(Un)equal Justice Under (Selective Application of) the Law

On the evening of April 29, 2014, Americans witnessed in real time the torture-murder of a death row convict who committed a unconscionable crime in the past and accounted for it by being subjected to an experimental lethal injection cocktail, made worse by the fact that it was not committed by an unrepentant killer but by the official avengers of the victims’ families, enforced by the clinical hands of state government. What does this have to do with The Divide: American Injustice in the Age of the Wealth Gap, the new book by former Rolling Stone national affairs reporter Matt Taibbi? We can put it this way. The transnational megabank HSBC — caught laundering hundreds of millions of dollars for groups like the Sinaloa cartel, among others, guilty of “high-volume reprisal killings and public chainsawings and disembowelings” and the blood of at least 20,000 people — gets fined $1.9 billion for its key role in lubricating the transactions of murderous narcoterrorists. Yet no top executive will have to spend even one day in a penitentary, and no one was individually fined a single cent.

Photo courtesy Brookings Institution.

Photo courtesy Brookings Institution.

The doctrine of “Too Big to Fail” morphed into the apparent reality that big bankers are also “Too Big to Jail.” On the front page of the New York Times on April 30, cracks in that wall have begun to emerge as “prosecutors in Washington and New York have met with regulators about how to criminally punish banks without putting them out of business and damaging the economy.” Taibbi shows how this concern grew out of a memo that Eric Holder wrote in 1999, when he was part of the Clinton-era Justice Department, titled “Bringing Criminal Charges Against Corporations.” This became known as the “collateral consequences” document, which warned that systemic risk may inhibit prosecution due to the fear that the economy may be endangered if, say, big banks are prosecuted for their crimes.

Speaking of criminal justice, on the front page of the Times business section, the analyst Eduardo Porter observes that the incarceration rates in the United States are totally abnormal for the advanced industrial world, and that they have gone up fourfold since the 1960s, and triple since the 1970s. Income inequality and incarceration are intricately linked, as well: “There is something to the idea that the more distant the rich become to the poor,” Porter quotes Harvard professor Devah Pager as saying, “the easier it is to impose policies that are more punitive than others.” In the month since The Divide was released, it appears that the Paper of Record has discovered what Taibbi calls “the seam,” where the ugly political mesh formed by the convergence of the corruption of the justice system and the casino that is called the free market.

The author can barely conceal his righteous rage at the grotesquerie that has become not only the American “justice system” but also what used to be called “the free market,” increasingly resembling a mafia racket instead. “Obsessed with success and wealth and despising failure and poverty, our society is systematically dividing the population into winners and losers, using institutions like the courts to speed the process,” Taibbi writes. The financial crisis of 2007-2008 was “a massive criminal fraud scheme, something akin to a giant counterfeiting operation, in which banks mass-produced extremely risky, low-quality subprime mortgages and with lightning-quick efficiency sold them off to institutional sucker-investors as highly rated AAA bonds.”

Photo courtesy PBS.

Photo courtesy PBS.

Andrew Brown, “with the powerful build of an NFL fullback,” came out the Tompkins Houses, aptly described as “a grim little stretch of brick buildings built in the shadow of the elevated M subway line, dead in the center of Brooklyn, far from any museums or amusement parks or any other place white New York might visit.” Naturally, it is “one of the most heavily policed areas in the country.” Brown recalls of his younger gangland days, “There was all this testosterone, that’s all it was ever about.” Taibbi records how repeated encounters Brown had with law enforcement hammer home a disturbing truth: “It’s not that it’s written anywhere that if you’re black and you live in the projects, you don’t get protection against illegal searches—it just sort of works out that way,” observes Taibbi. There is a very telling scene early on in the book wherein Taibbi asks a quizzical defense lawyer why he does not find it “interesting” that a cop, in court, conceded “to falsely arresting someone.” What follows neatly encapsulates the main theme throughout, which is that the system simply does not work for everyone, and that Equal Justice Under the Law is a fraud. (Taibbi is in italics.)

“Have you ever heard of a white person being arrested for obstructing pedestrian traffic?”
“Well, white people don’t live in those neighborhoods,” he said.
“But white people live somewhere,” I said. “And nobody arrests them for obstructing pedestrian traffic.”
“That’s because that’s not where the crime is. The crime is out there.” [The lawyer had “jerked a thumb in the direction of Brooklyn.”]
“Low-class people,” he said, “do low-class things.”

And, therefore, they have low-class rights, and a lower-grade form of citizenship. The meat grinder of our correctional system transformed the courthouses “into huge fun houses of unreasonableness and mindless punishment, where you can peek into just about any room and find someone absolutely beside himself with disbelief over what is happening to him.”

As a way of explaining what actors like Lehman Brothers were up to until the 2008 crash, Taibbi paints a simpler picture: “A con man comes to a town and opens a store. He then buys lavishly from all the local merchants, on credit, to stock his shelves. For a few weeks he does a booming business, selling his swag for cash. But suddenly, before his bills come due, he flees town with the cash, stiffing the local hayseeds who’ve been gullible enough to give him credit.” This is precisely what firms like Lehman did, when its executives “ran up a $700 billion tab engaging in almost indescribably reckless and antisocial behaviors, borrowing on a grand scale to create and sell products so dangerous that they very nearly collapsed the world economy in 2008.” To add insult to injury, they “paid themselves hefty bonuses on the way out the door.” Barclays and Lehman made a fire-sale deal as the edifice was collapsing. The deal between Lehman and Barclays, whose name graces the former site of Atlantic Yards, “was struck very much in the manner of a political coup d’état.” It gets tricky around this point. But what people need to know is that the events that took place during the weekend of September 13-14, 2008, “was a momentous, unprecedented transfer of wealth and property.” On that fateful weekend, Washington and Wall Street forged a deal that would turn the United States “into a permanent oligarchical bailout state.”

Later on, after describing the agonizing ordeal of immigrants who broke no laws except overstaying their visas and got faced with the dehumanizing tragedy represented by the Orwellian “Secure Communities” law that “was supposed to make it easier to deport Mexican murderers” but, in practice, led to record deportations of migrants “who fled from Mexican murderers,” Taibbi throws down the bomb.

[N]ot one single employee of any foreign bank—not one banker from Barclays, Deutsche Bank, RBS, Dexia, Société Générale, or any of the other numerous foreign banks tha thave been caught up in the many serious fraud and manipulation scandals in recent years—has yet been deported or jailed for any crime connected to the 2008 financial crisis.

Foreign corporations and foreign individuals are treated on radically different levels. No matter what nationality, the only color that matters is green. And “so we’ve built a massive and ruthless police apparatus for the ordinary immigrant population, complete with a sprawling, essentially extralegal detention complex [run in many instances by private companies], to catch and detain people who have not committed any actual crimes.” Meanwhile, the foreign-owned banks are not kicked out or held under a draconian system unworthy of the name American.

Photo courtesy Getty Images.

Photo courtesy Getty Images.

The connection between this and Wall Street is clear, when you look at an entity called the Corrections Corporation of America (CCA): “Depending on whom you believe, CCA receives upward of $166 per day from the federal government to care for immigrants.” This “big influx of cash impressed investors on Wall Street.” By now, “the corrections industry is one of the soundest stock/equity bets in the world, with soaring revenues—the industry as a whole pulled in more than $5 billion in America in 2011.” At the same time, Countrywide, the top lender of subprime mortgages that helped blow up the world economy just six years ago, alone had “dumped as much as $26.6 billion on the taxpayer and the state when it sold overvalued bonds to Fannie [Mae] and Freddie [Mac]. … Fifteen other companies also targeted the federal government for hundreds of millions and billions more. The state of California’s pension fund, CalPERS, was also the target of massive fraud schemes, as banks, mortgage lenders, and ratings agencies conspired to sell California workers billions more in worthless securities in exchange for their life savings.” No privatized prisons for them. The following seems to represent the core of Taibbi’s larger argument, outlining “the logic of our new shadow government.” To wit,

By the time all these [financial] companies were finished first inflating and then crashing a huge global asset bubble based on overvalued mortgages, the world had lost trillions of dollars—one extremely conservative estimate by the IMF [International Monetary Fund] put the losses at $4 trillion.…In the twenty-one biggest federal settlements over mortgage fraud abuses—$300 million from State Street for lying to investors, $153 million from Chase in the Magnetar settlement [in which the bank placed very risky bets with a hedge fund without notifying investors of its conflict of interest], and so on—those companies and a few others paid a total of $26 billion in damages to the government. In every single one of those cases, the relevant companies were allowed to settle without admitting wrongdoing. Not a single individual was charged in any of those cases.…Not one home was searched.…You can drive yourself crazy trying to figure out how this makes sense, financial or otherwise. But it does make sense. It’s not just about money. It’s about fucking with people.

Although it seems halcyon by comparison, the Clinton years were extremely problematic. “It’s not a coincidence that radical welfare reform took place on the same watch that also saw a radical deregulation of the finanical services industry.” Here is one small example, among many. “Staffs were cut at all the major regulatory agencies, and banking watchdogs like the Office of the Comptroller of the Currency [OCC] and the Office of Thrift Supervision simply stopped pursuing criminal investigations; groups that had referred thousands of cases a year to the Justice Department for prosecution during the S&L [savings and loan] crisis completely stopped that activity by the turn of the millennium. In 2009 the OCC referred zero cases for prosecution.” At the same time, “welfare fraud was prosecuted like never before, and welfare fraud investigators multiplied like rats in every state in the country, forming unions and lobbying agencies.” Bill Clinton “showered the projects with cops and bean counters and pulled the cops off the beat in the financial services sector.” Democrats and Republicans “wanted to merge the social welfare system with law enforcement,” and “wanted the financial services sector to become an endless naked pillow fight,” while “turn[ing] life in the projects into a police state.”

Photo courtesy Reuters.

Photo courtesy Reuters.

Rights are conditional on social standing, a tenet that is not part of the old pledge that we made in the first grade. There is in the Land of the Free™ “a vast archipelago of roadblocks, convoys, and detention centers built and maintained specifically for a certain kind of alien—the poor, non-European kind.” This “system … has many of the features of a police state.” In other words, while the United States is not a police state per se, all of what would become the essential architecture for one is in place. For now, the only targets are the criminalized poor of all colors, migrants without papers, and other marginal non-people. Clearly, only deluded conspiracy theorists should be alarmed.

There’s the question of prioritizing what resources go to which agency that polices what segment of the society. There is always enough money to throw at low-level drug users — “just the increase in the national drug enforcement budget for the year of the biggest financial crisis since the Depression was roughly two hundred times the size of the budget for the sole executive branch effort at formally investigating the causes of financial corruption” — which included massive money laundering for cartels. But when it comes to prosecuting the bigger game, well, no one wants to break the bank.

There is a small ray of hope at the end, however. “At the very least,” Taibbi concedes, “on the federal level, officials seem to recognize the political necessity of saying these things [about the lack of accountability for the Masters of the Universe] out loud, and this has to be in very large part due to the public outrage over the lack of Wall Street prosecutions.” This “public outrage … can change the calculus.” My fellow Americans, don’t just get angry — presuming you are not already. Channel the rage constructively. Keep up pressure on the bastards and “do the right thing.”


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