Wednesday, March 15, 2017

The Case for the Corporate Death Penalty

Corporate Justice Blog contributor Steven Ramirez, together with his co-author Mary Kreiner Ramirez, have just released their new book The Case for the Corporate Death Penalty: Restoring Law and Order on Wall Street.  I was fortunate to review the manuscript of this book prior to publication and it is a breathtaking read.

Professors Ramirez and Ramirez painstakingly describe the many and various frauds perpetrated by corporate executives leading up to the housing market crisis of 2008 and wonder aloud why the Obama administration failed to bring criminal fraud charges against any of the corporate leaders that collapsed the global economy in 2007 and 2008.  Publisher's Weekly reviewed the book as follows:

"This is a thought-provoking call for the prosecution of criminal bankers--and investigation into why such prosecution has not yet occurred--from two who should know: Mary Kreiner Ramirez, a former prosecutor for the Department of Justice Antitrust Division, and  . . . Steven A. Ramirez, a former SEC enforcement attorney.  They charge that in a "historically unprecedented breakdown in the rule of law," the U.S. government failed to prosecute the people at the center of the 2008 financial crisis, opting instead for a huge civil payment from shareholders.  Providing some historical context, the authors demonstrate that never before in modern U.S. history have white-collar criminals enjoyed such immunity."

Inexplicably, the Department of Justice and the Obama administration have been satisfied to see Wall Street leaders agree to hundreds of millions of dollars of civil penalties for misleading investors (i.e., fraud), paid out of corporate coffers (shareholders value) rather than pressing criminal prosecutions against these leaders for engaging in fraudulent corporate behavior.  The Case for the Corporate Death Penalty describes that unlike the federal government during the Savings and Loan scandal and the Enron-era scandal, this time the government did not have the steel/backbone to prosecute Wall Street.


  1. This looks like it will be a good read. My only hypothesis for why the banks weren't slapped with fraud charges is that it would destroy the public's faith in commercial paper completely. Obviously, the crisis itself had a big effect on public perception of these banks, but if they were facing criminal charges I think we'd see a generation of people who never invested, never held bank accounts, essentially kept all their money in the mattress. This would, potentially, create a chain reaction which would leave the US economy unrecognizable. My take is that the Obama administration played the long, and though they didn't punish the banks to the extent they should have, the economy at large was able to recover.


    1. matt,

      this is an interesting observation. i certainly take your point that investor confidence was an important consideration in determining whether to bring criminal fraud charges against corporate bankers for their role in the mortgage crisis of 2008. do you think that consumer/investor confidence in the capital markets was negatively impacted when kenneth lay and jeffrey skilling were convicted for securities fraud for their role in the Enron collapse? or when charles keating and his ilk were prosecuted for the saving & loan fraud way back when?


  2. I have to ponder this further but a couple thoughts ... Balancing "white collar crime" with "collarless crime" is an issue that deserves more consideration... Is an appropriate punitive punishment for white collar crime a white collar punishment of monetary civil penalties. Oh, wait. A novel idea - Could there be punitive punishment for white collar crimes of monetary civil penalties AND criminal punishment????? Robin Beasley

  3. I would have to agree with Matt. The administration understood they needed to balance the implications of consumer confidence. Regarding Law and Skiling, because the investigation was on them personally or their specific corporation the average lay person didn't connect either of these two instances to industry-wide fraud and corruption. Perhaps the media and technology kept the details more sterile versus today. We have much more access to information and conflicting/investigative journalism than we did in the early 2000's.


  4. The path leading to the bubble pop in 2008/2009 began with some of the the deregulation of banking that occurred in the 1980's. Those Executive's began slowly pushing the boundaries of legality then. When they realized that no one was watching or the agency was underfunded, it was an easy step towards bigger "profits." They should be punished, but our society need to look inward as well. It is easy to fall victim to predatory lending when we lack self control on purchases. We have become a society of debtors rather than investors. History will repeat itself.

  5. I agree with Matt in that they may have not been prosecuted in order to preserve faith in banks. However, this topic reminds me of something that we talked about in Hip Hop and the Law last semester where rich white people who have committed crimes that led to millions of dollars of fraud claims get a slap on the wrist or nothing at all, but low-income people often get years in prison for far less serious crimes. This is just evidence that our system today does not provide justice for all, but rather, it only provides justice to those who are rich enough to buy it.