Some culprits in fleecing of America wear robes

Some culprits in fleecing of America wear robes

It’s easy enough these days to hear partisan debates in which one side accuses the other of bringing about the nation’s economic collapse.

Some Democrats seem to think that only Republicans worked to undercut regulation of the financial markets, while some Republicans firmly believe that Democrats are solely to blame for the tsunami of mortgage defaults.

Among the primary suspectss are Democratic Presidents Jimmy Carter and Bill Clinton, Sen. Christopher Dodd and Rep. Barney Frank. Among the alleged Republican miscreants are Presidents Ronald Reagan and George W. Bush, Sen. Phil Gramm and Rep. Christopher Cox (a strong advocate of deregulation in the House, who had an opportunity to reap what he sowed as chairman of the Securities and Exchange Commission). The names invoked change according to the politics of the accuser.

And that’s just a short list. Books will be written about the role those and many other Washington insiders played in bringing on the recession of 2008 and 2009 (using the most optimistic of end-dates).

There’s another group

But the focus on elected officials overlooks the enormous role that was played by appointed officials, specifically justices on the Supreme Court of the United States who, since the 1990s, built an almost perfect track record of siding with corporations against the interests of individual investors. Even investors who could clearly show that they lost their life savings through fraud found a majority on the Supreme Court willing to stand between the crooks and the aggrieved.

Conservatives, especially, are fond of talking about the dangers to society posed by “activist judges.” Yet few were heard to complain about the court’s rulings stretching from the Central Bank of Denver v. First Interstate Bank of Denver decision in 1994 (which protected known aiders and abettors in fraud from being held personally liable) to the 2008 ruling in StoneRidge Investment partners, LLC v. Scientific-Atlanta, Inc. (which extended the court’s protective hand over accountants who helped crooked executives cook their books and fleece investors). The Stoneridge case was relatively small, but its significance was huge, because it established a precedent that barred Enron victims from seeking compensation from accounting firms that shielded the truth about the company’s fraudulent bookkeeping until it was too late.

Some 15 years of lopsided rulings by the Supreme Court have so weakened the law that victims of Bernie Madoff’s Ponzi scheme may find it difficult to recover some of their losses from Madoff’s accomplices (and only a fool would believe that Madoff managed a $50 billion to $60 billion scam over a period of decades without anyone else helping him, or at least recognizing what he was up to).

Righting the wrongs

Now is the time for Congress to reassert itself, especially for those members who say they want to rein in those activist courts.

Congress has the ability to do just that by rewriting security legislation to restore the protections that investors are entitled to. This time, they should do so in a way that leaves the courts less latitude to gut the law through permissive interpretations.

We would point out that U.S. Sen. Sherrod Brown, D-Ohio, is a member of the Senate Banking Committee, and U.S. Rep. Charlie Wilson, D-6th, is on the House Committee on Financial Services, putting them in particularly good positions to drive some of the reform that is needed.

But this is a movement that should have wide and bipartisan support — from any member of Congress who doesn’t like slick operators stealing from honest investors, doesn’t think Wall Street’s gatekeepers should be able to look the other way while the thief is running out the door with his loot or doesn’t think activist justices should be going out of their way to protect the ill-gotten gains of white-collar thieves and their accomplices.

Let’s see who lines up on the side of the angels, and who votes to let the hustlers keep playing the angles.