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The Editors

A Better Approach to Fighting White-Collar Crime

Holding individuals responsible could prove a lot more effective than fines.

Companies consist of people.

Companies consist of people.

Photographer: Nicky Loh/Bloomberg

U.S. authorities have lately been taking steps against Wall Street misbehavior, perhaps seeking to respond to criticism that they have been slow to prosecute white-collar crime. Their settlements with two of the country’s largest financial institutions bear many similarities to deals struck in recent years — arrangements that haven’t done enough to deter bad actors. But there are also some encouraging differences.

Companies can’t commit crimes unless people do, so you’d expect holding individuals rather than entire enterprises responsible to be the norm. Lately, that hasn’t been true. Although common after earlier debacles such as the savings-and-loan bust of the 1980s and the accounting scandals of the early 2000s, charges or serious sanctions against individuals have more recently been rare. Rather than doing the hard work of building cases against the people who actually commit the crimes, the Justice Department has preferred to hit up companies for headline-generating monetary settlements.