I have a legal question citizens of New York might wish to ponder. What is the difference between Sheldon Silver and Jamie Dimon? Representative Silver is speaker of the State Assembly in Albany, and federal prosecutors want to put him in prison for taking kickbacks for doing political favors. Dimon is CEO of JPMorgan Chase, the nation’s largest bank, which has richly rewarded him for political manipulations that saved the megabank billions in regulatory fines for defrauding investors and saved fellow bankers from criminal prosecution.
Something about this comparison doesn’t smell right.
“Shelly” Silver is accused of steering plaintiffs to two law firms who sue big companies in behalf of people injured by asbestos or other cancer-causing substances. He arranged state research money for a couple of nonprofit health projects that deal with such issues, In return, the indictment charges, Silver received $3 or $4 million spread over ten or fifteen years. As political corruption goes, this is pretty small beer.
Jamie Dimon, by contrast, is political nobility, a leader of the Wall Street gang that raped the nation (financially). Trillions were lost by millions of families in the mortgage-securities racket that brought down the US economy. Dimon’s kickbacks were from his board of directors, grateful that he used his skill and influence to dodge the legal consequences.
Yet when it came time to punish financial wrongdoers, the scandal did not go before a grand jury. Dimon instead sent squads of corporate lawyers to negotiate with the government on how much the bank was willing to pay for its misdeeds (Dimon called them “mistakes”). When the negotiations stalled, Dimon traveled to Washington for a personal conversation with the attorney general. The final deal announced by Eric Holder was a bit fraudulent itself. Holder claimed to have won a record penalty of $13 billion, but lawyers who read the fine print and did the accounting said it was actually closer to $6 billion—a pittance compared to the horrendous damage Wall Street bankers profitably did to the nation.
The sordid mismatch of crime and punishment was displayed in the pages of The New York Times, though the newspaper seemed unaware of its contradiction. The Times editorial page demanded Representative Silver’s immediate resignation, never mind the trial and jury verdict. US Attorney Preet Bharara accused Silver of holding “titanic political power.” the Times wanted a prompt hanging. Silver did not resign but did agree to delegate leadership to senior assembly members on a temporary basis. “I hope I will be vindicated,” he said.
Meanwhile, on the same day back in its business section, the Times was reporting that for his efforts Dimon would get “a sweeter pay package in 2015.” The board of directors decided Dimon’s total compensation would remain at $20 million and he would get $7.4 million in “easier-to-access cash” rather than restricted stock shares.
The business story said, “Among the directors, the people briefed on the matter said, Mr. Dimon has been bolstered by a widely held view that he took on a crucial role in JP Morgan’s settlements with the federal authorities.” The story said directors “see the government’s extraction of money from the banking industry as driven more by a desire to take a tough line against Wall Street than any actual problems at the banks.”
In other words, the boys at JPMorgan did not learn their lesson. They did not take the government’s complaints seriously because they assume Washington was just putting on a show to appease angry citizens. After all, $6 billion is a mere asterisk on JPMorgan’s balance sheet, although Dimon continues to whine in public about the unfairness of the government regulators.
In fact, the Morgan Chase directors may be right about the feds. Matt Taibbi of Rolling Stone wrote a blistering critique of Holder’s claim that criminal prosecutions still might be possible. The AG gave a tortured explanation of how difficult it is to pin down individual responsibility in corporations. “Responsibility remains so diffuse and top executives are so insulated,” Holder told an NYU audience, “That any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.”
Taibbi responded: “In other words, people don’t commit crimes, corporate culture commits crimes!” Perhaps Sheldon Silver’s lawyers should put the blame on New York political culture.
I should acknowledge my own bias in this matter. I have family (children and grandchildren) who live in Sheldon Silver’s Assembly District 65 on the Lower East Side. They are not naïve and they oppose corruption. But they also see “Shelly” Silver as a pretty good guy. He plays hard ball in behalf of certain interests and issues, they know, but he also involves himself in stuff that matters to ordinary people, like defending rent-control apartments against the ever-encroaching grasp of the real-estate lobby.
Shelly Silver lives in their neighborhood, and not in grand style, contrary to the heated insinuations of editorial writers. During Hurricane Sandy, when power was out, trucks showed up around Grand Street, where people could recharge cell phones and laptops. Without really knowing, residents heard or just assumed that Representative Silver had something to do with that.
In the legislature, he pushed the gay rights legislation, but also the default speed limit of twenty-five miles per hour so old folks and joggers could cross broad streets without getting run over. He demanded more building space for the new downtown high school my grandson attends. Shelly legislated a school holiday for the Lunar New Year (2015 is the Year of the Sheep), so Chinese kids could stay home and celebrate with their families without being recorded as absent. These are small matters, but people notice and remember.
Farther south, Silver’s district also includes the financial district. Like most New York politicians, Representative Silver attends to Wall Street too. But he is an old-school politician, and the tension between neighborhood life and powerful money interests is a very old conflict in New York politics, still very active in current events.
Silver’s reputation as the powerful boss who looks out for the folks is a model descended from the olden days of the Tammany machine but also the great social reform movements that arose on the Lower East Side in the early twentieth century—the popular politics that eventually evolved into the liberal-labor agenda of the New Deal era.
Tammany Democrats used to speak unapologetically of “honest graft,” which meant politicians could take care of the public interest and take care of their own interests without legal contradiction. Of course, many bandits hid gross corruption behind that logic. But determining criminal motivation is not as self-evident as righteous prosecutors assert. The overly zealous pursuit of bad guys might “criminalize” what is the standard practice of bartering and trading in everyday politics.
The US Attorney must have noticed, for example, that a lot of money changes hands in politics—big money given to politicians by private interests—and a lot of that money comes from Jamie Dimon’s gang. These exchanges are called “campaign contributions” but that dodges the real question: What’s being bought and sold? Is Jamie Dimon bartering private deals with our elected representatives over how public funds will be spent or which laws will be altered to benefit Dimon’s bank? Of course he is. We just don’t know what he is buying or selling.
The US Attorney for Lower Manhattan should convene a grand jury to explore these questions, because very little is ever revealed about the dark-side transactions. The FBI, as it sometimes does with criminals it has caught, should put a “wire” on some middle-level bankers and collect recorded glimpses of who’s trading away public assets behind closed doors—deals more secretive than anything Shelly Silver engineered.
Of course, that kind of investigation won’t happen. The corporate justices who control the Supreme Court would never allow it. Examining the private motives behind Wall Street’s political manipulations would violate the free-speech rights of Jamie Dimon and his crowd. Money is speech, the Court says. Therefore, the more money that pours into the hands of politicians from the corporates the better our democracy will become. What a hoot.
My essential question is this: Who gets to decide how public resources are going to be spent or which laws should be altered to satisfy certain private interests? Democracy promises (in theory) that the people have a right to participate in the decisions governing their lives.
But whatever the law and Constitution require, these decisions will in the end always be determined by people, mere mortals who may get things wrong and will always be influenced by self-interested motivations. That applies to elected representatives like Sheldon Silver. But it also applies to private bankers like Jamie Dimon, whose gang expends billions to buy members of Congress and high-level government appointees and to field thousands of lobbyists who help rewrite the laws for us to observe. Democracy’s promise is still unfulfilled, but people are working on it.
In this imperfect world, I would rather have the Shelly Silvers decide things than the Jamie Dimons.