An article in Bloomberg Businessweek shows how words obfuscate and illuminate at the same time. Judge William Pauley III dismissed a case brought against Goldman Sachs's CDOs because there was not "sufficient fraud allegations" against Goldman: Now this description may be the writer's misinterpretation of events in the courtroom but it still tells a certain truth.
Then there is this quotation regarding the same dismissal:
“The complaint in this case does not ascribe to Goldman or TCW any particular motive for committing fraud beyond a general profit motive common to all corporations, which does not suffice,” a three-judge panel of the appeals court in Manhattan said in an unsigned order. (By Bob Van Voris, Bloomberg Businessweek)So we can conclude that 'fraud" exists in small increments--a little here and a little there and if there is not enough fraud then fraud does not exist.
We could also conclude that as long as general profit is the motive for committing fraud, then there is no fraud. But, come on now, profit (excessive profit and big honking bonuses) was THE motive. How revealing are these writers and judges in spite of themselves!
Be not deceived --the system of justice and the system of finance themselves are corrupt and full of fraud that is being dismissed out of hand.
Sequoia Fund Manager Campaigns Against Goldman Board Member, Former Fannie CEO Jim JohnsonRead the whole article here
By Yves Smith - Naked Capitalism
A telling taboo in elite circles is the issue of corruption. At INET last year, after a panel discussion on the financial crisis, Jamie Galbraith said he was astonished that there was not a single mention of fraud. His observation was met with a resounding silence.
Similarly, I had a colleague tell me today that I shouldn’t use the “c” word, meaning corruption, since it would alienate potential allies. The logic is similar to arguments against being shrill. He claimed that even if a lot of people in positions of authority engage in corrupt looking behavior, that doesn’t mean they understand it to be corrupt, so calling the corrupt will merely get them worked up to no useful end. They could well think they are doing the right thing and just be victims of cognitive capture.
I deeply oppose this line of argument. First, it assumes that decision-makers don’t recognize when they are taking ethically problematic actions. The people I know who have yielded to institutional pressures to do the wrong thing say they knew they were doing so and found a way to rationalize it. And I suspect even sociopaths know where the lines are. They have to do a better job of covering their tracks when their conduct is dubious.
Second, it assumes that it isn’t worth taking a firm position on ethics because it will turn off powerful people who have engaged in questionable behavior. Better to be less accusatory in order to have a dialogue with them. I don’t buy that because being indulging their justifications of their conduct helps preserve a bad status quo.
One aspect of American exceptionalism is many still believe the US is cleaner and more above board than most other advanced economies. But if you go overseas, you will find that a lot of businessmen see the US as not particularly ethical. One British colleague who has worked with major US firms described the US as becoming more and more a scam-based economy (in fairness, he was really talking about the financial services industry). An American who works a great deal with foreign investors said his clients saw the US at best as on a par with other big countries, at worst, with Russia.
One of the big reasons for the erosion in US behavior is the notion that elite crimes shouldn’t be prosecuted because it would harm the system. Glenn Greenwald describes the pardon of Richard Nixon as a critical embodiment of this principle. And while people in influential positions have long been able to get away with all sorts of bad conduct, it’s one thing to have, say, speeding tickets disappear quietly (the hoi polloi are no wiser) and quite another to have a tax cheat oversee the IRS. In the old days, propriety and reputations mattered, and that served to check bad behavior.
So it is important to define norms and not shy away from words like “fraud” and “corruption” when they fit. While it would be nice if more people in power were capable of feeling guilt, shame will do. Thus naming and shaming are legitimate strategies for letting the elites know that the broader public is not fooled.