“The floodgates opened and all the forces of evil invaded . . . . Loyalty, truth, and conscience went into exile, their throne usurped by guile and deception, treacherous plots, brute force, and a criminal lust for possession. . . . All duty to gods and to men lay vanquished; and Justice the Maiden was last of the heavenly throng to abandon the blood-drenched Earth.” —Ovid, Metamorphoses, 125-150 (8 AD)

In this dystopian era we often hear tales of the dire threats posed by relatively new high-powered technologies like genetic engineering, robotics, nuclear power, and cyber-spying. But one of the most problematic social innovations ever conceived is actually more than two centuries old. This is the “corporation”—a real-world example of Dr. Frankenstein’s laboratory experiment run amok if ever there were one. Left to its own devices, it may eventually wreck the planet and drive most of us “non-corporate persons” under.

We tend to forget that “corporations” are not natural entities. Paradoxically, like many other truly revolutionary innovations in the history of capitalism, they were originally creatures of an entrepreneurial state groping for creative solutions to the big problems of the day. Since our silly contemporary biases about whether solutions happen to come from “markets” or “governments” had not yet been invented, pragmatism won out.¹

As of 1816, the Commonwealth of Massachusetts was the leading U.S. state to charter limited-liability corporate entities for the purpose of raising capital, mainly for worthy public investment projects. Eventually the Massachusetts legislature granted several hundred corporate charters, subject to strict conditions. These included: ten-year term limits, renewable only with the legislature’s approval; corporate activities limited to specific domains like canals and textiles; and strict prohibitions on acquiring the shares of other corporations or expanding geographically. Importantly, these corporate charters were also conditional on an affirmative duty to engage in “good behavior.”

To make a long story shorter, over the succeeding two centuries, under the impact of the Industrial Revolution, the rise of giant global industries like transportation, energy, steel, defense, and IT, increased competition for the lucrative corporate registry business from Delaware and other U.S. states as well as offshore havens, and a line of Gilded Age Supreme Court decisions that recognized “corporate personhood,” all these restrictions were swept aside, while other corporate powers were expanded. By the 1930s, as Columbia Law professors Adolph Berle and Gardiner Means recognized,

The corporation is a means whereby the wealth of innumerable individuals has been concentrated into huge aggregates and whereby control over this wealth has been surrendered to a unified direction. The power attendant upon such concentration has brought forth princes of industry, whose position in the community is yet to be defined. The surrender of control over their wealth by investors has effectively broken the old property relationships and has raised the problem of defining these relationships anew….²

Today, corporations and banks possess powers that have become almost super-human. They live forever, unless terminated by investors, creditors, or—rarely, at least in the United States—governments. Although subject to (weak) anti-trust laws, exchange controls, and restrictions on foreign investment, they are nevertheless mainly free to hang out with multiple partners, acquire cross-share holdings, merge, divorce, and spawn unlimited captive offspring. Under the neoliberal policies that have prevailed since the 1980s, they are also free to expand across most state and national boundaries and markets, even as millions of human counterparts wait patiently for passports and visas or are subject to the Border Patrol’s tender mercies.

On top of all this, from a legal standpoint, corporations have also become full-fledged U.S. citizens. Even though “corporations” are never mentioned in the original U.S. Constitution, the Bill of Rights, or the other 17 amendments, by now our fellow corporate citizens have acquired almost all the constitutional rights of individual U.S. citizens except the right to vote and the prohibition against self-incrimination. These include such invaluable ones for criminal defense as the right to counsel, due process, equal protection, the Fourth Amendment’s protections against unlawful searches and seizures, the right to trial by jury, and attorney-client privileges.

Indeed, in 2017, several U.S. defense contractors achieved the penultimate inversion of the obligations originally associated with state chartership. Under the terms of their contracts, they are allowed to invoke the Federal government’s own sovereign immunity. This prohibits anyone—including the Federal government—from suing them for malfeasance, no matter what they do.

U.S. corporations and banks have recently become much less shy about wielding this combination of increased political rights and financial clout, demanding favorable treatment not only from public officials but also from prosecutors and judges. For example, in 2016, reported spending on Federal contributions and lobbying by the U.S. financial services industry totaled $1.44 billion—about $7,373 per Congressperson per day. Spending per day by non-financial services lawyers and lobbyists added another $250 million, or about $1,282 per Congressperson per day.

Across both leading political parties, this kind of influence spending has increased dramatically since the 1990s. Of course these donors are not charitable organizations. So the fact that their investments have continued to expand suggests that they must be earning healthy returns—whatever those returns might be. It is also worth noting that the way the Supreme Court has been interpreting political corruption lately, those on the taking end of corporate lobbying increasingly need not worry about serious consequences. If a Congressman caught red-handed with tens of thousands of dollars in cash in his freezer can get his corruption conviction overturned, one has to wonder if any way of accepting bribes can be brazen enough to get a Congressperson in trouble.

All this has permitted today’s giant corporations to accumulate seemingly limitless wealth on a global scale. They park revenues, costs, assets, and loans in “separate entities” located in dozens of low-tax/low-regulation “havens.” They also use these jurisdictions as parking lots for under-regulated hedge funds, investment funds, insurance companies, and “facilitation payments.” Aside from occasional Panama/ Paradise Papers exposés, they keep all this activity well hidden, beyond the scrutiny of First World investigators and taxmen, let alone developing countries.

As we all know by now, in the years leading up to the 2008 global financial crisis, this kind of chicanery encouraged the world’s largest corporate financial institutions, including ostensibly blue-chip entities like JP Morgan and Goldman Sachs, to commit boatloads of outright fraud and all but bankrupt the world’s economy. They then pleaded that they were “too big to fail” and got bailed out by Western taxpayers. Meanwhile, most of them got caught red-handed in an unprecedented spree of corporate crime, including helping First World elites and multinational corporations to move wealth to tax havens.

After eight years of low interest rates that helped finance their recovery, these very same giant corporate banks then escaped with less than $300 billion of partly tax-deductible fines and settlements. There occurred no jail time for senior executives, no revocations of operating licenses or corporate charters, and not a single solitary apology.

On top of all this, with no shame whatsoever, these same institutions recently joined forces with the Trump Administration, demanding the first in a series of deep U.S. corporate tax cuts. If this passes, it will set off a global tax war and a race to the bottom that will repay their $300 billion corporate fine bill many times over.

All told, then, it is not really surprising that U.S. multinational corporations and bank profits, stock market valuations, and political influence are now at record highs. Decades ago they declared a class war; now they may have finally won it.

Asleep at the Switch

As this author and others have noted, one predictable result of all this increased corporate power was a corporate crime wave. That, in turn, created enormous pressures on the U.S. law enforcement system’s conventional approach to tackling corporate crime.

Ever since U.S. courts recognized “corporate crimes” as prosecutable in the early 20^th century, this system has relied on the same procedures as those for individual crimes. Since they are to some extent public entities, one would hope that a higher standard of conduct might apply to them—and for a time, in various ways, it did. But they now enjoy the full privileges of individual protections like the presumption of innocence and freedom from unreasonable search and seizure.

Of course the prosecutorial system was never perfect. Responsibility has long been scattered across multiple Federal agencies like the Department of Justice, the SEC, the Postal Service, and the IRS, and loosely divided among 50 publicity seeking U.S. Attorneys. For decades, prosecutors, FBI agents, and other investigators who specialize in corporate crimes have struggled to compete for resources with the latest crimes du jour—terrorism, cybercrime, drugs, and street gangs. The Federal judiciary’s support for prosecutorial tactics has also varied significantly over time. Moreover, corporations have long had relatively deep pockets, a full panoply of stalling tactics and creative defenses, and access to the best “white collar” criminal defense attorneys money can buy—much of it hand-trained by the Justice Department itself.

However, it is now clear that in the past decade, even as all available evidence indicates that corporate financial chicanery was exploding, this system became weaker than ever. For example, as of 2017, the number of “white collar” criminal prosecutions and convictions is at the lowest level in 22 years. Indeed, during Trump’s first year, so far, there have only been about 6,000 Federal white-collar criminal prosecutions of all kinds—a 46 percent drop from their 1995 total (10,913), and just 6 percent of total Federal criminal prosecutions. Bank fraud cases will account for only 8 percent of all Federal white-collar crime prosecutions.

It is important to note that this negative trend is not peculiar to the Trump Justice Department. Under the Obama Administration, Federal white-collar criminal prosecutions peaked in 2011 at 10,100, and then fell dramatically to 6,240 in 2016. Bank fraud cases accounted for less than 6-8 percent of all white-collar crime cases during this period—which, in turn, accounted for just 5-6 percent of all Obama Justice Department criminal prosecutions.

All this is a little hard to square with the undeniable existence of a corporate crime wave. Similar trends have also recently been observed in the United Kingdom. So what’s going on? Have prosecutors simply been abandoning the field to the enemy? Are they short of resources, relative to their opponents’ new tactics and skills? Or, like Pogo, have they met the enemy, only to find that “he is us?”

This is the question at the center of Jesse Eisinger’s new book, The Chickenshit Club. Eisinger is a veteran financial journalist with a 20-year career at publications like the Wall Street Journal and ProPublica. This book, his first, has already earned him a Pulitzer.

To begin with, even apart from any other merits or faults, Eisinger certainly deserves credit for tackling this great puzzle head-on and spending years in the equivalent of the legal mortuary to bring so many sordid details to light. He is hardly the first to have done so, but this book is a useful addition to getting at the key question: Why is it that at a time of record corporate crime of all kinds—especially big-ticket securities fraud and all sorts of other misbehavior by the world’s largest financial institutions—did the entire U.S. law enforcement system for prosecuting such crimes basically drop the ball?

More specifically, why did George W. Bush and especially Barack Obama underperform George H.W. Bush during the Savings & Loan banking crisis of the 1980s, when there were 30,000 criminal referrals and 1,000 felony convictions, including 600 bankers and 300 savings and loans? As Professor William Black noted in his 2013 interview with Bill Moyers on this subject, under the George W. Bush and Barack Obama Administrations, financial regulators like the Federal Reserve produced zero criminal referrals, and zero senior bankers at major Wall Street institutions went to jail. (The complete omission of Professor Black from Eisinger’s index is puzzling, given his well-known authority on the subject.)

To tackle this question, Eisinger invites us to join him on a kind of guided tour of high-profile “white collar” crime cases since the 1980s, complete with family portraits of leading prosecutors, judges, and whistleblowers. He’s been immersed in this story for years, and his account, while voluminous, is methodical. He also waited just long enough to publish so that he is able to tell a complete story of the Obama Administration’s prosecutorial dropped ball.

What we get is not Gibbon’s Decline and Fall of the Roman Empire. Eisenger’s prose does not sparkle, but then again this is a book about long-time lawyers and corporate crooks: They do not inspire sparklers. If one wants a quick dive, certain chapters, like chapter ten on Wall Street law firms and chapters seven, 12, and 13 on the failed KPMG, Lehman, and Goldman investigations, are especially pointed.

Among Eisinger’s most interesting findings:

The Rotary Club. After 30 years of soaring corporate crime, we do not just have a “revolving door” at the Department of Justice; we have a stairway to heaven. Especially since the early 1990s, when the “white collar” defense industry started to boom, it became the norm for virtually every single senior official at the Justice Department and many experienced U.S. prosecutors to rotate back and forth between $150,000 positions at Justice and $3-$4 million partnerships at major Wall Street and DC firms. The most prominent rotations include:

Of course, according to these self-same former officials—Lanny Breuer for example, now returned to serve as Covington & Burling’s Vice Chair—this kind of lucrative circulatory system is absolutely essential to providing the Justice Department with access to the very “best and brightest” lawyers—even if they do say so themselves.

On the other hand, this kind of self-serving argument is easily exaggerated. First, apparently we are able to do without this Justice Department “Chickenshit/Rotary Club” for criminal prosecutions that do not involve “white collar” defendants—since there is no “revolving door” for attorneys who handle those kinds of cases. Second, this clubby system has almost certainly contributed to the rise of “we happy few” cronyism and intrinsic conflicts of interest on the part of the white-collar criminal defense bar. That, in turn, has helped to proliferate “deferred prosecution agreements,” corporate fines as a substitute for jail or corporate sanctions, and the Justice Department’s growing tendency (one of Eisinger’s key themes) to settle cases rather than to litigate them.

Furthermore, we really don’t have to speculate about this. We just have to study the illustrious careers of prosecutors like Stanley Sporkin and Robert Morgenthau, as described by Eisinger. This allows us to imagine a very different career path for U.S. white-collar prosecutors—a dedicated unit of elite government prosecutors with abundant resources, decent salaries, and the most important long-term reward of all: the sheer satisfaction of winning critical cases against major felons.

Fumbling on the Goal Line. The Obama Administration emerges from Eisinger’s tale with far more egg on its face than either of the Bush Administrations. Bill Clinton’s Administration is barely mentioned. (This may be partly because the giant corporate frauds of the 2000s were just getting started. But the involvement of Attorney General Holder and perhaps former White House counsel/Assistant Attorney General Lanny Breuer in the dodgy 2001 pardon of Marc Rich certainly deserved a mention.) Of course the relatively aggressive approach taken by George W. Bush’s Justice Department under Deputy Attorney General Larry Thompson and Assistant Attorney General Michael Chertoff to the prosecutions of Enron, PNC Bank, AIG, and KPMG probably did set the stage for an untimely “backlash” by the corporate defense bar in 2007–08, as Eisinger puts it.

But it is also clear from the long-term track record right through 2016 that something more fundamental was going on. Time and again, Attorney General Holder and Assistant Attorney General Breuer, as well as their successors Loretta Lynch and Leslie Caldwell, respectively, decided to settle for corporate fines and “deferred prosecution agreements” rather than tougher corporate sanctions, let alone jail time for key executives. At the time, the “record billion-dollar fines” looked good on paper, and helped the Justice Department pay its bills. But from the standpoint of serious deterrence, these settlements were paper tigers.

They Really Did It. Whatever the reasons for the Obama Justice Department’s “George B. McClellan” type generalship, as Eisinger puts it, it was certainly not the absence of indictable corporate crimes. As Eisinger makes clear, Obama’s Justice Department turned a blind eye to abundant evidence of grotesque culpability at the highest levels, not only at the usual suspects like Bear Stearns, Lehman Brothers, Merrill Lynch, and AIG, but also at Wall Street’s most hallowed institutions—especially Goldman Sachs and JP Morgan. One can almost hear the SEC’s former chief prosecutor Stanley Sporkin, a law-and-order Republican, rising up from his grave, shouting, “Where the hell are the rachmones and sechel?”—that’s compassion and common sense for those unsure of their Yiddish.

This failure to prosecute these giant Wall Street firms to the hilt for helping to produce the largest global financial crisis since the 1930s was no mere technical foul. By helping to discredit Hillary Clinton for her—in retrospect—really quite modest but ill-considered associations with Wall Street, it set the stage for Donald Trump’s surprising 2016 victory. It is also hard to imagine Trump being able to do a compete U-turn and hand over his entire economic policy to a team of 14 senior “revolvers” from Goldman—including Gary D. Cohn, its President from 2006 through 2017, right through the financial crisis—if Goldman Sachs had gotten its just deserts.

Overall, then, Eisinger gives us a helpful, comprehensive account of the long-term deterioration of the U.S. criminal justice system with respect to prosecuting corporate crime. At the end of the day, however, he does not really nail down the answer to his puzzle. His tell-all journalist approach is at its best in chronicling the epic battles by the handful of “heroic” prosecutorial risk-takers. To the extent there are true heroes in this dark tale, they include not only better-known champions of tough prosecution like Stanley Sporkin and Senator Carl Levin, but also several lesser-known figures who also deserve to be remembered, like Judge Jeff Rakoff, James Kidney, and Justin Weddle. There’s no doubt that in any given situation, individual initiative and risk-taking can make the difference in the prosecutorial world.

Ultimately, however, Eisinger gives us a kind of morality play, a heroic tale of a comparative handful of quixotic prosecutors who were willing to take risks to avoid membership in James Comey’s “Chickenshit Club.” Ultimately, they lost out to the far more numerous self-seekers who were in it just to check some boxes on the cv, score some publicity, settle a few big cases, and get back to their private practices.

So this quixotic tale doesn’t quite do it. We get a hint at the fundamental difficulty in Chapter Three, where Eisinger provides a lengthy discussion of the history of “white collar” criminal prosecutions, but misses the main point. As we have argued here, the whole notion of “white collar crime” is really a sugarcoated placebo, a subtle diversion from the real problem. The problem is not a crime wave that was launched by thousands of detached solo proprietors or independent contractors. “White-collar crime” is a euphemism for corporate crime—in particular, the blinding fact that since the 1990s, many of our largest financial corporations, as well as many multinational corporations, have become involved up to their eyeballs in serial enterprise-wide criminality—mortgage fraud, securities fraud, money laundering, tax dodging, price fixing, bribery, and a host of other financial crimes.

To concoct, organize, administer, and conceal all this shameful activity, and then escape real hard-time prosecution for it, they had the able assistance of the country’s very best brains at its most prominent accounting firms and law firms. Indeed, even while all this was going on, many of their lead partners were occupying critical revolving-door positions in the very Federal agencies that were supposed to regulate and prosecute.

This is the structural problem at core of the puzzle addressed by Eisinger. It is not a problem that will yield to quixotic risk-taking by this or that heroic individual beavering away at the heart of this heartless system. Putting new Sporkins on the same old treadmill and encouraging them to take risks and work harder is not going to do it. The whole system of essentially lawless, organized corporate irresponsibility is broken. We need another one. Anything less is an imaginary solution to a real contradiction.