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Senator Warren finds penalties on corporations “shockingly weak”

— February 2, 2016

In a recent Senate report and subsequent op/ed piece in the New York Times, Senator Elizabeth Warren rightly accuses the Obama administration of having been “shockingly weak” on holding corporations accountable for their crimes.

“The failure to punish big corporations or their executives when they break the law undermines the foundations of this great country,” Warren states in her report. “If justice means a prison sentence for a teenager who steals a car, but it means nothing more than a sideways glance at a CEO who quietly engineers the theft of billions of dollars, then the promise of equal justice under the law has turned into a lie.”

In the report, entitled Rigged Justice 2016: How Weak Enforcement Lets Corporate Offenders Off Easy, the senator from Massachusetts takes aim at the administration’s handling of corporate wrongdoing in the areas of finance, for-profit colleges, automobile safety, occupational safety, the environment, international trade, and the pharmaceutical industry. In each area, she cites several cases in which she finds the administration to have come up short in its enforcement of existing laws.

It is worth noting that Warren’s report does not stress a need for new laws, but tighter enforcement of the laws already on the books. This will only happen, she asserts, when the agencies in charge of regulating the various sectors of the economy have strong leadership. “Personnel is policy,” she concludes. Also significant is that the senator not only criticizes the relatively paltry amounts of money giant corporations are fined, she insists on the appropriateness of pursuing criminal prosecutions against corporate executives who make unlawful decisions. “While thousands of Americans were rotting in prison for nonviolent drug convictions,” Warren points out, “JP Morgan Chase was so chastened by pleading guilty to a crime that it awarded Jamie Dimon, its C.E.O., a 35 percent raise.”

Perhaps no corporate crime is more outrageous than those involving the lives and safety of other people. Such are the examples Warren cites in her report’s section on auto safety. The report cites three federal automobile safety cases: the Department of Justice settlement with General Motors over coverup of its faulty ignition switch; the National Highway Traffic Safety Administration’s (NHTSA) fine levied on Honda for failing to report its faulty airbags, and the NHTSA fine on Graco Children’s Products for refusing to recall defective children’s car seat buckles. In each instance, Warren argues, the federal agency involved allowed the corporation to get off with at most a slap on the wrist. For instance, GM’s $900 million fine represents approximatelty one percent of the corporation’s yearly revenue, and the $35 million fine levied on Honda amounts to only one percent of that company’s yearly profits. In each case, executives sat on information that their products had caused deaths.

Finally, though, Warren and her report can be seen as, to be kind, naive. In her objection to weak regulatory control of corporations, Warren resembles the chief of police in Casablanca, who when duty calls is “shocked, shocked” to find gambling going on in his favorite haunt. Her solution to the crisis of corporate crime is for voters to consider the importance of the presidential appointment of agency commissioners when they go to the polls in November. Strong leadership is what’s needed, she says.

Nonsense. Warren refuses to see—or at least to report—the writing on the marble wall. The revolving door between regulatory agencies and the industries they pretend to monitor is a well-established part of Washington life. More than this, whomever voters elect for Congress or the White House will owe their office not to the voters but to the corporations and banks that paid to persuade those voters. “Weak leadership” does not happen accidentally. In fact, looked at rightly, the regulatory agencies are doing exactly what they are now supposed to do—protect big corporate profits with a show of regulatory oversight.

Warren’s report shines a bright light on precisely the contradiction she works so hard to gloss over. There is a fundamental conflict of interest between the drive to make profits and the duty to protect the public. We might notice that nowhere in the report do we find mention of General Electric. Formerly, GE was one of Warren’s favorite targets for its breathtaking skill at avoiding paying corporate taxes. It may be that last year’s move of GE’s headquarters from Connecticut to Boston has softened the Massachusetts senator’s views on tax evasion.

The profit motive is at odds with justice, with safety, and with the welfare of the public and the planet. At most, regulatory agencies slow and soften the rapacious progress of capitalism. That those agencies have been bought out along with the politicians is only a logical outcome in a system dominated by the profit motive. It is a cold, hard fact with no easy fix.


New York Times. ‘Elizabeth Warren: One Way to Rebuild Our Institutions’

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