Every time this question of “bankslaughter” (criminalizing bank failure, basically) comes up, someone usually chimes in and suggests that such a law should also apply to Congressmen who pass bad laws.
At first this just seems like a funny retort, but really, what’s wrong with this suggestion?
Theoretically, the case for criminalizing bank failure (oh, sorry, taking risks that in retrospect “reasonable” bankers would’ve recognised as being too dangerous) is that the actions of bankers can have a huge negative affect on society as a whole, and that the threat of jail time would encourage them to make better decisions.
When we suggested that doing so would essentially be penalising executives randomly — letting those who took big risks off simply because their bets didn’t blow up — James Kwak at Baseline Scenario likened it to vehicular manslaughter. 10 cars can make an illegal turn, but we go after the driver who plowed into a pedestrian and killed them, not the others. C’est la vie.
Anyway, that too could be applied to lawmakers, who not only pass stupid laws all the time, but are given ample warning by experts that the laws could backfire.
And unlike, say, the financial market damage caused by AIG or whoever — which might’ve avoided by a risk-averse investor, the effect of bad laws can’t often be avoided by anyone in the land. Every citizen is potentially affected.
Should we consider imprisoning Congressman who vote the wrong way on such laws as
- Glass Steagal repealmant.
- Not reining in Fannie and Freddie.
- Letting banks keep off-balance sheet vehicles, even while cracking down on them in other industries.
- Voting to deregulate the derivatives market.
- Supporting ethanol and other deadly farm subisidies.
And on and on and on and on…
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