Financial Fraud

Today’s lead story in The New York Times was titled, “Financial Fraud Rises as Target for Prosecutors.” The article predicted a slew of prosecutions of loan processors, mortgage brokers and bank officials and detailed actions in several states as well as a plan for increased enforcement by President Obama.

While financial fraud is despicable, and leaves many innocent victims whose life savings have been wiped out, it’s important to maintain some perspective. There are many legitimate executives in these industries, and while they should be held to a strict standard, it is patently unfair to react to the crimes of a small number by placing everyone at increased risk.

The mortgage industry is no different from other fields where a small number of bad apples give everyone else a bad name. Politics comes to mind. So does plumbing.

It may be a little extreme, but in the French Revolution a similar wave of emotion swept the land, and all the nobles were led off to the guillotine. Justice in the United States has been noteworthy because of its fair and impartial rule of law, a rule supposed to affect everyone equally. Everyone is entitled to answer the charges against them and receive a trial by their peers.

So while many people would cheer at the thought of financial executives being led off in handcuffs, that’s not the way things should work in the United States.