We need a ‘Son of Sam’ law for corporations

David Berkowitz ("Son of Sam") Image via Wikipedia

Goldman spent years buying hundreds of thousands of subprime mortgages, many of them from some of the more unsavory lenders in the business, and packaging them into high-yield bonds. Now that the bottom has fallen out of that market, Goldman finds itself in a different role: as the big banker that takes homes away from folks such as the Beckers.

The couple alleges that Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender, even after they wrote to Goldman’s then-Chief Executive Henry Paulson — later U.S. Treasury secretary — in 2003.

via Goldman takes on new role: taking away people’s homes | McClatchy

Fortunately, the Beckers won what McClatchy calls a “David-and-Goliath struggle” when Goldman Sach’s subsidiary, MTGLQ Investors, dropped efforts to seize their house. However, “[b]y then, the college-educated couple had been reduced to shopping for canned goods at flea markets and selling used ceramic glass.”

Most people aren’t so lucky. A majority of Goldman subsidiaries continue to contain bondholder losses by foreclosing on properties and evicting delinquent borrowers. All the while, delinquent companies like Goldman get to merrily skip along, kicking people out of their hoses, while profiting from a tumultuous economy the corporation helped to destroy.

McClatchy observes that Goldman and other Wall Street firms are primarily responsible for people losing their homes.

Many of the families being put on the street never would’ve gotten their big mortgages if investment banks hadn’t provided a seemingly insatiable secondary market for millions of loans to marginally qualified buyers.

These loans were given supposedly bulletproof triple-A ratings, and yet the shysters who sold snake oil to millions of Americans not only go unpunished, but actually stand to gain from their crimes. Most recently, it was discovered that Goldman Sachs may receive a payment of $1 billion – while US taxpayers would lose $2.3 billion – now that embattled commercial lender CIT has filed for Chapter 11 bankruptcy protection.

Americans need protection from the unregulated, unethical practices of huge corporations like Goldman Sachs. An easy first step would be to make it illegal for corporations to profit from their crimes.

The first “Son of Sam” law was created in New York after the Son of Sam murders committed by serial killer David Berkowitz. It was enacted after widespread speculation about publishers offering large amounts of money for Berkowitz’s story. The law makes good sense. A convicted killer shouldn’t be permitted to profit from their crime. Such profiteering is unfair to the victims, and makes a mockery of the justice system.

Well, it’s unlikely that Goldman Sachs executives will ever see their day in court. However, a huge financial firm like Goldman, which helped to facilitate toxic mortgages that led to one of the worst economic catastrophes in US history, should not be allowed to now profit from those crimes.

The profiteering is made all the more nefarious because taxpayers continue to pay a disproportionate chunk of the bailout, while Goldman Sachs plans to double its 2008 bonuses this year by handing out $23 billion. Raw Story points out that $23 billion could send 460,000 students to Harvard, and buy insurance for 1.7 million families. It could also keep a lot of people in their homes.

Meanwhile, Goldman pays very little in taxes. In 2008, the company paid just $14 million in taxes worldwide, and paid $6 billion in 2007. The firm’s corporate tax rate is 1 percent. This kind of behavior would have made Berkowitz blush.

Most insultingly, there’s been chatter that Goldman plans to throw $1 billion at the nearest charity in order to deflect some of the criticism for its lavish bonuses. They must think very little of the American people if they seriously think that’s going to distract taxpayers from the fact that Goldman: 1) Helped tank the economy and 2) Now stands to profit from the chaotic aftermath.

Since the Son of Sam law is used to prevent serial killers from financially exploiting their crimes, it should also be used to stop a corporation from similar profiteering (in the case of corporations, we’re talking about the exploitation of millions of individuals). It just makes good sense.