FacebookTwitterGoogle+RedditEmail

Business Groups Take Left Flank

by RUSSELL MOKHIBER

On corporate crime, business executives, corporate think tanks, business magazines and newspapers are starting to take the left flank of both the Republican and Republican parties.

No leaders of the Republican or Democratic Party are calling for tougher sanctions against corporate criminals. In fact, you will rarely find a politician on the national stage from either party using the term “corporate crime.”

No leaders of the Republican or Democratic Party are calling for the return of Glass Steagall, the depression era law that separated the investment from the commercial units of banks.

But business executives, free market think tanks and business magazines are starting to say yes – crack down on corporate crime, bring back Glass Steagall.

Last week, the Economist magazine ran a long article and editorial calling for tougher sanctions against corporate crime.

“At the moment, it seems, some corporate crimes pay handsomely,” the Economist declared in an editorial last week asking Is Crime Rational?

“Banks, drug companies and weapons makers have all been stung with record fines recently,” the Economist wrote. “But while fines keep going up, corporate rule breaking – for example, the LIBOR banksters – seems to be booming. Why aren’t high fines deterring bad behavior?”

“One reason could be that the fines, which can be seen as the price of crime, are too low. The economics of crime would support this idea. Many crime economists use a framework set out by Gary Becker of the University of Chicago. The idea is that would-be criminals rationally weigh up the expected costs and benefits of breaking the rules. If the probability of being caught or the level of fine is too low, then the expected costs might be outweighed by the benefits.”

Similarly, earlier this month, USA Today editorialized for more criminal prosecution of corporate executives.

In an editorial titled Fight Corporate Crime with More than FinesUSA Todayconcluded with this – “The way to change criminal behavior is with criminal penalties. In the finance and drug industry scandals, they’ve been too scarce.”

Eamonn Butler, director of the Adam Smith Institute, a free market think tank in London, took to the pages of the Wall Street Journal last week with a startling lead sentence – “More readers of this paper ought to be in jail.”

In an opinion article titled Charge the Criminals, Not the Companies, Butler quotes former New York Attorney General Eliot Spitzer as saying – “The only thing that will work is CEOs and officials being forced to resign and individual culpability being enforced.”

And Butler would give shareholders much more power to run the companies they own – and he would hold them accountable for corporate wrongdoing.

“I would like to see much greater power given to shareholders to run their companies. It is their money,” Butler told Corporate Crime Reporter in an interview last week. “They are the ones who profit from it. And therefore they should have the power to run it without heavy handed regulation from the state which robs shareholders of a great deal of power.”

Then you have the case of Sandy Weill, the former CEO of Citigroup, who engineered the repeal of Glass Steagall, the Depression era law that led to the consolidation of the big banks.

Last week, Weill called for the breaking up of the big banks.

Then you have Phillip Purcell, former chairman and CEO of Morgan Stanley, taking to the pages of the Wall Street Journal arguing that breaking up the big banks will make them better investments for shareholders.

Last week, Purcell wrote an op-ed article in the Journal titled Shareholders Can Cure Too Big to Fail.

“I spent the better part of 20 years aggregating financial businesses to achieve the benefits that can come from institutions that have a variety of products and services,” Purcell wrote. “The benefits were considerable and they still are. However, the market is now discounting the stock prices of financial institutions with investment banking and trading. Breaking these companies into separate businesses would double to triple the shareholder value of each institution.”

“The five obvious too-big-to-fail institutions – Bank of America, Citigroup, J.P. Morgan Chase, Morgan Stanley and Goldman Sachs – have a median stock-market value of considerably less than the values of those component businesses they own that have predictable earnings streams, strong franchises and established client bases,” Purcell wrote.

“Breaking up these banks and isolating their investment banking and capital-markets businesses solve the shareholder-valuation problem. And by not allowing investment banks to fund the assets on their balance sheets with insured deposits, the risk to taxpayers is largely reduced.”

Recently retired Citigroup chairman Richard Parsons put the blame on the financial crisis on the repeal of Glass-Steagall.

“To some extent what we saw in the 2007, 2008 crash was the result of the throwing off of Glass-Steagall,” Purcell said earlier this year. “Have we gotten our arms around it yet? I don’t think so because the financial-services sector moves so fast.”

I’m not sure the words “corporate crime” or “Glass Steagall” have ever publically crossed the lips of President Obama or Mitt Romney during this campaign.

My guess is they haven’t.

But their corporate buddies are starting to pay attention.

Maybe they should too.

[For the complete transcript of the Interview with Eamonn Butler, see 26 Corporate Crime Reporter 30, July 30, 2012, print edition only.]

Russell Mokhiber edits the Corporate Crime Reporter.

Russell Mokhiber edits the Corporate Crime Reporter.

More articles by:
Weekend Edition
June 24, 2016
Friday - Sunday
John Pilger
A Blow for Peace and Democracy: Why the British Said No to Europe
Pepe Escobar
Goodbye to All That: Why the UK Left the EU
Michael Hudson
Revolts of the Debtors: From Socrates to Ibn Khaldun
Andrew Levine
Summer Spectaculars: Prelude to a Tea Party?
Kshama Sawant
Beyond Bernie: Still Not With Her
Mike Whitney
¡Basta Ya, Brussels! British Voters Reject EU Corporate Slavestate
Tariq Ali
Panic in the House: Brexit as Revolt Against the Political Establishment
Paul Street
Miranda, Obama, and Hamilton: an Orwellian Ménage à Trois for the Neoliberal Age
Ellen Brown
The War on Weed is Winding Down, But Will Monsanto Emerge the Winner?
Gary Leupp
Why God Created the Two-Party System
Conn Hallinan
Brexit Vote: a Very British Affair (But Spain May Rock the Continent)
Ruth Fowler
England, My England
Jeffrey St. Clair
Lines Written on the Occasion of Bernie Sanders’ Announcement of His Intention to Vote for Hillary Clinton
Norman Pollack
Fissures in World Capitalism: the British Vote
Paul Bentley
Mercenary Logic: 12 Dead in Kabul
Binoy Kampmark
Parting Is Such Sweet Joy: Brexit Prevails!
Elliot Sperber
Show Me Your Papers: Supreme Court Legalizes Arbitrary Searches
Jan Oberg
The Brexit Shock: Now It’s All Up in the Air
Nauman Sadiq
Brexit: a Victory for Britain’s Working Class
Brian Cloughley
Murder by Drone: Killing Taxi Drivers in the Name of Freedom
Ramzy Baroud
How Israel Uses Water as a Weapon of War
Brad Evans – Henry Giroux
The Violence of Forgetting
Ben Debney
Homophobia and the Conservative Victim Complex
Margaret Kimberley
The Orlando Massacre and US Foreign Policy
David Rosen
Americans Work Too Long for Too Little
Murray Dobbin
Do We Really Want a War With Russia?
Kathy Kelly
What’s at Stake
Louis Yako
I Have Nothing “Newsworthy” to Report this Week
Pete Dolack
Killing Ourselves With Technology
David Krieger
The 10 Worst Acts of the Nuclear Age
Lamont Lilly
Movement for Black Lives Yields New Targets of the State
Martha Rosenberg
A Hated Industry Fights Back
Robert Fantina
Hillary, Gloria and Jill: a Brief Look at Alternatives
Chris Doyle
No Fireworks: Bicentennial Summer and the Decline of American Ideals
Michael Doliner
Beyond Dangerous: the Politics of Climate
Colin Todhunter
Modi, Monsanto, Bayer and Cargill: Doing Business or Corporate Imperialism?
Steve Church
Brexit: a Rush for the Exits!
Matthew Koehler
Mega Corporation Gobbles Up Slightly Less-Mega Corporation; Chops Jobs to Increase Profits; Blames Enviros. Film at 11.
David Green
Rape Culture, The Hunting Ground, and Amy Goodman: a Critical Perspective
Ed Kemmick
Truckin’: Pro Driver Dispenses Wisdom, Rules of the Road
Alessandro Bianchi
“China Will React if Provoked Again: You Risk the War”: Interview with Andre Vltchek
Christy Rodgers
Biophilia as Extreme Sport
Missy Comley Beattie
At Liberty
Ron Jacobs
Is Everything Permitted?
Cesar Chelala
The Sad Truth About Messi
FacebookTwitterGoogle+RedditEmail