When all else fails, sex sells. The only way to sell the American public on socialism is to use sex appeal because socialism does not appeal to reason or justice. And watching handsome high rollers head to prison is no doubt an Occupy Wall Streeter’s notion of ultimate bondage sex appeal.
The Department of Justice is not in the sales industry. Yet the DOJ appears hell-bent on prosecuting provocative cases that deflect responsibility for the financial crisis away from the government and onto the private sector.
A recent Gallup poll reveals that most Americans blame the government, not Wall Street, for the economic downturn. Americans are fed up with disgraces like Fast & Furious, Solyndra and high unemployment. Now, it appears that President Obama may be relying on the DOJ to help him regain public approval for his collectivist policies.
Preet Bharara is the man President Obama nominated as U.S. Attorney for the Southern District of New York, headquartered in lower Manhattan.
With impeccable timing, Bharara is delivering the Occupy Wall Street progressives (potential Obama 2012 campaigners) exactly what they are clamoring for by prosecuting sexy, high profile cases that send an anti-wealth, anti-capitalism and anti-Wall Street message. Here is a timeline:
• September 17: Occupy Wall Street protest begins.
• September 21: Bharara announces that former Galleon Group LLC trader Zvi Goffer will serve 10 years in prison, the longest prison term on record for insider trading.
• October 7: Bharara announces that Emanuel Goffer will serve three years for acting on “inside information” that he received from his brother Zvi.
• October 12: Bharara announces that former attorney Michael Kimelman will serve 30 months for his involvement with the Goffer brothers (despite a very close jury and no clear evidence that Kimelman knew the he was acting on illegal information).
• October 13: After utilizing admittedly “aggressive prosecutorial methods and unprecedented tactics,” Bharara announces that billionaire and Galleon Group LLC hedge fund manager Raj Rajaratnam will serve 11 years in prison, setting a new record for insider trading prison terms.
FBI press releases state that these cases were “brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group.” Government records indicate that President Obama created this tax force to “hold accountable those who helped bring about the last financial crisis.”
The obvious problem with this task force is that shady Clinton-era government housing policies initiated the financial crisis, not Wall Street. So, how can a government task force hold the government accountable?
The government’s Wall Street “watchdogs” are particularly tainted. The DOJ has notoriously blown taxpayer funds on extravagant conferences featuring $16 muffins, and, last spring, 33 Congressional probes uncovered high-level SEC employees using taxpayer time and equipment to indulge their addiction to porn.
Furthermore, economists including the widely recognized founder of the economic analysis of law, Henry Manne, argue that deregulating insider trading would benefit both the economy and society. UCLA School of Law Professor Stephen M. Bainbridge writes: “Insider trading is one of the most controversial aspects of securities regulation, even among the law and economics community. … Deregulatory arguments are typically premised on the claims that insider trading promotes market efficiency or that assigning the property right to inside information to managers is an efficient compensation scheme.”
The New York Times has reported that, “Insider trading does not appear to have any appreciable effect on the markets, at least as measured by the volume of trading that occurs.” The Guardian also reports that many insider prosecutions do little to anything to stop the practice, and, more importantly, the trading itself may not be inherently destructive to the market.
Bharara genuinely seems to think he’s whipping horrific crimes. But what is more scandalous? To threaten America’s food supply by ignoring and even facilitating drug cartel border violence (think Fast & Furious)? Or, to leverage your connections and cut backdoor deals on Wall Street—when there is no evidence that such trades hurt the economy?
Government waste and corruption is a far greater threat to the economy and society than insider trading. But when was the last time you saw a government regulator get perp-walked? I think the President’s task force could send a superior anti-corruption message by securing the border and attacking government waste.
U.S. District Judge Richard J. Sullivan in Manhattan suggested that historically high prison terms like Goffer’s and Rajaratnam’s: “…will be used to send a message to Wall Street.” And Wall Street represents capitalism. So, these men appear to be sexy scapegoats serving drawn-out prison terms to send an anti-capitalism message to the progressive mob.