Wednesday, April 21, 2010

Another Breach in the Levee

One of the things that separates a thriving constitutional republic from a banana republic is that, in the former, the administration of justice generally isn’t a matter of scoring political points and settling political scores. This is an area of policy as to which the way things look is just as important as the way they really are; citizens can’t be expected to settle their disputes by deferring to public legal authorities that look like they’re in the business of helping political friends and hurting political enemies. That’s why it’s the job of judges and prosecutors not only to resist political impropriety, but to do their best not to project its appearance

Granted, there are instances where there’s no bright line between the even-handed administration of justice and partisan politics. There was no way, for instance, that the Supreme Court could have ruled in Bush v. Gore (the case about the Florida recount in the 2000 presidential election) without people on the losing side believing that they’d suffered a political hit job. It’s not often, however, that circumstances conspire to leave judges and prosecutors with no choice but to plunge headlong into a political thicket. Under normal circumstances, we expect responsible judges to do their best to avoid rendering politically charged decisions in the interest of maintaining the judicial system’s legitimacy. The same goes for prosecutors; we expect them, in their sound discretion, to avoid bringing cases that look like political vendettas or an effort to change public policy at the expense of a defendant who wasn’t given fair notice that his conduct was illegal.

In this respect, our legal system is like a reasonably designed flood-control-system; its levees keep the political waters at bay under normal circumstances, even if they can be overwhelmed by a hundred-year-storm like the 2000 election. One of the disturbing things about our recent politics is that the system is starting to spring leaks in its day-to-day operation. Did it look politically even-handed to you when: Alberto Gonzalez fired U.S. Attorneys who'd resisted filing politically inspired voter fraud cases; a politically connected Texas D.A. changed the national political landscape by prosecuting Tom DeLay under a controversial legal theory; the Justice Department (according to the court hearing the case) overzealously prosecuted Alaska Senator Ted Stevens in the heat of his reelection campaign; the Justice Department tried to bend the code of legal ethics out of shape to exact retribution from John Yoo for his legal opinions on coercive interrogations (on which I commented here)?

Seen in this light, Harvey Pitt’s observations about the SEC’s recent civil complaint against Goldman Sachs point to another breach in the levees:
“But to quote Jimmy Breslin, in suing Goldman Sachs, the SEC 'received immediate lacerations of the credibility.' This begs the question why, considering that this SEC litigation takes it places it hasn’t been before—

• challenging the premier firm of Goldman Sachs,

• about a synthetic derivative transaction,

• on which Goldman lost millions of dollars,

• where the parties were sophisticated and not in obvious need of SEC protection,

• after a year-and-a-half investigation,

• filed immediately after the President threatened vetoing financial reform legislation that doesn’t strongly regulate derivatives,

• and a few hours before release of the Inspector General’s Report on SEC inadequacies in attacking Alan Stanford’s Ponzi scheme,

• but apparently without giving Goldman advance notice of the filing,

• or exploring possible settlement, and

• splitting 3-2 along political lines in a major enforcement action.”
All of the bulleted points count as reasons why the SEC could have refrained responsibly from prosecuting a civil case against Goldman. The last, in particular, makes it look to a lot of people like Goldman is suffering collateral damage from an SEC campaign to strike a political blow against Republicans on the issue of financial regulation. From the little I know, I can’t tell whether the Commission’s three Democratic appointees decided unreasonably to prosecute Goldman or the two Republican appointees unreasonably withheld their consent. We’ll probably find out as the case proceeds. But I can’t help believing that our legal system is a little less legitimate than it was a few days ago because one or the other group abused its discretion.

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