Elizabeth Warren slams corporate wrist-slapping
With populist anger in the political air, Sen. Elizabeth Warren (D-Massachusetts) issued a report condemning what she saw as lenient treatment of corporate malfeasance, citing 20 concluded federal cases from 2015.
Coming three days before the Feb. 1 Iowa caucuses, Warren laid down a marker for her view that company executives should face criminal punishment for misbehavior. In the cases she cited, almost all companies got away with fines, which she judged to be too low. Only one executive faces jail time.
An icon of her party's liberal wing, Warren espouses a dim view of big companies and Wall Street that's more in line with Vermont Sen. Bernie Sanders than with former Secretary of State Hillary Clinton. But Warren hasn't yet endorsed either of the top Democratic rivals in the presidential contest.
In a 12-page booklet titled "Rigged Justice: How Weak Enforcement Lets Corporate Offenders Off Easy," Warren listed 20 civil and criminal cases last year showing how "corporate criminals routinely escape meaningful prosecution for their misconduct."
The 20 cases covered industries ranging from mining to banking to autos. But the Warren report lamented that only one led to a conviction for an executive -- and that was merely a misdemeanor.
In the Upper Big Branch mine case, in which 29 Massey Energy employees died in a 2010 mine explosion, a jury found its former chief executive officer, Don Blankenship, guilty of one misdemeanor count. That's punishable by up to a year behind bars -- despite 2,400 safety violations since 2009, the report said.
While federal prosecutors didn't argue that the CEO was directly responsible for the Upper Big Branch deaths, they said his leadership style placed profits over lives. Blankenship was acquitted of charges that could have led to 30 years in prison. His lawyers maintained that Blankenship's indictment was overkill. He will be sentenced in the spring.
The case that Warren highlighted as favoring Wall Street, a much-reviled sector following the financial crisis, focused on a scheme among five of the world's largest banks to rig the foreign exchange market. No executive was charged, and the banks ended up paying a $5.6 billion settlement.
JPMorgan Chase (JPM), Citicorp (C), Barclays (BCS) and Royal Bank of Scotland (RBS) pleaded guilty to fixing the price of euros and U.S. dollars. The main banking unit of UBS Group (UBS) pleaded guilty to interest rate manipulation. The traders in this plot referred to themselves as "the Cartel."
Although the pleas normally should result in federal regulators barring the institutions from a number of activities in the U.S., the report noted, the Securities and Exchange Commission issued waivers so they could continue conducting business as usual. The waivers meant that "the banks' much-hyped guilty pleas were ultimately likely to carry more symbolic shame than practical problems," according to the report.
Warren also castigated the $900 million plea deal of General Motors (GM) to avoid criminal charges stemming from faulty ignition switches. The defect led to 124 deaths and 275 injuries, when small cars lost power so the brakes and steering would no longer work. The report noted that the fine was less than 1 percent of GM's annual revenue.
Saying the upshot of such light treatment showed "following the law was merely optional," Warren's report concluded that "breaking the law is little more than a cost of doing business."