Letter to the editor examines crimes of America’s wealthiest

Sanjay Paul January 29, 2014 0

If Homer had a mission in life, besides seeking to ensure a regular supply of scones at the Blue Bean, it would be to come to the aid of very rich people who get caught committing financial crimes.

In this, Homer is in good company. Take the editors of the country’s leading business newspaper, the Wall Street Journal. Every time a money manager is charged with insider trading or a major bank is caught trying to manipulate global interest rates, the WSJ is quick to rise to their defense. They were merely seeking to promote market efficiency, they write in their anguished op-eds. Leave them be, they cry, let the masters of the financial universe alone! Any attempt by the government to rein them in is foolhardy.  Regulations, as everyone knows, are but a stepping stone to communism.

If it wasn’t for the WSJ’s energetic salvos, how many innocent people would have suffered under the onslaught of an interfering government? Homer himself was quite sympathetic to the plight of the wealthy and helpless. Ever since the 2008-09 financial crisis, it seemed that the world had turned against the financiers. The Occupy movement, the passage of Dodd-Frank, the election of Elizabeth Warren to the Senate — these were only the most visible manifestations of the class warfare that had been unleashed on the hapless denizens of Wall Street. It was, Homer thought, them against the 99 percent. It was not fair to the one percent.

Not only was the whole thing unfair, but the government was having some success in convicting some of their elite brethren. In 2011, a billionaire hedge fund manager, Raj Rajaratnam, was sentenced to 11 years in prison for insider trading. The length of the sentence sent shock waves through the financial community. White-collar crime wasn’t supposed to be punished this severely.

To see yet another case of egregious conduct by out-of-control regulators, consider the plight of JP Morgan Chase. Not long ago, they were considered to the best-managed bank in the country. But now, after the depredations of a malevolent government, the bank’s reputation lies in tatters. To settle a slew of lawsuits (all without merit, no doubt), the bank has agreed to pay monstrous fines to the government.

And what was JP Morgan Chase charged with? The list of alleged improprieties is a long one. The government did not like the way in which the bank sought to recoup credit card debts from delinquent borrowers, the manner in which it marketed mortgage-backed securities before the financial crisis, and its failure to report Bernard Madoff’s Ponzi scheme to regulators. The bank also lost $6 billion on a trade that went drastically awry (but on the plus side, brought the phrase London Whale into public discourse).

But it is not out of the woods yet. The bank has been accused of hiring the children of high-ranking officials in China in order to win business in that country. Sure enough, the WSJ wrote about how the bank was being treated unfairly — didn’t everyone do this sort of thing, they asked?

Homer wondered whether anyone had thought of looking at JP Morgan’s website. If the rabid government attorneys, instead of chasing after evidence and witnesses and such, had taken a moment to read the bank’s well-crafted mission statement, they would have learned that “by fostering a culture that stresses the highest ethical standards in support of clients, we have built one of the world’s most trusted and respected financial services institution.” How many banks can claim this sort of ethical probity and soaring achievement after agreeing to pay $20 billion in fines?

But all was not gloom. A recent report cheered Homer. A judge ruled that Ty Warner, billionaire founder of Beanie Babies, didn’t have to go to jail.

Warner, it turns out, had hid his money in Swiss bank accounts to avoid paying taxes to Uncle Sam. He claimed that he was really ignorant about basic financial matters and was misled by foreign bankers who told him that he didn’t have to pay taxes on foreign income. The judge noted that he had given a lot of money to charity. Moreover, Warner said he was really, really sorry about the whole thing. The judge, a kindly sort, let off the poor man with two years of probation.

Now, this was refreshing, thought Homer. If someone went to the trouble of going all the way to Switzerland to open a bank account, he should be lauded for revealing the inequities in the American tax system, not threatened with prison time. Being shamed in public was enough punishment.

If only, thought Homer, other government regulators were so benevolent.

Leave A Response »