Crime Pays

In a recent post on the Center for Effective Government, Katherine McFate wrote about how banking executives avoided any criminal prosecution for the many financial crimes committed in recent years. In her article, “Time for Three Strikes and You’re Out for Banks,” she notes that, unlike the period during the S&L crisis, when executives served prison time, no banking official has suffered a similar fate since the 2008 crisis. She suggests that a “three strikes” mechanism should be put in place so that if a bank is found guilty of committing three violations of banking laws, its culpable executives would be banned from a range of activities, including working in the financial sector, as a way to deter executive misbehavior.

What Ms. McFate and many others seem to have overlooked is the fact that there is no financial disincentives for banking executives to change their behavior. Despite the fact that banks and other financial institutions have been fined billions of dollars in recent years, at the end of the day, these institutions pay the fines, which offset any earnings these institutions have made.

Who is punished? Shareholders.

So who are these shareholders? Well, they are you and me. Do you have an IRA or a retirement account? Do you own shares in a mutual fund? Then chances are you own a piece of the banking industry. So to close the circle on this perversion, ordinary people, who were impacted by the financial crisis were penalized for the criminality that led to the crisis.

While I think that Ms. McFate’s idea is an interesting one, what we really need is a more direct deterrent aimed at executives of these companies. Currently, when a bank is hit with fines in the hundreds of millions or billions of dollars, the trend is to give executives a raise. Going forward, bank executives should be fined as well, to the point of “pain.” This means that they can lose their pensions, stock options, the jet, the house in the Hamptons and the apartment in Manhattan. Once this happens, perhaps these criminals will finally wake up.

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How about human rights at home?

Today was one of those “only in Washington” days where I attended two conferences on human rights. The first one was held at George Washington University and the focus was on business and human rights. A second conference was held across town at the Newseum and it’s focus was on Internet freedom. Both conferences were well down in their own rights, interesting speakers and both conferences had the honor of a keynote speaker, Maria Otero, the Under Secretary of State for Democracy & Global Affairs.

Under Secretary gave essentially the same speech at both events, focusing on Internet freedom around the world. It was a well crafted speech (even the rerun) and reflected the Obama Administration policy targeting repressive regimes around the world. Yet, as I sat there listening to this laudable set of speeches, I reflected on a disappointing position that the Obama Administration has taken against young women in America.

I am speaking of the decision by the Administration to deny women under the age of 17 to purchase emergency contraceptives over the counter.

Yesterday, the Food & Drug Administration, at the advice of its scientific advisers, recommend that Plan B, the branded “morning after” pill, was safe for all women of child bearing age to use. Since its approval by the FDA for sale in the U.S., the previous practice, established by the Bush Administration was to allow for the sale of Plan B without a prescription but the pill was to be kept behind the pharmacists counter and given to women specifically requesting the drug. If a woman was under the age of 17, she needed parental permission. This procedure was an effort by the Bush Administration to restrict women’s access to contraception, a decision to appease its conservative base.

It’s now 2011. President Obama Administration, steadfast in his view that scientific evidence would not be trumped by politics did the unthinkable. For the first time, a Secretary of Health & Human Services overruled the Food & Drug Administrator’s decision to approve the sale of drugs to the American public. Overruling the FDA’s unconditional approval to sell emergency contraception over-the-counter to all women, HHS Secretary Kathleen Sibelius rejected the FDA’s scientific evidence and slapped down young women who seek to control their own bodies.

For a full discussion of the politics of this appalling decision, read the piece on here.

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The Debt Supercommittee: Will it raise taxes on corporations and the wealthy?


The Debt Super Committee – the Joint Select Committee on Deficit Reduction – has been established to create a plan before Thanksgiving to cut $1.5 trillion in federal spending over the next decade. If the Committee fails there will be an automatic $1.2 trillion in cuts to defense and discretionary spending. While this pressure is significant for the committee members and Congress as a whole, the likelihood of success for this Committee in coming up with a workable plan is unknown. Continue reading

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Land Grabbing: The New Colonialism?

I have been focusing my interests of late on the subject of “Land Grabbing,” a somewhat pejorative description of the phenomena that is taking place in many parts of the developing world. I recently came across this video produced by Oxfam that provides a fictionalized but interesting perspective on the problem.

What is “Land Grabbing“?

It is the acquisition of large tracts of land in developing countries (think: sub-Saharan Africa, eastern Europe, central and eastern Asia and Latin America) where corporations and foreign states acquire millions of acres of land for pennies to develop commodity crops for sale on the global markets. The problem lies in the all too common fact that these agricultural products are not sold on local markets, indigenous peoples (subsistence farmers, herders) are uprooted, often displaced and faced with greater poverty than prior to the acquisition of their lands.

This is a relatively new phenomena that has emerged from the global food crisis in 2008. However, the scale of this problem has grown dramatically. In a recent report by Oxfam, it is estimated that 227 million hectares of land, equivalent to the size of Western Europe, has been acquired through sales, leases or licenses since 2001. This dramatic buying spree is not abating soon.

The following video touches on an aspect of this land grab phenomenon and while a bit on the cynical side, it paints an all to real picture of the pecuniary motives of buyers, who see tremendous opportunities for wealth from developing countries.

Take a look.

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Stuxnet as Cyberwar: The Law of War and the Virtual Battlefield

Cyberwar is a popular topic in national security circles of late. While there has been considerable discussion about whether the U.S. has been subject to cyber attacks in violation of the laws of war, much of the discussion has centered on technical questions related to the nature of various attacks, big and small, with little attention given to the terms being bandied about. In the common parlance, cyber war has been applied to espionage, theft, extortion as well as physical attacks resulting in real world damage. But is any of this really warfare within the definition of international law?

I recently wrote a paper entitled Stuxnet as Cyberwarfare: Distinction and Proportionality on the Cyber Battlefield, where I attempt to address a number of legal issues related to the recent attack known as Stuxnet, looking at the nature of the attack and whether it adhered to the law of war principles of distinction and proportionality. Focusing on whether the Stuxnet attack constituted a form of cyber warfare, I then looked at whether the attack adhered to these important legal principles.

While a number of legal scholars have written extensively on the subject of cyber war, until the discovery of Stuxnet, there was considerable disagreement as to whether a cyber war had ever occurred. While I believe that the Stuxnet event was in fact an attack within the meaning of international humanitarian law (IHL), I think that the attack on the Natanz nuclear facility by unknown aggressors raises as many questions as it answers, including questions of attribution and whether a proportional response by the victim state (in this case, Iran), would have been legitimate within the framework of the U.N. charter.

That said, I am attaching a copy of this paper for readers interested in my analysis of the subject.

Creative Commons License
Stuxnet as Cyberwarfare – Distinction and Proportionality on the Cyber Battelfield by John Richardson is licensed under a Creative Commons Attribution 3.0 Unported License.

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