By William K. Black
Kansas City, MO: December 6, 2014
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.
‘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.
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.
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.)
The “strategy” of ignoring or even praising the banksters’ enormous frauds while aggressively arresting the poor for the most minor of property offenses is obviously indefensible on every conceivable basis. The strategy is grotesquely unfair and the elimination of the rule of law for banksters has caused catastrophic harm and will cause even greater harm in the future.
But what of the other prong of the strategy that led to Garner’s death? The costs of that strategy are typically ignored. The benefits of that strategy are the subject of intense debate. The proponents of mass arrests of disproportionately poor Blacks and Latinos for minor property offenses had a superb and unprincipled PR machine. Police Commissioner Bernard Kerik, eventually admitted his guilt to a series of felonies. The NYPD PR machine claimed that NYC’s reduction in reported crime was produced by “broken windows” policing. The reality was that most major municipal areas that did not employ “broken window” strategies reported substantial reductions in crime in the same time period. Further, the police in many cities were employing new strategies during this same time period, so attributing causality to the reported crime reductions (a) to police strategies in general or (b) any particular police strategy is generally unreliable. (Criminologists also know that reported crime levels are often unreliable. Local officials frequently game the numbers and Kerik later confessed to committing many acts of deceit in connection with other events.)
In addition to arresting large numbers of poorer, darker-colored citizens for mostly minor property crimes under the rubric of “broken windows,” NYC followed a strategy of massively increased “stop and frisks” of disproportionately poorer Blacks (50%) and Latinos (30%). By 2011, the NYPD was conducting 684,000 humiliating “stop and frisk” actions in a single year (nearly 1874 per day – with an average of 1500 of those being Blacks and Latinos). Only a small percentage of these humiliations result in successful prosecution. To its credit, the Cato Institute has excoriated the NYPD’s stop and frisk policies. The average large bank’s C Suite has a dramatically higher crime incidence than does a street in Harlem. All the property crimes committed cumulatively by Black and Latino residents of Harlem over the last 400 years were exceeded in the typical minute of the Libor fraud and cartel.
To this systematic anti-prioritization of criminal justice resources that causes the NYPD to ignore the most destructive property crimes in history that are (disproportionately) committed by elite whites and focus overwhelmingly on the least destructive property crimes committed in parts of the city (disproportionately) inhabited by Blacks and Latinos one must add “stop and frisk,” the outright racist effects of the sentencing disparity for powder v crack cocaine, and the emphasis on arresting drug sellers overwhelmingly in poorer areas inhabited disproportionately by Blacks and Latinos. Collectively, the strategy means that policing in NYC is aimed overwhelmingly at Blacks and Latinos, creates the constant humiliation of young Blacks and Latinos, makes it inevitable that large sections of these communities will view the police as the problem rather than the solution, and produces the self-fulfilling prophecy of leading to grossly disproportionate numbers of Black and Latino males having criminal records that impair their ability to get jobs and form well-functioning families. The resultant hostility between the police and much of the community means that both groups feel that they are under siege by the other.
Other members of the broader community – and that includes many Blacks and Latinos – support the NYPD police strategies. Many crimes do cause serious financial and/or personal injury. Some property crimes (minor burglaries of homes while no one is home) that cause little financial loss can cause other serious harms because the victims feel violated and unsafe. Most crimes by Blacks and Latinos are committed against Blacks and Latinos.
Repeatedly humiliating male minorities through “stop and frisk” operations and arrests for trivial offenses – people who know that they are prioritized as targets because they are poor Blacks and Latinos – has to produce a combination of rage and a deep belief that the police’s actions are not legitimate but a form of racial and ethnic degradation. This means that arresting such individuals is inherently dangerous – and police know it. Police are taught to be aggressive and dominating in such encounters and to view every arrest as a dangerous encounter with someone that may cause them grievous or even fatal injury.
It is generally wrong to think of the police in such arrests as swaggering thugs. The police and the minority being arrested often share mutual terror. As the person being arrested struggles or flees the police officers’ fear spikes. It is unusual for police to be seriously harmed during arrests, and far more likely that the suspect will be harmed, but every police officer is told multiple stories about situations in which a police officer was hurt or killed during what seemed to be a routine arrest. As humans, we are primed to respond to narrative, not statistics.
How one responds to the death of Blacks and Latinos being arrested in such struggles depends almost entirely on which of two rival perspectives one takes. While I know that many readers will hate this sentence, I urge readers to understand that both perspectives are rational given the framing of the issues. Each group comes away from the police encounter with the minority suspect more strongly convinced of the truth of their own framing of the issues. The police see the resistance to their authority by someone who is violating the law (no matter how minor that violation) as deeply offensive and view supporters of the criminal who (a) violated the law (no matter how trivial) (b) defied the officers’ authority and commands, (c) further violated the law by resisting arrest, (d) “forced” the officers into a dangerous confrontation where (e) the officers felt fear and sometimes terror, which (f) led to the unintended death of the criminal who was resisting arrest, (g) which will haunt the officers for the rest of their lives, (h) exposing them to public hate, (i) blighting and perhaps even ending their career, (j) exposing them to state and federal criminal investigation and possible prosecution, (k) civil suits, while (l) “playing the race card” and claiming that the officers were bigots. From the police perspective, the death of the criminal at the hands of the police is a tragedy brought on by the criminal.
(Yes, I know that “suspect” would be a more accurate term than “criminal.” However, “criminal” is the word the police will use and believe. This tendency is even more extreme when it comes to our drone strikes where the U.S. “defines” whoever we kill as “terrorists.”)
From the police perspective, the arresting officers are the victims and the attacks on them for doing their duty – a duty to enforce laws devised by society, not them – and a duty that puts their lives at risk, is a grotesque injustice compounded by an outrageous smear claiming that they acted as they did due to racial animus. People who defend the criminal and attack the police are morally depraved. The police see their elite critics as ingrates and hypocrites who want the police to act aggressively when the critics’ lives and property are at risk but feel free to second guess them after the fact when things go tragically wrong in confrontations with minorities.
The same kind of logic chain, can be done from the perspective of Blacks and Latinos who correctly see the NYPD strategy as counter-prioritizing criminal justice resources. The NYPD uses its resources in a manner that is irrational from any societal perspective. The NYPD’s use of resources is fundamentally based on class, but it also inherently leads to concentrating police on the (overwhelmingly minor) crimes of poor Blacks and Latinos.
Criminal justice scholars, particularly those who from a police or intelligence background, understandably often share the police perspective rather than the critics’.
“‘Everyone is just demonizing the police,’ said Maki Haberfeld, a professor of police studies at John Jay College of criminal justice. ‘But police follow orders and laws. Nobody talks about the responsibility of the politicians to explain to the community why quality-of-life enforcement is necessary.’”
“Quality-of-life enforcement” means “broken windows.” “Everyone,” is not, of course “demonizing” and everyone is not demonizing all “police.” Dr. Haberfeld knows that the problem from the perspective of many Blacks and Latinos is that “police follow orders.” Those “orders” constitute the NYPD strategy that causes the police to counter-prioritize the use of their resources.
Dr. Haberfeld knows that the police frequently do not enforce the “laws.” They do not do so for two primary reasons. First, as Edwin Sutherland explained 75 years ago in his presidential address to sociologists that announced the concept of “white-collar crime,” the police typically do not enforce laws against the massive white-collar crimes committed by elites. Second, even under a “broken windows” regime the police do not arrest large numbers of those they have probable cause to believe have committed some criminal offense. Women, girls, whites, and social elites are all less likely to be arrested for minor criminal offenses. The police frequently warn and chastise rather than arrest. If they always arrested suspects for whom they had probable cause to believe had committed minor blue collar crimes a huge percentage of males of every race, ethnicity, and class would have juvenile arrest records. Prosecutors exercise even greater discretion and often refuse to prosecute cases. I do not know of any criminologist, prosecutor, police officer, or judge who favors the police arresting, and the prosecutors prosecuting, every case in which anyone is apprehended who the prosecutors believe committed a crime.
As financial regulators, we did not take an enforcement action against every violation of law and every unsafe and unsound act we discovered even when we believed we could establish those violations. We did, however, require supervisors to explain why they did not believe such an enforcement action if the violations were continuing. I do not know of any regulator who believes that we should take an enforcement action in every case where we find a violation or unsafe and unsound act. We were, as we can now tell with the benefit of seeing many other regulators in (in)action, vigorous regulators who believed in the rule of law for everyone. We also believed in justice, the exercise of judgment, and the desirability of not making mountains out of molehills. We successfully distinguished between matters like liar’s loans (long before they were called by that name) – which we drove from the industry because only a fraudulent lender would make such loans – and minor, typically unintentional violations of rules that the lender’s managers were happy to remedy and try to avoid in the future. Underwriting quality is not a molehill – it is the essential function to be a prudent, profitable, and non-predatory lender.
Dr. Haberfeld’s last complaint, if accurate, represents a major advance among NYC politicians.
“Nobody talks about the responsibility of the politicians to explain to the community why quality-of-life enforcement is necessary.”
Politicians used to rush to “explain” that we must target the most minor offenses of poor Blacks and Latinos and humiliate male Blacks and Latinos hundreds of thousands of times every year in “stop and frisk” confrontations in NYC. This was supposedly “necessary” to prevent a (mythical) rapidly increasing epidemic of violent crime by young, predominately minority “superpredators” who were deliberately dehumanized as “feral” by inventors of this “moral panic” such as James Q. Wilson (one of the co-developers of “broken windows”). These claims ignored the actual epidemics of crimes of the Wall Street elites (the true “superpredators”) that devastated the Nation. The phrase “criminal justice system” is an oxymoron when we allocate our resources in a manner that is inherently unjust and certain to fail against the elite offenders who cause incomparably greater financial losses and maim and kill more people than do blue collar criminals.
I am not aware of Dr. Haberfeld ever upbraiding the NYPD or Attorney General Holder for failing “to explain to the community why quality-of-life enforcement is necessary” on Wall Street. If she has done so I hope she will contact me and I will pass on to my readers her efforts to explain that necessity.
American elected officials are becoming increasingly aware that the drug war is insane and causes terrible injury to our Nation and catastrophic harm to several other nations. It is hard to find a public official who will now defend the racist policies we followed in punishing crack cocaine far more severely than powder. Sadly, as recently as 2010, the Fraternal Order of Police disgraced itself by attacking legislation that simply reduced the 100:1 disparity.
Dr. Haberfeld was one of the important advisors in the DEA’s failed drug wars. I stress that the DEA’s failure was inevitable and not the product of Dr. Haberfeld’s advice. The only way to “win” the drug war was not to engage in it. Given the 9/11 attacks and her background as an Israeli intelligence specialist, Dr. Haberfeld now works largely in the anti-terrorism field.
Criminologists debate whether “quality-of-life enforcement is necessary” or disastrous in the blue-collar crime context. Criminologists generally do not agree that research has demonstrated any such “necess[ity].” Criminologists increasingly recognize the extreme costs inflicted on society of applying the racialized and class-driven counter-prioritization of “broken windows” strategy in the manner used by the NYPD.
Ironically, the “broken windows” strategy worked far better in the context of elite white-collar, e.g., in our response to the control fraud epidemic that drove the savings and loan debacle and our crackdowns on junk bond and liar’s loan frauds. “Broken windows” strategies against elite white-collar crimes have far fewer drawbacks than they do in the blue-collar sphere. Conservative proponents of “broken windows” strategies against blue collar crime, however, rarely mention elite white collar crime. Sadly, Sutherland’s observations about the unwillingness of elites to take elite white-collar crimes seriously and the resultant enormous cost of such crimes remains largely true 75 years later.
The “broken windows” strategy against blue collar crime and the related strategies that have made it inevitable that criminal justice enforcement will be unjust and will fail against elite white-collar criminals also makes it inevitable that large numbers of Blacks and Latinos and the police will be largely unable to understand each other and work together. The frames of the police and large numbers of Blacks and Latinos are not simply different, but inherently contradictory under these police strategies.
Even if we assume that “politicians” actually had (and accepted) a “responsibility” “to explain to the community why quality-of-life enforcement is necessary” the politicians’ efforts would fail. Dr. Haberfeld does not seem to understand that she is demanding that Black and Latinos communities accept the NYPD’s policies, and their framing of the issues, as valid. Note that she uses the world “community” rather than “communities.” Why would Blacks and Latinos ever agree that a system in which 80% of the “stop and frisk” humiliations are inflicted on their children constituted “criminal justice?” Why would Blacks ever agree that the 100:1 crack/powder cocaine disparity was “criminal justice?” Whey would Blacks and Latinos ever agree that a drug prosecution effort that disproportionately targeted their children for arrest for drugs represented “criminal justice?” Why would Blacks and Latinos ever agree that “quality-of-life enforcement is necessary” for poor minority communities while Wall Street elites grow wealthy and devastate our Nation, particularly Black and Latino communities, with impunity? Why would Blacks and Latinos ever agree that ending the rule of law for banksters represents “criminal justice?”
What does “quality-of-life enforcement” actually mean? When the NYPD, overwhelmingly, humiliated Blacks and Latinos an average of 1,500 times daily through “stop and frisk” encounters, what happened to the quality of their life? What happened to the quality of life of all the Blacks and Latinos who witnessed those humiliations? What happens to the quality of life of Blacks and Latinos when their kids are far more likely to be arrested for drug crimes than white kids with the same incidence of drug use? What happens when their kids spend far longer in prison because they use crack while the white kids use powder cocaine? What happens to the quality of life of the Blacks and Latinos targeted by predatory lenders when the lenders’ CEOs’ crimes go unpunished?
How many Blacks and Latinos must we incarcerate and even kill for trivial offenses in order to optimally improve the “quality of life” of Blacks and Latinos? Why does spending the City’s scarce dollars in this strategy of repression improve the “quality of life” in Black and Latino communities more than using those dollars to create jobs?
Who seriously believes that the failed drug war, net, adds to the “quality of life” in the City? Who thinks it adds to the “quality of life” in cities throughout Mexico and Colombia?
The Black and Latino communities have heard, ad nauseum, “politicians” “explain” why “quality-of-life enforcement” is supposedly “necessary” in their communities. They have heard the thunderous silence of the proponents of this claim – the failure to even attempt to “explain” why “quality-of-life enforcement” is not necessary on Wall Street. They do not accept the validity of the explanations and they know full well why the NYPD refuses to even try to enforce the rule of law on Wall Street.
It is time for the NYPD to listen to explanations from the Black and Latino communities about the reality of the NYPD’s criminal injustice system. The Black and Latino communities would love a NYPD that made the reduction of serious blue collar and white collar crimes in the City its top priorities. If the NYPD adopts a strategy that does not require the Black and Latino communities to accept the NYPD’s current (false) framing that defines their communities as the City’s problem and Wall Street as the City’s paragon, then the police and the Black and Latino communities’ framing of the issues will no longer be inherently contradictory. Cooperation and mutual respect in struggling against the most serious crimes becomes a realistic possibility if the NYPD is willing to evolve and embrace the equal application of the rule of law to everyone in the City.
Criminology can help. The mother of all serious crime “hot spots” in NYC can easily be mapped using Geographical Information System (GIS) software. The system would generate nice tight crimson circles around the C-Suites of the twenty largest Wall Street banks and bank holding companies.
Odd thing about NYC mayors. Has Rudy Giuliani, the fiery scourge of the junk bond dealers, said anything about the MBS/CDS frauds? I know he’s a Fox guy and I don’t expect them to air anything vaguely critical of the “free market” (snnrrrggk!), but they sure do trot him out for the “broken windows” stuff.
Krugman famously dumped on Bloomberg for this http://krugman.blogs.nytimes.com/2011/11/01/michael-bloomberg-ignorant-yahoo/?_r=0 , in which Bloomberg blames Fannie-Freddie-Fannie-Freddie-Fannie-Freddie (total BS as shown by Konczal) but stops just short of the “Barney Frank – Community Reinvestment Act” meme one often hears. This is the trifecta of truthiness, the lisping government homosexual forced the poor innocent banks to give mortgages to shiftless negroes. A tale that confirms what our guts know is true spoken in dog-whistle-ese comprehensible to a 3rd grader or NY Post reader.
Here is another component of the broken windows policy.
While the police follow a policy of addressing even the most minor offenses, they take a completely contradictory view of their own need to follow minor, and not so minor, laws. It is standard practice for NYC police officers to provide all their family members and friends with courtesy cards, “get out of jail free cards” which can be displayed with the express purpose of being excused for illegal acts, like running a red light, speeding, parking illegally, not stopping at a stop sign, even DUI offenses! Police cars here, in Flushing, NY, frequently park at the bus stop, while they run into Starbucks to get coffee, causing the bus to stop in the only traffic lane, blocking traffic. They park in a no standing zone at an extremely busy intersection while having lunch (although less often than the bus stop). They regularly parked their personal vehicles illegally in the municipal lot across from the precinct, often right in the entrance, turning a 4-car wide entrance to busy lot to a 2 car wide entrance. For YEARS, in one municipal lot that did not require that the parking receipt be displayed (you entered the spot number into the meters), they would KNOWINGLY ticket the cars EVERY DAY for not displaying the parking receipt. I know for a fact, that they knew these tickets weren’t valid, and this was done by police officers not traffic agents!
I am not suggesting that this is indicative of a police attitude of being above ALL laws, nor am I suggesting that this is not the case. I simply don’t know. But I would venture a guess that at least some percentage of the officers extrapolate that they don’t have to follow more serious laws as well. (It’s human nature). But I am sure that they are teaching the citizens, especially in the impressionable immigrant community of Flushing, that police are not here solely to serve the citizens, and are not to be completely trusted.
So I challenge the NYC police commissioner, to be consistent. Either follow the broken windows policy for police officers as well as citizens, or drop the policy.
For me, a 42 year old, Caucasian American, who has never had a single issue with the law, seeing the disregard for the law that I see exhibited every day, by those who are charged with enforcing our laws, fills me with distrust!
Always and everywhere ” the Corporate State” is about the MONEY, and who gets to make and keep the most!
Nothing can change until the consumer understands that TRUTH, a fact proven by every citizen supported form of wealth extraction, since the beginning of time!
Extreme Wealth Extraction by the Corporate State is destroying the consumer, the source of all wealth.
When the consumer has nothing is left to extract, then what?
Thank you for outlining so thoroughly what I have been saying (mostly to myself): What about the Wall Street Vampires who sucked the lifetime resources from the middle class, got bailed out with the bill being sent to the middle class, wrecked the economy for 8 years and counting & then police murdering a man over a cigarette ?
Your very thorough piece has been greatly appreciated.
Thank you again,
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