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Big Banks, Business and Butter: Highlights From Our Q&A on Corporate Impunity

Reporter Jesse Eisinger offers his thoughts on the lack of white-collar prosecutions, journalism and the Green Bay Packers.

On the heels of our story this week with the New York Times Magazine on the rise of corporate impunity, reporter Jesse Eisinger took to Reddit to answer readers’ questions on regulatory challenges, changing the status quo and what it was like to star in “The Facebook movie.”

Below, a selection of the best.  (We really recommend reading the whole thing.)


Q: What would it take to change the status quo? – Frajer

A: A change in the culture of the DoJ, where the leaders were more ambitious, were less afraid to fail and devoted more resources to the most complex cases. Also, the DoJ needs to start thinking about statutory fixes to address its loss of tools over the last decade.


What one proposed law or legal change do you think would make the most significant difference? – karmanaut

I don't think enough attention has been paid to the fact that the white collar laws are inadequate, so there haven't been many proposed remedies. One thing the DoJ should use is the "willful blindness" or "conscious disregard" charge. As Judge Jed Rakoff wrote recently in the New York Review of Books: Such a charge "is a well-established basis on which federal prosecutors have asked juries to infer intent, including in cases involving complexities, such as accounting rules, at least as esoteric as those involved in the events leading up to the financial crisis. And while some federal courts have occasionally expressed qualifications about the use of the willful blindness approach to prove intent, the Supreme Court has consistently approved it."


Is part of the regulatory problem that technology (financial, corporate, communications etc) is evolving too fast for regulators to keep up? – dvonya

Absolutely. They are outgunned technologically. The markets have become too complex for them. But that's not the only problem. A lot is will and leadership.


Is a Pulitzer Prize a medal, a statue, or a certificate? Can you wear it around your neck? – Ballacaust3000

It's a certificate but they make a statue of you out of butter and put it on the lawn in the middle of the Columbia campus.


How much does wanting to get a job at these firms for big paydays affect the lack of prosecution of these executives? Should we restrict how easy is to go from the DoJ or the SEC to a financial firm? – jerk40

This is a huge part of the problem. As a partner at a huge law firm, you can make ten times what you made as a prosecutor. If you are too aggressive or break the unwritten rules, that harms your future earnings. You go after easier cases to get wins and it helps if they are sexy cases (rather than boring, complex cases).


Is the criminal behavior limited to theft/fraud, or are there specific types of financial transactions corporations engage in that are/should be outlawed? – ningrim

Fraud writ large yes. There were many misrepresentations to the public that I think were worth deeper, more aggressive investigation. I write about the Lehman Brothers executives' representations of their liquidity in the weeks and months leading up to their collapse, which was clearly factually and materially inaccurate. Did they know it at the time? I don't believe the DoJ adequately investigated that question. And Lehman isn't alone.


So in your opinion, what would it take to properly sanction big business? Also is it fair or right that a corporation is considered a person with rights equal to an individual? – kevinb2k6

To properly sanction corporations, indictment has to be on the table. That includes seeking admissions of guilt and/or being willing to take corporations to trial. However, I think prosecutors are justified in being concerned about an indictment leading to a corporate death penalty. But doing justice may require it. A dangerous, recidivist company might deserve to be put out of business.

Also, they must go after individuals as well. One way to do this should be to try to design fines that hit individual executives, not shareholders. Another is to charge individuals.

Corporations have rights as individuals and responsibilities. This is a long established precedent and won't be overturned anytime soon. I don't think the principle is a problem; corporations can make contracts, be sued, etc.


What was the biggest threat you ever got from a major political/business figure? – bobthebobd

Well, financial reporters got it pretty good. The worst that happens to us most of the time is that high-priced PR people yell at us on the phone. Once, in the late 1990s, two detectives from the Manhattan D.A.'s office were sicced on me by someone about a story I wrote on a Canadian billionaire pharmaceutical fraudster. I was so naive, I thought they were coming to feed me some information about their investigation of the guy. I didn't realize they were questioning ME until halfway through our meeting. Another time, my boss at the WSJ and current boss at ProPublica was summoned when he was on his honeymoon in Paris by Bernard Arnault, the French billionaire who owns LVMH, to complain about some of my columns. My columns stood up to the scrutiny and my boss backed me. I was deeply sorry my boss had to talk about accounting arcana on his honeymoon but very glad that I had pissed off Arnault that much.


What would you consider the biggest mistake of your career? – dvonya

I have made so many mistakes, I've given speeches about them. Fortunately, I've never made the kind of huge factual error that meant the story required retraction. Thank God.

One of my best stories was also one of my biggest mistakes. In Oct 2007, I wrote for Conde Nast Portfolio that the Wall Street investment banks were going to fail. I wrote that it would be Bear Stearns first, then Lehman Bros, and maybe even Merrill, Morgan Stanley and even Goldman. Pretty good, right? But I didn't follow up on it, probe deeper, write more. So I kind of blew the opportunity of a lifetime to really own the story of the biggest financial crisis since the Great Depression. Oh well.


I have a list of questions:

As a journalism student in college, what should i be doing to get a job as a reporter when I graduate?

Did you naturally gravitate towards covering wall street or was it an assignment?

What's it like to win a Pulitzer?

Do you think the seahawks can repeat for the title? and if not who do you think will win?

Thanks for doing the AMA! – squirtgunheadphones

1. Read as much journalism as you can, figure out what you like and who you like, cold call those reporters and try to meet and get a coffee. Study something that imparts real knowledge: science, statistics, economics, history etc. so you have some knowledge base and skill set. Look at all the start-ups: Vox, 538, Fusion, BuzzFeed (which is established, of course) and seek to get in on the groundfloor of those places.

2. I fell into it 20 odd years ago by luck. I honestly didn't know the difference between a stock and a bond. But I liked it, soon realizing that is where the power structure of society lay. So to understand how the country works, you need to understand finance.

3. It was great and I felt very lucky. But soon I started to worry that it would be my professional peak and that scared the shit out of me.

4. Obviously not and it will be apparent on week one, when the Packers crush them in Seattle.


You were great in The Social Network and Zombieland. You're like Michael Cera except more awkward, its awesome – black_caddy

I know it. I was robbed of the Oscar for both of those roles. Cera is a punk.

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