AlterNet: Taibbi: How Can We Expect Wall St. Thieves to Stop Stealing ... http://www.alternet.

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By David Sirota, AlterNet

Posted on November 18, 2010, Printed on November 19, 2010
http://www.alternet.org/story/148916/

Often, the most provocative ideas arise after swigs of whiskey. This is especially true
when a Rolling Stone reporter is around -- and, as I recently learned, it's all but
guaranteed when that Rolling Stoner is Matt Taibbi, aka the heir to the magazine's
gonzo throne.

I had the chance to hang with Taibbi last week after he spoke to a Denver audience
about his new book, "Griftopia," which argues that Wall Street's bubble-bailout cycle
has been one of the greatest -- and least prosecuted -- crimes in history. His
presentation was serendipitously timed, coming the same week as a local Bonfire of
the Vanities-esque scandal was underscoring the speculator class's privilege. In
Colorado's own Bonfire of the Rockies, a local prosecutor had just reduced
hit-and-run charges against a fund manager because the prosecutor said a felony
would have "serious job implications" for the Sherman McCoy in question.

Over drinks in my living room, Taibbi and I pondered the financial Masters of the
Universe and their maddening infallibility. I asked him why they never fear facing
legal consequences. Do they believe they're untouchable? Or do they know law
enforcement won't pursue them?

"They're not afraid because other than Bernie Madoff, when was the last time
someone on Wall Street faced any real punishment?" he responded. "Sure, a few go
to jail once in a while, but they're usually out in a few months and then on the
speaking circuit. That's not exactly a deterrent against bad behavior that's making
you millions."

Deterrence -- it's the vaunted idea behind "tough on crime" sentences for violent
offenses. Lock the door, throw away the key, and the theory says that heinous acts
will be prevented.

However, things haven't worked out that way because the toughest "tough on crime"
policies are most focused on crimes of passion, derangement and destitution --
crimes that are often not calculated and therefore not deterrable. This is probably
one of the reasons why the murder rate has been higher in death penalty states than
in non-death penalty states, leading most criminologists to conclude that capital
punishment does not hinder conventional homicide.

But what about crimes of economic homicide? These are the opposite of crimes of
passion. When, say, a speculator securitizes bad mortgages and peddles them to
pension funds as safe investments, that fraud involves exactly the kind of calculation

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that might be deterred via the prospect of harsh punishment.

"What if a bank CEO was given life without parole?" I asked Taibbi. "What if
instead of country club jail, one of these guys was shown experiencing prison like a
regular convict? That would have to stop some of the worst stuff, right?"

"Right, and go a step further," Taibbi countered. "How about putting a few of them
in the electric chair? Are you telling me Goldman Sachs execs aren't then going to
change?"

We both busted out laughing -- and hard. Not at the truth behind the theorizing, but
at the idea that any of it would actually happen today. In 2005, Washington couldn't
even pass a post-Enron proposal to hold CEOs legally liable for their companies'
corporate tax fraud. So the notion that the same money-dominated capital will now
subject CEOs to anything remotely "tough on crime" is, well, far-fetched.

And yet, the hypothetical is compelling, isn't it? That's because it highlights how our
society misapplies deterrence -- and how it might apply the concept more
successfully.

The necessity of such a criminal justice shift should be obvious. With financial fraud
now so sophisticated and pervasive, we clearly need zero-tolerance solutions to
change Wall Street's culture. Indeed, without true shock-and-awe deterrence, most
regulatory reform will likely be an ineffectual thumb in the economic dike -- just as
the thieves desire.

David Sirota is the author of the best-selling books Hostile Takeover and The
Uprising. He hosts the morning show on AM760 in Colorado and blogs at
OpenLeft.com. E-mail him at ds@davidsirota.com or follow him on Twitter
@davidsirota.

© 2010 Independent Media Institute. All rights reserved.

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