Corporate criminals belong in prison
After General Electric (GE) agreed to pay a civil penalty of $1.5 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) without making an admission of liability, Lisa McCormick, a progressive Democrat in New Jersey, has objected to letting corporate criminals elude justice by paying fines without admitting guilt, because ordinary people would be sentenced to prison for decades while businesses continue collecting tax breaks, subsidies and government contracts.
"Corporate criminal prosecutions are in decline," said McCormick. "The Department of Justice's policy on prosecuting corporate criminals does not serve the public interest. A GE subsidiary originated more than $65 billion in mortgages between 2005 and 2007, most of which contained elements of fraud, then passed the buck to unwitting investors, but nobody is going to jail for these crimes."
"I strongly support legislation that Sen. Elizabeth Warren introduced to make it easier to jail the chief executives of big corporations who allow fraud or other forms of corporate crime," said McCormick. "Corporations don’t make decisions, people do, and we cannot allow the rich to buy limits on criminal liability if we are going to have justice for all."
"With total assets over $309 billion and revenue in excess of $121 billion in 2018 alone, GE is not going to learn anything with a $1.5 billion paltry fine," said McCormick. "Last week 44-year-old Stephan Byrd, of Vineland, New Jersey, was convicted on three counts of bank robbery worth less than $25,000 but he faces a combined mandatory minimum sentence of 24 years in prison and a potential maximum sentence of life in prison."
“If top executives knew they would be hauled out in handcuffs for failing to reasonably oversee the companies they run, they would have a real incentive to better monitor their operations and snuff out any wrongdoing before it got out of hand,” Warren said. “Decision-making at the biggest corporations won’t change until executives have real skin in the game — not just the threat of fines that they can pass off onto shareholders while still collecting their multi-million-dollar bonuses.”
Investors, including federally insured financial institutions, suffered billions of dollars in losses as a result of WMC’s fraudulent origination and sale of loans for inclusion in residential mortgage-backed securities.
GE got into the subprime lending business at the height of the boom in 2004, buying WMC, which originated more than $65 billion in mortgages between 2005 and 2007. GE got out of the subprime business in 2007, selling off WMC after the bubble burst and it misrepresented the quality of its loans, which were sold to investors as part of residential mortgage-backed securities.
In March 2006, WMC reviewed a representative sample of the 1,276 loans it had repurchased in 2005, and concluded that 78 percent of the loan files reviewed contained at least one piece of false information.
"Someone needs to explain why a bank robber who gets less than $25,000 faces 24 years to life in prison, while an industrial conglomerate that originated more than $65 billion in bad mortgages gets to pawn off its problems, pay a settlement worth one percent of last year's sales revenue and keep getting government contracts worth more than the fine," said McCormick."That sounds like justice for some, but not others."