There are lots of crimes but few criminals. That is what could be surmised by a pair of large legal settlements announced this week involving large-scale corporate misconduct.
If you are a small-scale crook, you had better be prepared to spend time behind bars if your schemes don’t work out as planned. But if your crimes are large enough, the system tends to establish that laws were broken without pinning the blame on anyone. Corporations may be people when it comes to political contributions or religious beliefs, but when it comes to criminal conduct, responsibility tends to vanish in a mist of obfuscation.
One of the settlements involved Northeastern dairy farmers and allegations that a farm co-op called Dairy Farmers of America had conspired with Dean Foods, a milk handler, to hold down prices going to farmers. Farm co-ops are farmer-owned organizations that are supposed to serve the interests of the farmers, but farmers had charged in a class-action lawsuit that the monopoly power of Dean Foods and DFA allowed supermarkets to maintain high retail prices while shortchanging farmers. This was occurring at a time, unlike today, when record low milk prices were forcing farmers out of business by the hundreds.
Dean Foods agreed to a $30 million settlement of the lawsuit in 2011. But the company denied wrongdoing. Now DFA has agreed to a $50 million settlement, and it too admits no wrongdoing. The co-op and the company may hide behind their assertions of innocence, claiming that the settlements represent no more than an effort to end a costly lawsuit. But settlements such as these often occur when defendants are getting a sense that they are likely to lose the suit, which would establish clear culpability. Now DFA, while admitting no wrong, will be dividing $50 million among the farmers of Vermont and 10 other Northeastern states.
The other settlement announced this week involved Citigroup and the lies it told about the mortgage-backed securities it was selling prior to the financial meltdown of 2008. Citigroup agreed with the Justice Department to pay $7 billion in penalties and other payments and admitted to patterns of deception that were amply demonstrated by the evidence.
This was a civil case, and no Citigroup personnel has been found guilty of criminal conduct — even though Citigroup employees knew they were practicing a massive deception, and even though it was a deception that disrupted millions of lives and cost billions of dollars. The company was deceptive, not its employees.
The Justice Department and Attorney General Eric Holder are aware of the widespread criticism that they have failed to hold individual bankers accountable for their criminal acts. And yet they have become increasingly aggressive in holding companies to account. JPMorgan Chase agreed to a $13 billion settlement last year, and Bank of America is the target of a similar suit.
The lesson is that if you are thinking about taking a pistol down to your Citigroup bank on the corner and trying to get away with a few thousand dollars, you’d better be prepared to spend many long years in jail. But if you are a Citigroup executive getting million-dollar bonuses by marketing toxic securities by deceptive means, robbing thousands of people of their homes as a result of the crash that you cause, your company will cover for you.
Criminal cases against bankers with fancy lawyers are harder to prove than the patterns of deception that can be demonstrated in a civil case, and the Justice Department may have chosen the most cost-effective path to successful redress in pursuing civil cases. But a sense of injustice continues to linger over the whole of Wall Street in the aftermath of the crash. It adds to the growing outrage over the widening chasm of economic inequality that is crippling the nation’s economy. The robber barons who caused the crash are on the richer side of the chasm, though the recent settlements show how they got there.
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