Some might say that American justice is a little skewed in favour of white-collar criminals.
Compare the fate of your average rogue Wall Street trader with that of Junior Allen, a North Carolina man who was released from prison in 2005 after serving 35 years for stealing a black and white television. So yeah, a little skewed. And not only American justice either.
Just one banker saw the inside of a prison cell following the mortgage securities collapse of 2007. A handful of non-Wall Street executives did time and some are still doing time for related high crimes and misdemeanours, but Kareem Serageldin, once of Credit Suisse, remains the only bank employee to do any time at all.
Wall Street’s incarceration rate is unlikely to change any time soon. But if legislation passed in Utah this week gets the attention it deserves better information and protection for consumers and investors alike could soon be easy to find.
Using the novel idea of treating white- collar criminals in exactly the same way as blue-collar criminals, Bill HB0378 will create a white-collar crime registry open to public monitoring, much like sex offender registries. It passed the state senate and house comfortably and will end up on the desk of the Governor, Gary Herbert. He is very unlikely to veto.
The register will include anyone who has been convicted of a finance or fraud-related crime at any time since 2005, and will include a rogues’ gallery of up-to-date colour photograph mugshots. It makes perfect sense. If you want to know who in your neighbourhood is a potential danger to you or your children, you should also want to know who might cheat you out of your life savings.
That the bill was proposed in Utah shouldn’t actually be such a surprise. Deeply conservative it may be, but for a state known primarily for Mormons, Salt Flats and the Osmonds, it’s also something of a hotbed of fraudulent skulduggery. According to the Salt Lake Tribune, Mormons are particularly vulnerable to fraud because of their tight-knit communities and close personal bonds. So, apparently, the better you know someone and the more beliefs you share, the more likely they are to rip you off.
As Utah senator Curt Bramble, the bill’s chief sponsor, points out, fraud has a high rate of recidivism and all of the information is already publicly available. However, the majority of fraud victims are ordinary people, often elderly, not sophisticated corporations. So it is unreasonable to expect them to be able to search court records and make freedom of information requests to make sure the person they are dealing with is not a convicted fraudster. All the registry would do is consolidate information that is already in the public arena.
It would be no surprise to see other states (and countries) following Utah’s lead and setting up their own registry, even if protests from some quarters claim that Utah’s bill somehow heaps extra indignity on convicted fraudsters. Cry me a river. That argument won’t get much sympathy outside of Wall Street.
While fraud remains notoriously difficult to prove, crimes that leave innocent people broke and unable to secure their own future should be treated just as seriously as any other crime. They are not, either in the States or in Europe.
British lawmakers need to get busy with their own version, and pronto. This excellent piece of local legislation should mean that Donnie Osmond is no longer the best thing to come out of Utah.
GM is no piggy bank for chancers to shake and raid
About a month ago, it emerged that Harry Wilson, a former banker, hedge fund manager and a member of the team that led the US government’s bailout of General Motors in 2008, was looking for a seat on the board at the car maker. It was an awful idea then and remains an awful idea. Warren Buffett, a GM shareholder also came out firmly against the idea.
However, it seems that GM’s chief executive, Mary Barra, had everything under control. Last week the company announced a $5bn share buyback – essentially what Mr Wilson and his hedge fund employers wanted, even if it is less than the $8bn Mr Wilson sought and what GM had hinted was in the works anyway.
Mr Wilson has backed away from his demands for a seat on the board. For now at least. It’s pretty hard to believe that someone who just a few weeks ago so condescendingly said of Ms Barra that she “needs help” is now just going to sail off into the sunset.
The whole plan was deeply troubling from the start. The idea of someone sitting on the board at GM – on any board come to think of it – whose compensation is directly linked to the trading profit made by outside interests, is darkly absurd. At least he was open about it – Mr Wilson would have taken a salary from the company as a director and a cut of the profit made by the hedge funds he represented.
A board member needs to represent all interests, including but not limited to employees, stakeholders, shareholders and bondholders. The idea that Mr Wilson was driven by selfless magnanimity and concern for GM is equally absurd. That’s not to say that GM should not manage its cash reserves more actively. It should, even if a substantial amount of capital is required in an industry when recall costs can, and regularly do, run into billions of dollars. At the same time, it is not some piggy bank to be shaken and raided by the short-term interests of chancers.
There is nothing wrong with long-term shareholders who are real investors agitating for improved corporate governance, at GM or anywhere else. But companies need to be very wary of deals like the one Mr Wilson negotiated for himself – and GM is far better off without him.
First US deal with Cuban firm will open floodgates
IDT isn’t a well-known company in the UK. As it happens, it isn’t a well-known company in the US either. But whatever happens to it from now on its place in history is assured – last week it signed the first deal by an American company with a Cuban company since limited trade became permitted in December.
Undoubtedly “free-market” politicians who opposed President Obama’s executive order of re-opening ties will be livid at the prospect of a private company making money out of Cuba. Erm, probably not. This is a tiny crack in the floodgates that will lead to many more US companies negotiating deals with Cubans, if they aren’t already.
IDT, a New York-based telecoms provider, will partner with the Cuban national telecoms provider, Empresa de Telecomunicaciones de Cuba, to provide long-distance phone lines between the two neighbours. Previously all calls between the two countries had to go through a third party provider.
This deal probably signals the beginning of the end to resistance. Once American firms start bring a few greenbacks home from Cuba, it’s only a matter of time before the full trade embargo ends, as it should have done years ago.
Maybe the United States will stop trying to persecute any foreign corporation that tries to do business in Cuba now, too.Reuse content