New York City exemplifies two perverse criminal justice policies that drive many criminologists to distraction. It is the home of the most destructive epidemics of elite financial frauds in history. Those fraud epidemics hyper-inflated the housing bubble and drove the financial crisis and the Great Recession. The best estimate is that the U.S. GDP loss will be $21 trillion and that 10 million Americans lost their jobs. Both numbers are far larger in Europe. The elite "C Suite" leaders of these fraud epidemics were made wealthy by those frauds through bonuses that measured in the billions of dollars annually.
The most extraordinary facts about the catastrophic fraud epidemics, however, is New York City's reaction to the fraud epidemics. Not a single Wall Street bankster who led the fraud epidemics has been prosecuted or had their fraud proceeds "clawed back." Not a single Wall Street bankster who led the fraud epidemics is treated as a pariah by his peers or New York City elites. New York City's elected leaders have made occasional criticisms of the banksters, but Mayor Bloomberg was famous for his sycophancy for the Wall Street banksters that made him wealthy. In 2011, Mayor Bloomberg attacked the "Occupy Wall Street" movement for daring to protest the banksters.
"'I don't appreciate the bashing of all the hard working people who live and work here and pay the taxes that support our city,' said Bloomberg, during a press conference in a Bronx library.- Advertisement -
'The city depends on Wall Street.'
'Jamie Dimon is one of the great bankers,' said Bloomberg. 'He's brought more business to this city than any banker in (the) modern day. To go and picket him, I don't know what that achieves. Jamie Dimon is an honorable person, working very hard, paying his taxes.'
Bloomberg also questioned why the protestors were picking on wealthy bankers and other corporate titans.- Advertisement -
It is, of course, depraved to claim that because banksters are made wealthy through fraud and pays a small portion of that wealth in taxes they should not be held accountable for those frauds because they are important to local finances. The claim becomes all the more risible when we take into account that under Dimon's leadership JPMorgan became infamous for engaging in and facilitating billions of dollars in tax evasion that cost many governments, including NYC, enormous amounts of tax revenues. As a final indignity, most of the purported amounts that JPMorgan paid in settlements with DOJ are actually paid by the U.S. Treasury because DOJ allowed JPMorgan to treat large amounts of those payments as tax deductible. DOJ's senior leadership used this as one of their cynical means of making the settlements paid by the banks appear far larger than they actually were.
In 2012, Mayor Bloomberg, in response to an expose and protest of Goldman Sachs' corrupt culture by an insider (Greg Smith), publicly championed Government Sachs and its CEO (Lloyd Blankfein) who shaped that culture. The following passage is taken from Bloomberg's report on Mayor Bloomberg.
"New York City Mayor Michael Bloomberg visited Goldman Sachs Group Inc. (GS)'s headquarters in Manhattan in a show of support after a departing employee publicly criticized the firm's culture yesterday.
'The mayor stopped by to make clear that the company is a vital part of the city's economy, and the kind of unfair attacks that we're seeing can eventually hurt all New Yorkers,' said Stu Loeser, a spokesman for the mayor.
Bloomberg visited the firm today about 11 a.m. and met with Chief Executive Officer Lloyd C. Blankfein and numerous employees, Loeser said.
Greg Smith, an executive director who sold U.S. equity derivatives to clients in Europe, the Middle East and Africa, wrote in a New York Times opinion piece that he is leaving the firm after 12 years. Smith assailed the company's treatment of clients and blamed Blankfein and President Gary D. Cohn for losing hold over the bank's culture.- Advertisement -
The reality was the Dimon and Blankfein were leading two of the world's largest, most prestigious, and most destructive criminal enterprises. Nevertheless, as their repeated, massive felonies become more evident every month and as the Libor and FX conspiracies demonstrate that the CEOs of our largest banks are running criminal enterprises, their elite peers have not only failed to denounce the banksters but have instead demonized those who try to restore the rule of law in America as Nazis.
The crisis is marked by exceptional recidivism by these banks and banksters, the rapid progression of fraud in terms of severity and its spread through the elite banks, and the creation of a massively corrupt culture in banking and their political allies in which even the largest and most destructive frauds are ignored and the perpetrators are shielded from even the mildest forms of accountability. To sum it up, NYC exemplifies the moral depravity, endemic criminality, and resultant breakdown of the criminal justice system that "broken windows" theory predicts. "Broken windows" theory, however, is not applied by its conservative proponents to elite white-collar crime. When the SEC (purportedly) adopted the "broken windows") theory, the same conservatives that give the theory rapturous support when it leads to the mass arrests of poor minorities for the most trivial of offenses become apoplectic in their rage against holding elites accountable for lesser offenses.
This class-based rush to shield elite white-collar criminals from even the mildest forms of administrative accountability (the SEC uses "broken windows" as a PR slogan, not a reality) while simultaneously adopting an ultra-aggressive policy of arresting mostly poorer Blacks and Latinos for the most minor of offenses (e.g., selling small numbers of cigarettes from broken packs). The proponents of using "broken windows" to arrest large numbers of minorities for minor property offenses almost never demonstrate any awareness of the obvious obscenity and disaster of allowing banksters to grow wealthy by defrauding with impunity. Eric Garner ends up dead because the police arrest him for selling goods without paying sales tax (amounting to several hundred dollars in lost government revenue over the course of a year). The fraud epidemics cost that drove the financial crisis and the Great Recession cost our Nation $21 trillion -- and no senior banker who led the frauds in even arrested. (As I have explained, the Department of Justice and the FBI do target a tiny slice of the mortgage fraud "mice" -- particularly those of disfavored minorities like Russian-Americans -- for prosecution.)