the hunt continues (or, witches in pinstriped suits)

The most acerbic of the anti-banker hysteria is over, but that doesn't mean we wont kick a financier when they're down (provided we can find them).

I argue in an upcoming article in DramaBiz Magazine (Dancing for the Medicis -- will post the pub date when I know it) that theater artists should hesitate to join in the populist hatred of bankers because corporate giving constitutes a large share of artistic budgets. (To know thy enemy is good, but to know thy funding source--divine.)

Today the Economist reported on its website that there is a sharp rise in financial crime in the United States:

OVER 730,000 counts of suspected financial wrong[d]oing were recorded in America last year, according to recent data from the Treasury Department's Financial Crimes Enforcement Network. Institutions such as banks, insurers and casinos are required by law to report suspicious activities to federal authorities under 20 categories. Financial institutions filed nearly 13% more reports of fraud compared with 2007, accounting for almost half of the increase in total filings. The number of mortgage frauds alone rose by 23% to almost 65,000. But not all categories saw an increase: incidents [of] suspected terrorist financing fell. Just under half of all filings are related to money laundering, a proportion that is little changed in over a decade.

(They've got a handy chart as well.) This brought to mind John Kenneth Galbraith's 1955 book The Great Crash, 1929; he chronicles how, in the wake of the stock market's implosion, numerous instances of embezzlement came to light that had previously been overlooked. But there was no sudden surge in financial crime: throughout the 1920s everyone was getting rich--it was just that no one noticed (or cared) how that wealth was generated.

I suspect history is more or less repeating itself. Now, are people resorting to crime because they're in desperate straits? Absolutely. Are cash-strapped homeowners being preyed upon by predators, in some cases the very same people who sold them subprime mortgages not too many years before? Again, yes. But it's the number of reports suspicious activity that's spiking -- any gains today are assumed to be ill-gotten. A few years ago, those same gains might not endure such scrutiny.

Suddenly, we're all checking over each other's shoulders with some healthy, if belated, skepticism. It happened in 1929, and it's happening again now.