Were you a watcher of the tv show “Bar Rescue.” Not the best in quality television, I’ll admit. (More staged reality television, but it was entertaining.)
The Bar expert would sometimes talk about the need for a “landmark firing.” Everyone who works at the bar is guilty of goofing off, over pouring, or stealing. But you can’t fire them all—the bar would be shut down for weeks. So you pick someone who’s bad, but not necessarily the worst, and you fire them to send a message to the rest.
I finally listened to the podcast this weekend.
I don’t buy Comey’s argument that the prosecutors in the SDNY were chickenshit. Robert Reich in Saving Capitalism talks about the reality of regulatory enforcement in the United States. Popular regulatory legislation will often be passed with bi-partisan support but then Congress will intentionally underfund enforcement budgets. As a result, regulators will often settle for pennies on the dollar: a $10 billion dollar fraud may receive a $100 million fine, meaning the corporation keeps $9.9 billion of the ill-gotten gain.
My guess is that the SDNY didn’t have the budget to go to trial for all these cases and so they settled for fines that were preferable for the corporations compared to being landmarked.
That’s the frustrating part of all of these financial crimes: the return on investment is something like $10 for every tax dollar spent on enforcement. If I could, I would quadruple the IRS investigations unit budget tomorrow as a quick way to rein in a lot of the white collar crime that currently goes undetected.