Consumer Law

Will legal system deliver justice to corporate malefactors? Eh, probably not.

By Kia Franklin

In this LA Times piece Mike Hiltzik predicts that the financial big wigs whose greedy behavior sparked the economic crisis will face little heat from the legal system for their actions. An excerpt:

"Justice? You get justice in the next world, in this world you have the law."

That opening line of one of my favorite novels, William Gaddis' 1994 legal satire "A Frolic of His Own," comes back to me every time I hear someone call for packing the rich malefactors behind the great financial meltdown of 2008 off to jail.

Having watched 40% of our 401(k)s go up in smoke and jobs vanish by the millions, it's natural to want to see the guilty subjected to divine justice. There's no dearth of suspects.

There are heads of banks and mortgage companies who invested their capital and made loans without the most cursory due diligence -- Angelo Mozilo of Countrywide Financial and Charles Prince of Citigroup come to mind. Richard Fuld and James Cayne, the bosses of Lehman Bros. and Bear Stearns, who presided over the extinction of their fine old firms. Maurice R. ?Hank? Greenberg of AIG, whom I saw last year on CNBC saying that a government bailout of that irresponsible company ($150 billion at last count) was in the "national interest."

These execs collected otherworldly salaries and bonuses for years on the grounds that their institutions could scarcely survive a week absent their wisdom and judgment. We know better now, but they haven't given the money back.

Is America's legal system up to the task of delivering the justice they deserve? Experience suggests we're bound to be disappointed...

Hiltzik's piece got me thinking about the current conversation about our legal system. Do we want to talk about real tort reform? Real reform would involve making sure it's possible for ordinary people to require "financial scoundrels", as Hifkitz names them, to account for their actions. It would also require us to move past the tired old "trial lawyers are evil" - "no they're not" argument and into a real discussion about how to make the legal system work, effectively, for ordinary people.

Perhaps a discussion about real legal reform will come soon, as Americans begin to learn more about what higher-ups in the financial industry have done to contribute to the current economic crisis.

Full post as published by TortDeform.com on January 13, 2009 (boomark / email).