How to Deter Corporate Crime Like We Mean It
Over the past few decades, the US justice system has gone from effectively punishing white-collar crimes to slapping corporations on the wrist while senior managers avoid accountability. Fortunately, there are relatively simple ways to give resource-strapped prosecutors the tools they need to uphold the law.
NEW YORK – Most people are familiar with the much-quoted statistic that not a single high-ranking executive at a Wall Street firm went to prison following the 2008 financial meltdown. But things were not always that way. Just a few years earlier, the CEOs of Enron, WorldCom, and a number of other public corporations went to prison for lengthy terms following an earlier stock-market bubble. Hundreds of executives were similarly jailed during the savings and loan collapse of the 1980s.
More recently, however, senior corporate executives at opioid makers, and at major companies including Boeing, Pacific Gas and Electric, and Goldman Sachs, have escaped prosecution, despite the severe injuries their firms have inflicted on many. What explains this sudden transition from an earlier time when criminal law was used against executives? In a recently published book, Corporate Crime and Punishment: The Crisis of Underenforcement, I seek to unravel this puzzle.
Others have preceded me, offering fairly simple explanations. In his 2018 book, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives, Jesse Eisinger of ProPublica argues that prosecutors lacked the courage to take on tough cases. He could be right regarding some cases, but this is a weak general explanation. In fact, prosecutors have every incentive to bring criminal cases against high-profile executives and politicians; it is the quickest way for a prosecutor to make a reputation and advance his or her career.