Jon Chait and Kevin Drum team up for a nifty demolition of that Wall Street Journal editorial page deception I wrote about a couple of weeks ago.
Chait notes that the Journal uses an “optical illusion” in its chart, manipulating it to make it seem like the upper middle class has most of the money:
Democrats have been arguing that their tax increases should solely effect income over $250,00 a year. The Journal makes that pot of income appear small by diving it up into seven different lines. See, the $100,000-$200,000 line is tall, and all the other lines to the right of it are short. That tall line must be where the money is!
But if you add up all the lines of income over $200,000, you get around $2 trillion. (I may be off, because I’m eyeballing it, but I’m not off by much.) That obviously far exceeds the nearly $1.4 trillion accruing to the $100-200,000 set. And it undermines rather than bolsters (though does not disprove) Reihan’s argument that “the collective political influence of the upper-middle-class is greater than that of the ultra-rich.”
Drum shows the manipulation even better by remaking the Journal‘s chart. The original is on the left and the Drum version on the right.
Excellent work by both.
— The New York Times goes a bit overboard with its second-day story on U.S. Attorney Preet Bharara, who oversaw the successful insider-trading prosecution of hedge fund billionaire Raj Rajaratnam.
The consistent presence of Mr. Bharara at the largest insider trading case in a generation — and the office’s resounding victory on Wednesday — signaled that the chief federal prosecutor in Manhattan was back as the sheriff of Wall Street.
Don’t get me wrong: This is an important case, and it’s critical that Bharara used wiretaps to bring down these criminals. But if Bharara, in office for nearly two years now, is the “sheriff of Wall Street” then why can’t the Times gives at least one more anecdote of him policing Wall Street? We get a lot of cases, but
In that short tenure, his staff has ventured far beyond Wall Street, prosecuting some of the nation’s — and the world’s — most prominent defendants. Among them: Faisal Shahzad in the Times Square bomb plot; agents in a Russian spy ring; Ahmed Khalfan Ghailani, the first Guantánamo Bay detainee to be tried in the civilian system; Viktor Bout, a Russian accused of being an arms trafficker; a Somali man charged with piracy; and four men charged in a plot to bomb synagogues in the Bronx.
Then there’s this rah rah quote from a Bharara pal:
“Everything about Preet’s record suggests that he’s a federal prosecutor for all the right reasons,” said Randy Mastro, a lawyer at Gibson Dunn and a former top deputy under Mayor Giuliani. “The best prosecutors are often those who don’t have political ambitions.”
Mr. Mastro, who overlapped for a time with Mr. Bharara at Gibson Dunn, added, “But that doesn’t mean he shouldn’t be drafted into running.”
Let Bharara go after one of the whales who actually had something to do with the financial crisis and then we can talk about drafting him for higher office. He hasn’t done so. The Times does nod to that fact, though it attributes it to carping “academics and newspaper columnists.” Take it away, Times columnist Joe Nocera, who wrote this last week:
Listening to Bharara, one could easily think that prosecutors were finally — finally! — getting tough on the bad behavior that helped bring about the financial crisis. Alas, it was mainly an illusion.
Upon closer inspection, it turns out that the main target of Bharara’s wrath was MortgageIT, a smallish division that Deutsche Bank bought in 2007 — eight years into an alleged fraud that ended in 2009. In the complaint itself, not one MortgageIT executive was singled out as a wrongdoer; it was as if this faceless corporation had somehow defrauded the government without human help.
Most stunningly, despite concluding that MortgageIT executives had “knowingly, wantonly and recklessly” lied to federal officials, Bharara’s office had decided that none of them deserved jail time. It had brought a civil, not a criminal, case, meaning the only punishment prosecutors could seek was money — more than $1 billion in this instance. That sounds like a lot until you realize that Deutsche Bank’s 2010 revenues were more than $42 billion. In other words, a tap on the wrist.
His kicker?
But so long as prosecutors resist bringing criminal cases against financial executives, they are sending a message.
Crime pays.
Some sheriff.
— Speaking of justice and Justice, William D. Cohan has a righteous rant on the Times‘s Opinionator blog on the lack of it:
One of the most frustrating facts of the recently abated financial crisis is that those who might have been partly responsible for it have got off scot-free. The only two people prosecuted criminally — the Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin — were found not guilty by a jury in Brooklyn. Other potential culprits — Angelo Mozilo, chief executive of Countrywide Financial, Joseph Cassano, chief executive of AIG Financial Products, and Dick Fuld, the chief executive of Lehman Brothers — were either slapped with a small civil penalty, in the case of Mozilo, or the Justice Department made the decision not to prosecute after months of investigation.
What’s worse, not only did bankers escape with no penalty, they walked off with millions of dollars in their pockets while American taxpayers got left holding the bag. Since the crisis was caused by greedy decisions made by one leader after another at various Wall Street firms and at other businesses, like mortgage originators and credit ratings agencies, that attached themselves to Wall Street like pilot fish on a shark, the dearth of prosecutions, or even attempted prosecutions, seems especially unconscionable. The least the Justice Department could do, in declining to prosecute, would be to make available the reams of documents on which it based its decisions, so that the American public can understand why prosecutors let these people walk. Without seeing what the prosecutors have seen, we are left with a sense of frustration and injustice.
Indeed.
While we won’t get our hands on what Justice has seen, we’ve seen plenty enough already.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.