In his praiseworthy new book, “The Divide: American Injustice in the Age of the Wealth Gap,” Rolling Stone columnist Matt Taibbi expertly examines how, ever since the 2008 financial crisis, the disparity in treatment between rich and poor in our justice system has increased so that now we have reached the proverbial tipping point.
Taibbi claims that the causative factors are the enormous resources recently devoted to get-tough-on-crime tactics—think stop-and-frisk, pursuing undocumented immigrants for petty crimes, and cracking down on food stamp and welfare fraud—and on the other hand, how no executive from a major financial institution saw the inside of a prison after the 2008 crisis.
At Rolling Stone, Taibbi has been a scold of the financial industry, famously referring to Goldman Sachs as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” In “The Divide,” however, Taibbi goes more broadly to take aim at the entire cast of players ranging from federal regulators, local prosecutors and police, judges, and the big banks and hedge funds.
Early on, he provides a stark contrast between how HSBC got off with a mere fine ($1.9 billion—a large number, sure, but only 5 weeks of revenue for the largest bank in Europe) after knowingly laundering money for terrorists and drug cartels, while a homeless man with a joint in his pocket contemporaneously spent 40 days at Rikers.
In making his point, Taibbi glosses over that the man mouthed off to the cops and struggled against them, which of course is a surefire way to invite trouble from the NYPD, but his larger point is that the mass arrests that occur of the poor, minorities, and undocumented immigrants are largely unjustifiable from inception.
Examples of differential treatment under the law abound throughout the book—for instance, in San Diego in 2011, 26,000 home searches were conducted of welfare recipients to root out fraud, and we learn of an inspector even rifling through a woman’s clothing, and then at one point, lifting a pair of sexy underwear with a pencil and accusing her of residing with a boyfriend. Meanwhile, “executives in the same general area of Southern California, at companies like Countrywide and Long Beach Mortgage, were pioneering the brilliant mass fraud scheme that involved the sales of toxic mortgage-backed securities.” Taibbi acidly notes that, “No banker ever had someone pick up his underwear by a pencil end and wave it in his face.”
Like a skilled attorney conducting a cross-examination, Taibbi lays out one piece of evidence and then follows it right up with another to provide contrast. It’s almost like an impeachment by prior inconsistent statement, except the inconsistencies are occurring simultaneously in our society.
There’s a lot to praise in “The Divide,” but foremost is how it shines a light on hypocrisies in the justice system when it comes to rich and poor, whites and minorities. For instance, he tells of how hedge fund titan Steve Cohen was not scrutinized, but instead celebrated, for earning an amazing 43 percent annual return during his fund’s first fifteen years, yet two middle-aged Harlem residents in a Range Rover were immediately profiled by police and taken into custody.
Robo-signing, corporate takeovers in which executives loot the company, reckless financial maneuvering, they all seem to get a free pass in our society. Meanwhile, a large segment of the population feels almost as if they are hunted by law enforcement.
All of this begs the question: how did this divide come into existence?
Taibbi traces its genesis to Attorney General Eric Holder who, back in 1999 when he was a DOJ lawyer, wrote a memo entitled “Bringing Criminal Charges Against Corporations” that included the following pronouncement: “Prosecutors may consider the collateral consequences of a corporate criminal conviction in determining whether to charge the corporation with a criminal offense.”
According to Taibbi, this doctrine amounts to “a get-out-of jail-free policy for a kind of company that hadn’t existed yet: the too-big-to-fail megafirm that simply couldn’t be reined in with conventional criminal laws.” Too-big-to fail, meet too-big-to-jail.
Again, in lawyerly fashion, Taibbi sets out the collateral consequences for street crime that are routinely ignored by local prosecutors, such as job loss, job ineligibility, exclusion from public housing and other benefits, and numerous court appearances that consist of waiting around for hours only to receive an adjournment.
In Taibbi’s view, the divide is also due to the groupthink that has arisen from the revolving door between government, large law firms, and high finance which tends to make prosecutors and regulators sympathetic to those they are supposed to keep in line.
In researching “The Divide,” Taibbi spent hours in courtrooms and observed: “If judges in regular criminal courts treat everything that comes out of the mouth of a defense lawyer like a ploy to get some definitely guilty scoundrel out of trouble, in civil trials involving financial companies, they treat plaintiff’s counsel like parasites trying to use the courts to wrangle money out of hardworking, successful people.” New York lawyers will recognize some of the judges and law firms that appear throughout the book.
Objectively, Taibbi acknowledges the counterarguments levied against him: it is difficult to obtain sufficient evidence to convict individuals in big corporate cases, and even if that wasn’t the case, it’s more beneficial for the welfare of society to extract a large financial settlement from the wrongdoing company than to throw a few executives behind bars.
The problem with this reasoning, Taibbi smartly points out, is it suggests that with remarkable consistency the government manages to accumulate enough evidence to get corporations to cough up sums of money, yet always falls short of being able to pull an executive into court.
With regard to the social benefit argument, it creates a two-tiered justice system between how we treat an individual who commits fraud within a wealthy corporate environment compared to a poor person who commits fraud on a smaller scale.
What Taibbi has shrewdly and penetratingly uncovered in this book, and it’s a book that everyone who cares about justice and fairness should read, is akin to the criminalization of poverty. Poor people are more closely watched and more often prosecuted. Only time will tell if this book is a sign post along the way to a deepening divide, or instead marks the beginning of a change.
Eric Dinnocenzo is a solo practitioner in New York.