Big Banks and America's Broken, Two-Tiered Justice System
Sen. Elizabeth Warren, D-Mass., sharply criticized Securities and Exchange Commission Chair Mary Jo White on Tuesday, asking for details about the agency's enforcement actions and the implementation of key Dodd-Frank Act rules.June 2
Created under the guise of a program to root out fraud and illegal activity, this initiative has been used by Obama administration bureaucrats to pressure banks to end relationships with businesses they consider objectionable or "high risk."May 4
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, issued subpoenas Monday for several federal agencies, asking for a trove of documents concerning ongoing investigations that he said they are obstructing.May 11
Sen. Elizabeth Warren, D-Mass., delivered a sweeping speech Wednesday aimed at what she's calling "the unfinished business of financial reform."April 15
In February, federal prosecutors began a 90-day examination to determine whether to bring cases against individuals for their role in the 2008 financial crisis.
The deadline for that inquiry passed last month, with the Justice Department failing to hold any individuals accountable for their crimes. Instead, the DOJ announced that it would allow five megabanks to plead guilty to felony fraud charges related to rigging of the foreign currency exchange market but would not prosecute a single individual for wrongdoing.
I recently expressed frustration following this announcement against the five banks. Given that I've spent my career advocating against harsh penalties and mandatory minimums suffered by many in the African American and Latino communities, I find these sweetheart deals unjust and outrageous.
At the very moment these banks were given a slap on the wrist, hundreds of offenders were being sentenced to lengthy prison terms in our nation's courts, many for modest crimes with far less impact than the fraud perpetrated by these financial institutions.
But there was one difference. These mothers, fathers, brothers, sisters, daughters, and sons do not have big banks to hide behind. They spend years behind bars, often going long stretches without seeing friends or family members. They fall victim to abuse in our correctional institutions. And they lose one of our most basic and sacred rights as citizens of this nation the right to vote. When they emerge from prison, they face challenges to rehabilitation, to reestablishing their place in society and to putting themselves on the path to garner gainful employment. Many of these individuals were targeted for prosecution, and it has been documented that people of color often receive longer and more severe prison terms than whites convicted of similar crimes. Once the government makes the decision to prosecute, it's often to the fullest extent of the law unless, of course, you head up a megabank.
Since the financial crisis, which began with fraudulent loans being made to unsuspecting homeowners and continued with the sale of fraudulent mortgage-backed securities to unsuspecting investors, not one individual has been held criminally responsible. Yet, we continually hear about "record-breaking settlements" with the banks over their criminal behavior, behavior that apparently is being committed by everyone and no one.
The failure of our legal system to punish such conduct from which the nation is still recovering reinforces the belief that our justice system is two-tiered. The message for the very wealthy and powerful is that they will always be insulated from accountability even as hundreds of thousands of the rank and file suffer the full force of the law for a small fraction of the illegal conduct that multinational companies write off as the cost of doing business.
This two-tiered system of justice isn't merely a question of fairness. It also does nothing to deter bad actors on Wall Street. It tells the trader to take as many risks as he can because the worst that will happen is he'll simply have to look for another job. He'll keep his bonuses, his track record of profitability, and his freedom. It tells his supervisor that the worst that will happen is that he'll have to waste a few hours meeting with lawyers. He'll still get that promotion, keep that bonus, enroll his kids in private school, and take the annual ski vacation. And it tells bank CEOs that all they'll have to endure is a few days of bad headlines, but profits will stay up, shareholders will get their dividends, and any fines that need to be paid can simply be deducted from the firm's tax bill.
The vast majority of Americans agree that this behavior must stop. But the only way it will stop is when that trader sees his colleague being led out of the office in handcuffs; when his supervisor loses his job, license, and lifestyle; and when that CEO has to stand in a courtroom and hear a verdict of "guilty."
It has to stop because our prison-industrial complex sends a message to the young people being arrested and jailed for non-violent drug offenses that their lives and their futures do not matter. And it has to stop because it simply isn't fair. Equal justice under law means just that.
As Attorney General Loretta Lynch begins her tenure, I urge her to think seriously about the message we're sending to our communities if low-level offenders continue to spend years in jail while the bankers that perpetrate trillion dollar fraud continue to receive no punishment, whatsoever.
Rep. Maxine Waters, D-Calif., is the ranking member of the House Financial Services Committee.