کنترل کلاهبرداری ، قمار و آسیبهای اخلاقی: ارتکاب جرم توسط یقه سفیدها در بحران های پس انداز و وام

This paper reviews the relevant literature regarding the role of control fraud, or major frauds committed by controlling organizational insiders, in the savings and loan crisis. Using both economics and criminological concepts, it contrasts the claims made by “fraud minimalists” with those who saw fraud playing a significant role in the crisis. The paper concludes that the economics-based official history of the debacle that sees moral hazard and gambling for resurrection as responsible for major financial losses is not supported by the empirical data generated by criminological research.

The savings and loan crisis of the 1980s was one of the worst financial disasters of the 20th century, resulting in what were at the time, the largest financial losses in American history. By 1992, over 680 institutions around the country were insolvent, tens of thousands of criminal cases were referred to authorities, and the final resolution costs amounted to over $150 billion (Calavita et al., 1997). One of the more contentious issues that arose in the aftermath of the debacle was the role of fraud in producing these unprecedented losses. Numerous accounts of crime, especially expensive insider or control frauds, were brought to light in media accounts, government hearings and reports, and academic research. The debate continues as to the salience of white-collar crime in causing the size of the savings and loan crisis, relative to other structural economic factors related to regulation, deposit insurance, risk taking, managerial incompetence, and the like. The issue is still important, both nationally and globally, as it remains central to a comprehensive understanding of financial regulation and corporate governance upon which economic policies are ultimately based. The notion that fraud was overblown (or even used as a “cover up” to government incompetence) in the savings and loan crisis is commonly heard in economics and finance quarters. Honest thrift owners who desperately gambled to save their institutions and failed in doing so, along with moral hazard created by a combination of faulty regulation and deposit insurance comprise, to a large degree, the official record of the savings and loan debacle (NCFIRRE, 1993). Just as it would clearly be a mistake to assign too much weight to the role of fraud, it would also be a serious error to underestimate its prevalence. The major federally funded study on the savings and loan debacle and the response of the government contained a number of empirically supported findings regarding the nature and extent of fraud as well as other losses (Pontell et al., 1994a). First and foremost, it showed that crime and deliberate fraud were extensive in the thrift industry during the 1980s, thereby contributing to the collapse of hundreds of institutions and increasing the cost of the taxpayer bailout. This conclusion was supported by government hearings and data collected from numerous law enforcement and regulatory agencies. It also documented that the dramatic deregulation of the thrift industry in the early 1980s coupled with an increase in deposit insurance were key elements of a criminogenic industry environment that was clearly conducive to fraud. These two policy changes are repeatedly cited in almost all historical accounts as major factors that affected the ways in which thrifts could conduct business. In particular, the study notes that these changes in law increased the opportunities for fraud while decreasing the risks associated with fraud. It was also shown that thrift crimes typically involved networks of insiders, often in association with affiliated outsiders. Using primary statistical data, the research demonstrated how fraud was correlated with specific organizational characteristics at failed savings and loans. Institutions that were stock-owned, were less involved in the home mortgage market, and that undertook strategies that led to dramatic growth in assets – all of which were made possible by deregulation and increased deposit insurance – were the sites and vehicles for the most frequent, most costly, and most complex white-collar crimes. Regarding the government's response to the crisis, the research concluded that despite the urgency of this response and its unprecedented scale, its effectiveness was limited by the complex nature of these frauds, resource constraints, interagency coordination difficulties, and inherent structural dilemmas related to financial regulation. Despite this, a relatively high proportion of hundreds of defendants who were formally charged in major thrift cases were convicted (91%), and of those, a significant proportion (78%) received prison sentences. The study also found that these offenders, despite the fact that their crimes involved relatively large dollar losses, received relatively short prison sentences compared with those convicted of other federal offences. Finally, the research showed that significant amounts of fraud went undetected and a large proportion of individuals suspected of major thrift offences were never prosecuted due to limited enforcement capacity. All of these findings and issues speak directly to the amount of fraud that eventually became part of the official record of the S&L crisis. One high-ranking official put the enforcement response to the S&L crisis in keen perspective when he compared its extraordinary financial damage to a massive environmental disaster, too enormous to be cleaned up effectively: “I feel like it's the Alaskan oil spill. I feel like I’m out here with a roll of paper towels. The task is so huge, and what I’m worrying about is where can I get some more paper towels? I stand out there with my roll and I look at a sea of oil coming at me, and it's so colossal!” (Pontell et al., 1994b:400). Some have gone so far to claim in fact, that the financial losses that are directly attributable to white-collar crimes that were discovered and recorded in official statistics on the S&L crisis represent only “the tip of the iceberg” (Rosoff et al., 2002, p. 279). Finally, some government reports estimated that fraud played a central role in 70–80% of all thrift failures (GAO, 1989). A research study by economists Akerloff and Romer (1993) found that deliberate insider looting of institutions accounted for 21% of government resolution costs, and that this was “likely to be an underestimate” of this single type of crime in the debacle. Some regulators claimed that when indirect and direct costs of fraud were considered that they would add up to virtually 100% of resolution costs.1 In contrast to these views regarding the role of material fraud in the S&L debacle, others claim that fraud costs were minimal, exaggerated by the press, enforcement personnel and others who were looking to find scapegoats for the government's own mishandling of the problems that beset the industry. Made up mostly of economists and thrift industry consultants, these individuals claim that fraud did not play a material role in the crisis, and that it had only minor effects at best. Factors such as falling oil prices, the collapse of the Texas real estate market, and excessive – but not illegal – risk taking and mismanagement were the primary sources of insolvencies and the resulting costs to government and taxpayers (Ely, 1990 and White, 1991). Noted economist Lawrence White (1991) devotes less than three pages of his book on the crisis to fraud and crime, and claims that the “fraud factor” was greatly exaggerated in popular depictions of the debacle. His argument reflects what could be considered as the conventional economic wisdom on the subject. “The bulk of the insolvent thrifts’ problems … did not stem from … fraudulent or criminal activities. These thrifts largely failed because of an amalgam of deliberately high-risk strategies, poor business judgments …, excessive optimism, and sloppy and careless underwriting, compounded by deteriorating real estate markets” (1991, p. 117, emphasis in the original). Following the introduction of the term white-collar crime by Edwin Sutherland (1945) over a half-century ago, social scientists entered a similar debate. Sociologist/lawyer Paul Tappan dubbed the term loose, invective, and doctrinaire, and argued that criminologists should confine themselves to the study of those who have been adjudicated by the legal system and found guilty of a particular offence. He argued further, “White-collar crime is the conduct of one who wears a white-collar who indulges in occupational behavior to which some particular criminologist takes exception” (Tappan, 1947, p. 99). Not relying on the criminal justice system to decide this, he claimed, would allow value judgments to dominate social inquiry on the topic. Sutherland's responded to this charge by emphasizing that if studies were grounded in the well-documented biases of the criminal justice system, that researchers would simply replicate them in their analyses, and lose all claims to science. More recently, Geis (1992, p. 36) notes, “Sutherland got much the better of the debate by arguing that it was what the person had actually done in terms of the mandate of the … law, not on how the criminal justice system responded to what they had done, that was essential to whether they should be regarded as criminal offenders.” This particular issue is relevant to answering the question of how much fraud – especially “control fraud” (Black, 2001) committed by controlling insiders – played a role in the S&L debacle. Should estimates be based simply upon adjudicated cases and corresponding dollar losses? Or are there other considerations and data that can provide more accurate answers? This paper will explore these questions through an examination of conceptual issues and research conducted on the S&L debacle and the role played by material fraud, including control fraud, whereby those who controlled financial institutions used them to profit personally, and, at the same time, dragged them into insolvency. Much of the debate between those who see moral hazard present in the S&L crisis, brought on by economic circumstances combined with ineffective regulation and deposit insurance which led thrift owners to (legally) gamble for resurrection, and those who see fraudsters taking advantage of the situation (illegally) revolves not only around the issue of actual criminal adjudication, but of the intent of those involved in the complex financial deals that were found in the largest insolvencies. That is, even if the fraud minimalists grant that criminal adjudication provides an erroneous measure of the extent of thrift fraud, they can still effectively argue that the deals that thrifts entered into and which caused mass insolvency and losses in the industry do not necessarily represent fraud, but rather honest thrift owners acting as rational economic actors faced with extreme moral hazard who were desperately gambling in a vain attempt to save their institutions. The “gambling for resurrection” model represents the conventional economic wisdom regarding the catastrophic losses resulting from the S&L crisis, and in large part, the official history of the debacle. A review of previous studies will show that this viewpoint, absent of any specific data to the contrary, is in error. It must also be emphasized that the argument is well taken that fraud did not cause the economic or regulatory environments within which the debacle took place. The economic environment resulted largely from social structural forces, while the regulatory environment was due to a mix of political ideology, heavy lobbying by the thrift industry, and disastrous public policy choices which were based on the prevailing politics and economic wisdom of the era. None of these factors necessarily imply, as fraud minimalists have argued, that fraud, and more specifically, control fraud, did not play a significant role in producing the largest government bailout in history. On the contrary, there is much evidence that indicates that the inattention to control fraud and effective regulation in such policy-making allowed fraud to proliferate throughout the industry and concentrate in particular institutions that underwent massive insolvencies during the crisis.

Indeed, it is often extraordinarily difficult to distinguish white-collar crime, and especially control fraud from ordinary business transactions. As the well-known British criminologist, Levi (1984, p. 322) notes: “Since the aim of the more sophisticated fraudster is to manufacture the appearance of an ordinary business loss or at worst, of the ‘slippery slope’ rather than deliberate fraud … the actual allocation of any given business ‘failure’ to any of these categories is highly problematic.” The record of the S&L cleanup that has been documented in numerous reports and academic studies has shown just how difficult that task can be, especially in regard to the prosecution of complex financial frauds following the largest government bailout in history. The difficulties inherent in responding to a sudden and dramatic influx of complex white-collar cases that caused severe strains in the criminal justice system's existing capacity to process cases has been well documented elsewhere (Pontell et al., 1994b). Such limited response produces official statistics that cannot accurately portray the extent and nature of fraud that was present in the S&L crisis. Yet, minimal fraud proponents continue to maintain that excessive risk taking and rational economic behavior within the context of “moral hazard” and poor business judgments and mismanagement were at the root of the S&L crisis. They provide little empirical evidence that fraud played a relatively minor role other than citing the relatively low number of convicted offenders. This brings us right back to Tappan's insistence that the search for the “true” level of crime must be guided by official definitions and criminal convictions. While minimal fraud proponents appear to take this view, most criminologists who study white-collar crime have abandoned it for the scientific reasons noted earlier. Given the evidence compiled by researchers, individual case studies, regional studies, and from the investigative front, it is quite clear that much fraud remained shielded behind complex business transactions that were designed to hide it. As additional research has shown, the volume of such complex cases overwhelmed prosecutorial resources, necessitating declines in criminal cases, and the charging of only the most visible and easily prosecuted schemes, rather than the most complex and costly ones. The history of fraud in the S&L debacle as reflected in official statistics in no way truly represents the role of crime in the disaster. Indeed, there is every indication, that it dramatically under represents it. There are also examples of other financial debacles where the existence of control fraud has been downplayed or ignored altogether, as in the 1994 Orange County, California bankruptcy, which was the largest municipal failure in history with financial losses totaling approximately $2 billion dollars. The once fabled county investment pool, which had produced spectacular returns for years, and which was run by the County Treasurer with virtually no oversight from the Board of Supervisors had taken a nosedive in value that exposed the fact that the county had engaged in reckless gambling with public funds largely with the help of the brokerage house of Merrill Lynch (Will et al., 1998). While there was no evidence of personal financial benefit or embezzlement, the treasurer pled guilty to six counts of fraud, including the misappropriation of public funds, and making false material statements in connection with the sale of securities. The Assistant Treasurer was found guilty of similar crimes. Many others might have been indicted, and numerous civil sanctions were applied. The incredible lack of oversight exposed by the bankruptcy along with the essential control fraud that allowed for the size of the debacle provide important lessons for municipal finance. Yet, many economists and finance experts, just as in the case of the S&L scandal, preferred not to label such activities as “real” crimes. For example, in characterizing the bankruptcy, the dean of the business school at a well-known local university described the county as “a living laboratory of financial mismanagement and government ineptitude—if not outright irresponsibility (Rosoff et al., 2002, p. 471).” This is certainly not a flattering depiction, but mismanagement, ineptitude, and irresponsibility are not crimes. Fraud, however, is a crime, and fraud is what the treasurer pled guilty to. Similarly, as if to completely deny the significant role of white-collar crime in the worst government bankruptcy ever, the first academic book on the collapse (written by a professor of finance), which focuses on the treasurer (after his criminal conviction) and his ill-fated derivatives, does not even mention the terms “crime” or “fraud” nor acknowledge their significance in the bankruptcy (2002, p. 471). Such lenient analysis sees financial wrongdoings as a consequence of the “risky business” present in everyday financial transactions. Given the strong evidence to the contrary, this viewpoint is at best incomplete and potentially misleading; at worst it can form the basis of misguided and highly destructive public policy. That is, if it were not for control fraud (and not merely “risky business”), the resulting unprecedented fiscal and social losses could never have occurred. A concerted failure to consider control fraud as an outcome of even the best-intended regulatory policies, regardless of their actual beneficial or negative effects, can clearly lead to catastrophic financial debacles. Moreover, such failure will surely encourage those seeking to take advantage in two major ways. First, the fact that there are no effective watchdogs or market mechanisms to prevent control fraud from occurring allows rational actors to literally do whatever they want, which includes engaging in various crimes. One only needs to examine the rogue galleries of the S&L crisis and the recent corporate scandals as proof of this point. Second, the failure to recognize the possibilities for fraud, especially insider looting and control frauds until a debacle is well underway also acts to encourage its growth, as formal control systems will be overwhelmed by massive workloads, and perpetrators will be able to escape the vast bulk of legal sanctions because of resulting strains in criminal justice system capacity, i.e., lowered certainty, swiftness and severity of criminal punishment as well as civil and administrative actions. This, of course is true of common crime as well, and the phenomenon has been empirically demonstrated in terms of the system capacity model of criminal justice, but is exacerbated in the case of white-collar crimes given the legal complexities and intricacies involved, the legal resources of perpetrators whether they be individuals or organizations, and the hidden nature of the crimes themselves. Thus, the major tenets of deterrence and prevention are essentially denied, if not in theory, than certainly by practice. The legal system simply cannot respond effectively to massive waves of fraud. Moral hazard was certainly present in the S&L debacle, largely through the adverse incentives created by deposit insurance. It was exacerbated by a lethal combination of political ideology, ambition and corruption, and intense lobbying by the thrift industry, all of which occurred within the context of the accepted economic wisdom of the day. That wisdom ignored the possibility of fraud, especially control frauds. It appears that little was learned from the savings and loan debacle about the dangers of fraud and how it needs to be considered explicitly in both theory and policy. Such minimalist thinking about the role of fraud in financial markets also helped produce the corporate meltdowns that devastated U.S. and worldwide markets in 2002. While moral hazard may have been critical, “gambling for resurrection” was not primarily responsible for the worst S&L failures. On the contrary, analyses of failed thrifts have shown that fraud played a material role in the largest insolvencies. In particular, the ability to grow rapidly using assets that had no clear market value and that could produce phony income was the key—as a new fusion of economists and criminologists later concluded. Any reform proposals, whether they are directed at deposit insurance, financial institutions, accounting, or corporate governance cannot assume away the problems of assets that have no clear values, accounting abuses, or control frauds.