The New York Post’s Christopher Byron reports this morning on another casualty of the War on Terror—white collar crime enforcement. Despite some high profile cases, prosecutions have dropped off by 27 percent since 9/11.
Last week, the Christian Science Monitor joined The Post in sounding an alarm that has been raised repeatedly over the years in this space yet almost nowhere else: Five years after 9/11, we are losing the war on terror on a front where we don't even know we are fighting it: Wall Street.
On this battleground, white-collar criminal law enforcement has fallen victim to the massive shift in federal resources and priorities that was set in motion when the Twin Towers fell and a scar was ripped open in the side of the Pentagon and in a Pennsylvania field.
According to data released last week by a Syracuse University research group financed by the Rockefeller Foundation, those events have triggered a 24 percent rise in the number of federal criminal cases filed by the DOJ, with virtually all the growth coming from the ramped-up prosecution of cases involving illegal immigration, weapons felonies and alleged terrorist activities.
To meet the demands of this increased workload, the DOJ has been forced to cut back elsewhere, and the steepest cuts have come in the area of white-collar law enforcement, where prosecutions have plunged by 27 percent since 9/11.
White-collar crime is the smallest of the five major practice areas for federal prosecutors, and it's also the one to which they have the least institutional commitment, in part because responsibility for developing cases is awkwardly split between the SEC, which does the investigating, and the DOJ, which decides whether to prosecute.
While Byron writes as if this is simply a matter of bureaucratic structure and budget priorities, we have to wonder if the decline in white collar crime enforcement is not also a product of the broader political climate. After all, the time period he cites also coincides with George Bush’s taking office in 2001 and the Republican recapture of the Senate in 2002. It would not be surprising if SEC and DOJ officials overseen by GOP lawmakers and a GOP administration were not as interested in bring criminal charges against corporate executives and Wall Street. Could it be that Gary Aguirre’s charges of political favoritism at the SEC are a metonymy for the broader culture of business law enforcement?
That said, we’re not convinced that Byron’s solution—concentrating enforcement in one agency rather than two—would necessarily improve the situation. While the FBI is surely less under the thumb of business and financial interests than the SEC, we imagine that would change very quickly if the location of enforcement power was shifted. In fact, it would likely become easier for those who want to quite regulators to exert their influence if they only had to worry about one agency rather than two.
Bring In the FBI [New York Post]