Stanley Smith Barney money manager who left the scene after striking a bicyclist while driving his 2010 Mercedes.

Tougher charges, the prosecutor explained, would have damaged the bankers’ source of income, which could have limited his ability to pay restitution.  The banker, Martin Erzinger, manages about $1 billion in assets. Morgan Stanley received about $10 billion in federal bailout money.

Meanwhile the banker’s victim, a New York City doctor, faces a lifetime of pain, according to the Vail Daily. The prosecutor offered a variety of lame explanations for accepting the bankers’ guilty plea to two misdemeanors rather than a felony: the banker had no prior record, there were no drugs or alcohol involved, and harsher charges might have jeopardized the banker’s ability to pay restitution. The prosecutor insisted that he had rejected a more lenient plea offered by the banker’s lawyer, which would have allowed his client to wipe his record clean after a time.

Why the prosecutor believed he was obliged to reach a plea deal at all rather than taking the case to trial remains a mystery. Then again, a trial could have been inconvenient for the banker.

I covered criminal courts in Los Angeles for several years and I don’t recall local prosecutors acting so deferential to accused criminals, even those wearing expensive suits. In fact, criminal defense attorneys were always complaining about how law enforcement authorities liked to try to humiliate their white-collar clients by requiring them to come to court through a gantlet of news cameras in what was known as the dreaded “perp” walk.
Maybe the Colorado prosecutor’s attitude toward bankers has trickled down to him from the Obama administration. Its lenient treatment of bankers throughout the financial crisis has been interrupted only by occasional Asperger-like outbursts of populist rhetoric.  Most recently the president has taken a hands-off approach to the scandal surrounding the handling of foreclosure cases. The banks, inundated with foreclosures, couldn’t be bothered with following the legal requirements to prove that they actually own the mortgages on which they want to foreclosure or to guarantee that the required documentation is in order. The president has balked at proposals for a temporary foreclosure moratorium while the banks straighten out the mess.  Unlike the president and the Colorado prosecutor, some judges are beginning to insist on accountability.

It's Alive!

Wall Street has weighed in with powerful evidence that the United States Supreme Court was right when it concluded a few weeks ago that corporations are the same as human beings. Turns out, Wall Street has feelings, and they are hurt.

Wall Street is so “irked” at President Obama and the Democratic Party that it is rebuffing their requests for political money, according to the New York Times. “[I]t doesn’t feel good,” when Obama talks about Wall Street greed, complained a Morgan Stanley executive. “The expectation in Washington is that ‘We can kick you around, and you are still going to give us money,’” whined a major Wall Street executive. He warned: “‘We are not going to play that game anymore.’”

That’s just a bluff, of course, because Wall Street has been playing the Washington money game for decades – in fact, as we documented in our two hundred page report (PDF) last year, the nation’s economy is in the toilet now because between 1998 and 2008, Wall Street spent $5 billion on Washington, and Washington, without even a hint of partisanship, rolled over – deregulating the industry and encouraging the orgy of speculation that led to the crash.

The Supreme Court’s decision last month in the Citizens United v. Federal Election Commission case guarantees that big business will always be happy by solidifying corporate control over the nation’s legislative process. Discarding one hundred years of previous decisions, the court held that, under the First Amendment, when corporations spend money in the political process, it’s the same as when people make speeches.

This is a travesty. The practical effect of the decision is to accord huge multinational corporations the power to nullify the First Amendment rights of individual Americans. While you and I are “free” to drag a soapbox on to a street corner and  proclaim to our heart’s content, credit card companies, hedge funds, insurance companies are now “free” to unleash tens of millions of dollars from their corporate treasuries in an attempt to fix the outcome of any political debate in their favor. Sometimes that will backfire, as it did when insurance companies spent $80 million trying to persuade voters to defeat Proposition 103, the insurance reform I wrote back in 1988.  Californians figured out who was on the their side, and who wasn’t. But in the vast majority of lower profile issues, in which elected officials are called upon to choose between the policy choice favored by a huge money donor and the one that’s better for constituents, the money talks.

That’s why, despite the near-collapse of our financial system at the hands of the Money Industry, their lobbyists have still been able to stymie just about every congressional proposal to prevent another crash: reform of derivatives and the student loan system, creation of a Consumer Financial Protection Agency, and the recent proposal by the White House to ban banks from speculation.

The tyranny of the British monarchy led to the American Revolution. The Supreme Court’s decision substitutes a corporatocracy for the oppression of kings. So far, the tea parties that seem to be erupting spontaneously around the nation are directing their fire at the bailouts and other encroachments of government. They also need to keep an eye on the corporations that are arguably more powerful than the government already, or will soon be so thanks to the Supreme Court.