Warren Calls For Stronger Enforcement Of Corporate Crime

Senator Elizabeth Warren has just written an op-ed piece for the New York Times. In it she calls for the stronger enforcement of laws relating to corporations and the Wall Street financial firms -- and she directs that message at all of the current Democratic presidential candidates. I think she is right. Our justice system doesn't work when some are held accountable and others (like corporations) are not.

Here is what she had to say:

WHILE presidential candidates from both parties feverishly pitch their legislative agendas, voters should also consider what presidents can do without Congress. Agency rules, executive actions and decisions about how vigorously to enforce certain laws will have an impact on every American, without a single new bill introduced in Congress.

The Obama administration has a substantial track record on agency rules and executive actions. It has used these tools to protect retirement savings, expand overtime pay, prohibit discrimination against L.G.B.T. employees who work for the government and federal contractors, and rein in carbon pollution. These accomplishments matter.

Whether the next president will build on them, or reverse them, is a central issue in the 2016 election. But the administration’s record on enforcement falls short — and federal enforcement of laws that already exist has received far too little attention on the campaign trail.

I just released a report examining 20 of the worst federal enforcement failures in 2015. Its conclusion: “Corporate criminals routinely escape meaningful prosecution for their misconduct.”

In a single year, in case after case, across many sectors of the economy, federal agencies caught big companies breaking the law — defrauding taxpayers, covering up deadly safety problems, even precipitating the financial collapse in 2008 — and let them off the hook with barely a slap on the wrist. Often, companies paid meager fines, which some will try to write off as a tax deduction.

The failure to adequately punish big corporations or their executives when they break the law undermines the foundations of this great country. Justice cannot mean a prison sentence for a teenager who steals a car, but nothing more than a sideways glance at a C.E.O. who quietly engineers the theft of billions of dollars.

These enforcement failures demean our principles. They also represent missed opportunities to address some of the nation’s most pressing challenges. Consider just two areas — college affordability and health care — where robust enforcement of current law could help millions of people.

When the Education Management Corporation, the nation’s second-largest for-profit college, signed up tens of thousands of students by lying about its programs, it saddled them with fraudulent degrees and huge debts. Those debts wrecked lives. Under the law, the government can bar such institutions from receiving more federal student loans. But EDMC just paid a fine and kept right on raking in federal loan money.

When Novartis, a major drug company that was already effectively on federal probation for misconduct, paid kickbacks to pharmacies to push certain drugs, it cost taxpayers hundreds of millions of dollars and undermined patient health. Under the law, the government can boot companies that defraud Medicare and Medicaid out of those programs, but when Novartis got caught, it just paid a penalty — one so laughably small that its C.E.O. said afterward that it “remains to be seen” whether his company would actually consider changing its behavior.

Enforcement isn’t about big government or small government. It’s about whether government works and who it works for. Last year, five of the world’s biggest banks, including JPMorgan Chase, pleaded guilty to criminal charges that they rigged the price of billions of dollars worth of foreign currencies. No corporation can break the law unless people in that corporation also broke the law, but no one from any of those banks has been charged. While thousands of Americans were rotting in prison for nonviolent drug convictions, JPMorgan Chase was so chastened by pleading guilty to a crime that it awarded Jamie Dimon, its C.E.O., a 35 percent raise.

To be fair, weak enforcement is sometimes a result of limited authority. Despite the company’s history of egregious safety failures, for example, the former C.E.O. of Massey Energy was convicted only of a single misdemeanor in the deadly Upper Big Branch mine disaster that killed 29 miners in West Virginia in 2010, because federal mining laws are too weak. It’s on Congress to stiffen such penalties.

But in many instances, weak enforcement by federal agencies is about the people at the top. Presidents don’t control most day-to-day enforcement decisions, but they do nominate the heads of all the agencies, and these choices make all the difference. Strong leaders at the Environmental Protection Agency, the Consumer Financial Protection Bureau and the Labor Department have pushed those agencies to forge ahead with powerful initiatives to protect the environment, consumers and workers. The Special Inspector General for the Troubled Asset Relief Program, a tiny office charged with oversight of the post-crash bank bailout, has aggressive leaders — and a far better record of holding banks and executives accountable than its bigger counterparts.

Meanwhile, the Securities and Exchange Commission, suffering under weak leadership, is far behind on issuing congressionally mandated rules to avoid the next financial crisis. It has repeatedly granted waivers so that lawbreaking companies can continue to enjoy special privileges, while the Justice Department has dodged one opportunity after another to impose meaningful accountability on big corporations and their executives.

Each of these government divisions is headed by someone nominated by the president and confirmed by the Senate. The lesson is clear: Personnel is policy.

Legislative agendas matter, but voters should also ask which presidential candidates they trust with the extraordinary power to choose who will fight on the front lines to enforce the laws. The next president can rebuild faith in our institutions by honoring the simple notion that nobody is above the law, but it will happen only if voters demand it.