Barney Frank Asks An Awkward Question

I have a question of my own: why doesn't Canada have someone like Frank willing to speak truth to power?

Elizabeth Warren

With each story that I read about her, my respect for Elizabeth Warren grows. Would that Canada had someone similar to inspire us.

'Paying' For Their Crimes?

It doesn't take a cynic to realize that justice can be anything other than even-handed. We all know, for example, that there is a disproportionate percentage of people populating North American jails who are from the underclass, both white and non-white. The ability to 'buy' justice by engaging high-priced counsel is reserved for only a certain segment of our civilian population.

In his column today, The Star's Richard Gwyn turns his sights on a segment of our society, our corporate overlords, who have often been described as both 'too big to fail' and 'too big to jail.' Amongst those who fit that bill, predictably are the big banks:

- Just a month ago, Bank of America agreed to pay $11.6 billion (all figures U.S.) for making mortgage loans it knew its clients could never repay and for breaking the foreclosure rules so it could seize the houses of clients behind in their payments.

- That same month, Standard Chartered paid out $327 million after admitting it had broken American sanction laws against Iran, Burma, Sudan and Libya.

- By no means are the culprits only American institutions. Germany’s Deutsche Bank is trying to deal with charges that it hid $12 billion in paper losses to avoid a government bailout.

- The Swiss bank, Wegelin, small but with 272 years of history behind it, has just shut down after admitting it helped American customers escape taxes on $1.2 billion in assets.

- The truly humungous case is that of some 20 banks — American, British, German, Swiss, French — that for years have been fiddling a key international interest rate known as Libor to suit their corporate interests. The first to take the hit, Britain’s Barclays, has settled for $450 million. It all looks encouraging. The villains are being called to account.

True, many have had to pay substantial financial penalties for their crimes, but Gwyn places a couple of huge asterisks beside those 'penalties':

No one has done time for any of these misdeeds. No one has even had to endure the humiliation of a court appearance.

But it gets worse, as the very penalties these corporate malefactors pay are in fact heavily subsidized by the taxpayer:

Most of these grandiose settlements are a lot smaller than they seem because the institution can write off the costs as a business expense. The best, and worst, example is not a bank but British Petroleum, which earned a $10 billion tax windfall by writing off all its cleanup costs in the Gulf of Mexico.

Not in an entirely pessimistic frame of mind, Gwy points to a faint light in the distance:

At present, when banks pay penalties, a key part of their settlements is that they are not required to admit to any wrongdoing. A New York state attorney, Preet Bharara, though, now requires an admission of past guilt as part of any settlement. “We have a responsibility to speak the truth, to get at what actually happened,” he says.

Principle and integrity finding its way into the public arena? Only an inveterate cynic could question the prospect.