Is the Trump administration ignoring white-collar crime?

It sure look like it

Get out of jail free card.
(Image credit: Fanatic Studio / Alamy Stock Photo)

Will President Trump's Justice Department lay off prosecuting white-collar criminals?

Nothing like that has been formally announced. But Yahoo Finance's Bethany McLean reported this week that, if you put together different statements and pieces of news, it's hard to avoid the conclusion that's what they're planning.

The first and central bit of evidence is a memo Attorney General Jeff Sessions issued on March 8 to little fanfare. The memo declared that "addressing violent crime must be a special priority," and directed the Justice Department to begin a "focused effort … to investigate, prosecute, and deter crime."

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"I am today directing the 94 United States attorney's offices to partner with federal, state, local, and tribal law enforcement to specifically identify the criminals responsible for significant violent crime in their districts," Sessions continued. "Once identified, the United States attorney's offices must ensure that these drivers of violent crime are prosecuted, using the many tools at a prosecutor's disposal."

At first blush, this may seem entirely banal. Isn't violent crime worse than other crime? Shouldn't the Justice Department concentrate on that?

In some ways, the answer is "of course." Murder is obviously a far graver crime than embezzlement. But in other ways — say, when you're comparing violent robberies to non-violent ones — it gets a little more complicated. (And it's particularly striking since local cases have traditionally been the province of state's attorneys, with federal authorities concentrating their resources elsewhere.)

The problem, like so many things in America, comes down to class. The poor still might have the resources to commit some forms of nonviolent crime, like selling marijuana. But overall, white-collar crime is by definition dependent on privilege: You need access to lawyers, or knowledge of complex financial instruments, or economic and political power, and so forth. It takes some wealth to be in a position to commit wage theft, for example.

White-collar crime also wrecks vast numbers of lives. You don't have to physically assault anyone to deny workers in your employ the wages they're entitled to by law — but in dollar terms, wage theft is much larger in the U.S. than all robberies, burglaries, larcenies, and motor vehicle thefts combined. Mortgage fraud and cockamamie financial engineering don't directly involve pulling a gun on anyone — but it still nearly destroyed the U.S. economy in 2009, wrecking millions of peoples livelihoods, families, marriages, and lives in the process. Massey Energy killed 29 people in 2010, which is more than most serial killers manage, purely through corporate negligence.

Now, the other part of McLean's story is that Trump's newly proposed budget would cut the Department of Justice (DOJ) by 4 percent. We don't know how those cuts would be distributed within the agency yet. But both antitrust enforcement and the fraud section of the Criminal Division — which concentrate on corporate wrongdoing — sit under the Justice Department's umbrella. The Securities and Exchange commission (SEC), which does a lot of investigations into financial crime and helps prosecute the cases, is also facing cuts, according to McLean's sources.

The hiring freeze Trump announced for federal agencies has also hit the SEC — as well as the U.S. Attorney's Office for the Southern District of New York, which is known for its focus and expertise in white-collar crime. While both agencies can't hire people for the foreseeable future, members of their staff will continue leaving every so often for all the normal reasons people quit jobs from time to time. So there are going to be fewer bodies to do the same amount of work.

When you combine the shrunken pool of resources for these agencies with Sessions' shift in focus, the math becomes inevitable: "[Addressing violent crime] is for sure going to push resources away from other things," a former prosecutor told McLean. The reporter added that her source "says that morale is already low in the DOJ and the SEC, where people fear they are losing the ability to act aggressively on white-collar matters."

There are other worrying signals: The Trump administration's already-infamous decision to fire U.S. Attorney Preet Bharara, who was widely known as "the Sheriff of Wall Street." Trump's new nominee to run the SEC is viewed with skepticism for his ties and possible leniency towards big finance. And Trump's White House appears to be joining the Republican Party's demented crusade to declaw the Consumer Financial Protection Bureau.

What makes this all especially galling is the U.S. government was already far too lenient on white-collar crime under the previous liberal administration. Despite the massive destruction wrought by the 2008 financial crisis, and the clear evidence of sweeping fraud involved, the Obama White House failed almost totally to prosecute anyone responsible.

In other words, the obvious answer is wrong: Concentrating on combating violent crime can lead your society in perverse directions. Why should committing a robbery with pen and paper get a criminal off scot-free?

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.