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The Divide

American Injustice in the Age of the Wealth Gap

By Matt Taibbi
16-minute read
The Divide: American Injustice in the Age of the Wealth Gap by Matt Taibbi

The Divide looks at income inequality in the US, explaining how it impacts society and the justice system. Sadly, poverty is effectively criminnalized while the rich enjoy preferential treatment.

  • Anyone interested in social justice and fairness in the legal system
  • Anyone aspiring to work in the legal system
  • Anyone who has been or knows someone who has been abused by the justice system

Matt Taibbi is an award-winning American author and journalist. He became well-known as a financial journalist for his controversial reporting during the economic crisis. He is currently a contributing editor at Rolling Stone.

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The Divide

American Injustice in the Age of the Wealth Gap

By Matt Taibbi
  • Read in 16 minutes
  • Contains 10 key ideas
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The Divide: American Injustice in the Age of the Wealth Gap by Matt Taibbi
Synopsis

The Divide looks at income inequality in the US, explaining how it impacts society and the justice system. Sadly, poverty is effectively criminnalized while the rich enjoy preferential treatment.

Key idea 1 of 10

Even though the financial sector is responsible for many serious crimes, prosecution is extremely rare.

If you thought that US jails would be full of bankers after the 2008 global economic crash, you’d have been wrong. Despite their obvious responsibility for ruining the economy, very few bankers were brought to justice by the government.

Perhaps this seems strange. It’s even stranger when you consider the phenomenal cost of criminal activities in the financial sector, a.k.a. white-collar crime.

Roughly $4 trillion – 40 percent of the global economy – has been lost as a result of the recent financial crisis, and while we can’t know exactly how much of the deficit was a result of illegal activities, there’s no question that fraud played a huge role, especially in the mortgage industry.

For years, many profiteering banks like Washington Mutual simply gave out as much credit as possible without ever ensuring that their customers could actually afford the mortgages they were signing up for. These banks disregarded any moral or legal issues, leading to an enormous build up of unsustainable debt and eventually economic devastation.

So why haven’t these bankers been locked up? Because rather than prosecute anyone, the government has sought to control these crimes through expensive fines and agreements.

For example, in the 21 biggest mortgage-fraud cases of the crisis, record-breaking sums of $26 billion in fines have been shelled out by the government, but not a single banker involved was charged for his or her misconduct. Taking bankers to trial is not the government’s favored disciplinary strategy. Instead, the government prefers “deferred prosecution agreements,” where companies merely agree to future restrictions on their business activities, like not being allowed to gamble on the housing market anymore.

With no fear of prosecution, bankers and other financiers are left to take careless risks.

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