Why Isn’t Corporate Crime a Crime in the U.S.?
Corporate crime can be defined as crimes committed either by business firm or a corporation. It can also be described as crime committed by individual that may identified with a corporation or other business entity. A corporate crime is therefore an act of its personnel and need not be authorized or ratified by its officials (Jennifer, 1994). However, the crime is defined as so if the official were exercising customary powers on behalf of the cooperation and not their own accord. This means that therefore, the crime of the corporation involves the acts of the official and they are interwoven. Street crime on the other hand is the crime committed in the public. The crime also called mugging may include but not limited to pick pocketing, prostitution, vandalism of public property and/ or open illegal drug trade.
Calculating estimates of crime incidence and prevalence is a difficult task. However, statistics on corporate crimes are difficult than those of street crime because the sources of such crime data are limited in scope, are not collected in a systematic manner or there may be unique problems that limit operationalization and generalization (Albert, 1952). After the financial crisis of 2008, corporate crimes have intensified in the USA. Statistics for these are difficult to obtain. The crime causes an increase in financial costs. Since such crimes are an expense to the business, the costs are passed on to the consumer thus it creates an economic hardship to the citizens and the consumer. It also may cause loss of jobs to the employees who participate in such acts. Additionally it is an increased burden to the taxpayer of the criminals invests or deposits their money in banks from other countries therefore evade taxes. Corporate crime also has social consequences that are difficult to quantify, they include; psychological suffering that result from the crime and also the erosion of the long-held American culture.
The most recent form of corporate crime in the American history is the financial crisis of 2008 which was pioneered by various companies in America. Companies such as AIG, Goldman Sachs, JP Morgan Chase, Lehman Brothers and bank of America were among the major contributors of the crisis. With the absence of government in regulating the action of these banks in the investment sector, most of these banks were directly involved in the elaborate fraud and theft in the mortgage scandal and others that caused the great financial crisis. In a closer observation on how these institutions were involved on the cause of the crisis, the Lehman Brothers for example were involved in hiding billions of dollars from their investors. AIG chief, Joe Cassano assured his investors of a hundred percent return with zero loss but all that was scum compared to the consequent results (Tyler, 2011). Goldman Sachs failed to tell their customers how it put together the born to lose mortgage deals that were a failure and it was selling. The actions of these companies made America undergo an economic standstill and a financial crisis that affected its economy and its employment sector were the employment rate went so high. Ironically, none of the chief mangers were held responsible because the crime was not personal but they were working in the capacity of their mandate as empowered by the company and it was therefore their responsibility to work as they did for the companies to realize their objective.
The main causes of the 2008 financial crisis can be grouped into three. The first being the commercial real estate; this is where the speculative real estate bubble went beyond residential homes to affect all kinds of commercial real estate’s. People were buying high expecting to sell higher but the market collapsed and the made losses of up to 25%. The second factor was the misuse of the credit default swap (Tyler, 2011). This is characterized by the issuance of CDSs by non-insurance companies due to the structuring of the contract as a derivative swap rather than a traditional insurance policy. The problem was when the insurance companies were required to retain cash flow to pay for any damages but non-insurance companies were not and therefore the insurance companies were exposed to risks. Thirdly, the selling of Fannie Mae-backed mortgage bundles to pension funds and institutional investment was also a major cause of the crisis. Financiers bundled into very complicated packages which were called collateralized debt obligation (CDOs). The CDOs were sold to finical institutions which used loaned money and when the value declined the institutions were unable to pay the dept. The venture was attractive due to lack of government regulation which further made the venture risky.
The great financial crisis of 2008 is a great example of corporate crime in America because it affected the whole population yet no legal actions were taken top any of the managers of the leading companies except for one Bernie Madoff who was a con who conned the rich and famous people (Tyler, 2011). Otherwise, the companies left the American economy paralyzed and no actions have been taken to date. Capitalism system adopted by the American society advocates for private accumulation of resources and wealth, the companies as individual entities looked at their own interests and therefore pulled the fatal deal that affected the American economy for so long.
Works Cited
Albert, Vilhelm (1952) ‘White-Collar Crime and Social Structure’, American Journal of Sociology 58(November): 263-71.
Jennifer Arlen. "The Potentially Perverse Effects of Corporate Criminal Liability." Journal of Legal Studies 23 (1994): 833-867.
Tyler Durden. "Matt Taibbi's Latest: " Why Isn't Wall Street in Jail?" | Zero Hedge." Zero Hedge | on a long enough timeline the survival rate for everyone drops to zero. Web. 14 Dec. 2013.
