The End of White-Collar Prosecutions?

Peter J. Henning is not a bad guy, despite the fact that he writes the column “ White Collar Watch ” for the New York Times.

He is a professor of law at Wayne State University Law School, and he formerly posted at the “ White Collar Crime Prof ” blog, which takes an approach to its subject that is typical of the general culture but not rabidly anti-business. Certainly, Henning stands head and shoulders above his counterpart at the Washington Post, “ Market Cop ” Zach Goldfarb, a young punk who seems to have no qualifications at all for his position apart from having graduated from Princeton in 2005 with a virulent anti-capitalist animus.

Anyway, all of that is by way of noting Peter Henning’s September 9 NYT column “ End of an Era of White-Collar Prosecutions? ” In his column, Henning notes that the post-Enron prosecutions of individuals (such as the case against Jeff Skillings) are winding down, and yet the financial collapse of 2008 has not given rise to comparable big cases against individuals: The government seems to have passed on prosecuting major executives at A.I.G. or Lehman Brothers, he observes. Could this represent, Henning asks, a change of view regarding the prosecution of executives for what were essentially business decisions?

I fear that Professor Henning is much too sanguine. Recall that Eliot Spitzer also refrained from prosecuting major executives, just so long as he was able to do three things: (a) defame capitalists; (b) use that defamation to threaten capitalists with prison; and (c) use that threat of prison to take de facto control over capitalists’ industries. Thus, contra Professor Henning, I do not believe that anti-capitalist politicians and prosecutors have realized that they unjustly criminalized business decisions in the past. I believe that they (like Eliot Spitzer) have realized that a gun to the head is often more productive than pulling the trigger. Consult the Goldman Sachs case for details.

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