In his new book, The Divide: American Injustice in the Age of the Wealth Gap, Matt Taibbi takes a look at the growing problem of inequality in the justice system. Taibbi shows, through many examples, that the way justice works in the United States is divided pretty starkly between the wealthy and successful (and mostly white) and the rest of the country. The system assumes that wealthy Americans are innocent, even when they commit crimes, and their punishments are either nonexistent or minor. Poorer Americans, on the other hand, are assumed to be guilty and face harassment and punishment well beyond their crimes, particularly when coupled with the treatment the rich get.
Taibbi summarizes The Divide:
Obsessed with success and wealth and despising failure and poverty, our society is systematically dividing the population into winners and losers, using institutions like the courts to speed the process. Winners get rich and get off. Losers go broke and go to jail. It’s isn’t just that some clever crook on Wall Street can steal a billion dollars and never see the inside of a courtroom: it’s that, plus the fact that some black teenager a few miles away can go to jail just for standing on a street corner, that makes the whole picture complete.
Here are nine stories from Taibbi’s book that show the drastic divide between the justice that the rich see in the United States, and the justice the rest of us see:
1. HSBC (Hong Kong and Shanghai Banking Corporation): The company admitted to laundering up to $7 billion for Central American drug cartels. It also allegedly supplied more than $1 billion to Al Rajhi Bank of Saudi Arabia, whose founder was an original benefactor of al-Qaeda and whom was caught supplying travelers’ checks to Chechen extremists. A long list of other alleged crimes include funneling money to Iran, North Korea and the Sudan, countries listed as state sponsors of terrorism. HSBC paid a $1.9 billion civil fine (equal to about five weeks of revenue for the company), but neither the company or any of its employees faced criminal charges.
2. Jerome: Jerome was living with his child’s mother and her sister. The sister called the authorities on Jerome in an effort to get him kicked out of the house. The mother, who did not register Jerome as a resident in the house, was charged with welfare fraud and did a year in jail.
3. Bank of America: The bank teamed up with Countrywide to sell more than $1 billion in questionable loans to Fannie Mae and Freddie Mac through a program called “Hustle.” This program removed underwriters and compliance officers from the loan process in order to make sure that loans “moved forward, never backward.” No criminal charges were brought against anyone. Countrywide CEO Angelo Mozilo paid $67.5 million in civil fines and was banned from serving as an officer in a public company.
4. Andrew Brown: While Brown had previously had troubles with drugs and the law, he was trying to straighten his life out. One night, on his way home from work, he was dressed in work clothes and wearing a name badge and was talking to a neighbor in front of his own apartment building at about 1 a.m. Police told him he was blocking pedestrian traffic, and when he tried to explain that he was coming home from work, he was arrested, handcuffed, put in a van, taken to the precinct, strip searched and charged. After numerous run-ins with law enforcement in the past, he decided to fight back against the ticket, since he had only been standing in front of his own building and since it was 1 a.m., there was no pedestrian traffic for him to block. Multiple lawyers who were assigned to him advised him to plead guilty and take a fine, which would add a misdemeanor to his record, even after he told them he wanted to fight it. Eventually a judge dismissed the case, but only after also advising Brown to take the charge and pay the fine.
5. Wells Fargo: The bank certified 6,320 home loans for federal backing through 2010, despite having internally assessed the loans and found them seriously deficient. No criminal charges were brought against the company or its executives.
6. Ann Marie Selby: Selby was a 36-year-old writing teacher in Portland, Ore., who was coming back from a spa, missed her bus and decided to walk home. Police stopped her on suspicion of prostitution. Officers said she was looking into the windows of passing vehicles. When she tried to show them the receipt from the spa, officers took it from her. She was afraid that the only physical evidence that supported her case would be gone, so she tried to take it back, knocking a police notebook to the ground. That got her a charge of harassment to go along with the prostitution accusation. She eventually beat both cases in court.
7. Citigroup: The company certified thousands of loans for federal backing, despite internal assessments that the loans were deficient. Citigroup paid $158 million in civil fines, but no criminal charges were brought against anyone.
8. Abacus Federal Savings Bank: The tiny family-owned bank in New York’s Chinatown wedged between two noodle shops in one of the poorest parts of town was the only bank to be indicted in the financial crisis. Nearly 20 employees of the bank, including some making as little as $35,000 a year, were indicted and brought into the courtroom chained together by their hands and feet, even though some of them had already been arraigned and released on bail. Effectively, the bank was charged with granting loans to borrowers who could afford mortgages but didn’t quite want to reveal their income. But the mortgage owners in the case actually paid their debts and the company had one of the lowest default rates in the entire country. Fannie Mae actually made $220 million in profits off of Abacus-issued loans. The case was portrayed as striking at the heart of the financial crisis, even though Abacus neither was big enough to have an impact, they actually didn’t engage in most of the criminal practices the much bigger banks did. But there was one instance where a loan officer was apparently paid to fudge some income numbers for a borrower. When company officials found out about the problem, they self-reported it and fired the employee who took the payoff. Court proceedings continue.
9. Goldman Sachs: The bank underwrote more than $11 billion in federally backed mortgages (as well as billions in mortgage-backed products), despite bank managers knowing that most of these loans were toxic. Goldman Sachs didn’t inform regulators of this knowledge and tried to speed up efforts to divest itself of the loans to unsuspecting customers. No criminal charges or fines were directed at the bank. Fabrice Tourre, far from the CEO of the company, was the only executive to pay any fines, after he was found liable for misleading investors in a civil court.