Wednesday, November 13, 2013
The Reverse New Deal: An Acceptance of White Collar Crime
(Public domain image, courtesy of Wikipedia.)
The Securities and Exchange Commission (SEC) was a creation of the New Deal, and was designed to combat financial fraud.
Regulation of financial fraud--through the SEC and other legal & regulatory bodies--must be diligent and it must be dynamic, adjusting to new types of fraud and new types of technology. Unfortunately, as we have seen over the past few decades, and especially since the Great Recession of 2008-to-present, America has dropped the ball with respect to policing white collar crime. For example, for a criminal wrongdoing in the financial sector, a fine is typically imposed, a fine that can easily be worked into a firms's business plan (i.e., the profit from the crime exceeding the fine).
William Dudley, chief of the New York Federal Reserve recently stated that America's large financial institutions had an "apparent lack of respect for law, regulation and the public trust." U.S. Senator Elizabeth Warren (D-Mass.) recently warned that big American financial institutions are in an even greater position to damage the economy than when the Great Recession started in 2008. And a survey of people who work in the financial service industry showed that, among other things, "24% thought you have to break rules to be successful" and "16% admitted that they'd engage in illegal insider trading if they would not be caught."
All of this, however, doesn't seem to bother our Congress too much. This is probably because many of our Congressional "leaders" benefit from white collar crime, in the form of campaign contributions, and lord-knows-what-else, from the very institutions that are repeatedly breaking the law.
Welcome to the Reverse New Deal where, instead of creating new ways to combat white collar crime, we accept it with a wink and a nod.
And the result of this acceptance of white collar crime? 16.4 million children living in poverty, tens of thousands of homeless veterans, 25 million Americans who wish they had a full-time job but can't find one, stagnant middle class wages, $300 billion in revenue lost (annually) through illegal tax evasion, the largest prison-industrial complex in the world, and much, much more.
We need a new, and stronger, New Deal.