If ‘Stop and Frisk’ Is Such an Effective Tactic, Why Not Use an Electronic Version on Potentially Corrupt Bank CEOs?

Stop and Frisk is the police tactic whereby persons arousing police suspicions are stopped, questioned, searched for weapons and contraband, and arrested if any are found. Supporters of Stop and Frisk claim this tactic has reduced crime. So why not implement an electronic version to reduce crime by financial institutions?

In NYC in recent years, the number of people subjected to Stop and Frisk equaled as much as 8 percent of the population, and only about 10 percent of that group was found to be doing anything illegal. Further, even persons with no contraband can be arrested under Stop and Frisk if, for example, they refuse to be searched.

A general principle of common law is that: “It is better that ten guilty persons escape than that one innocent suffer.” The ratios achieved with Stop and Frisk are the reverse — at most one guilty person is caught, while nine innocents suffer the indignity of being stopped.

Under the Fourth Amendment to the U.S. Constitution, Americans are protected from unreasonable search. Therefore, police may only conduct Stop and Frisk based on reasonable suspicion. Now, either more residents of NYC have gotten suspicious-looking, or the NYC Police Department (NYPD) has become increasingly suspicious of the people it encounters. Between 2002 and 2012, the number of Stop and Frisks more than quadrupled, with a growth rate of over 15 percent per year. About 90 percent of the people stopped were black and Latino. So in 2011, about 12 percent of NYC’s black and Latino population was subjected to Stop and Frisk – but only about 2 percent of NYC’s white population.

Opponents have expressed doubts about the actual effectiveness of Stop and Frisk in reducing crime. NYC Mayor Bloomberg and NYPD Commissioner Kelly, however, are among its strongest proponents. They believe it prevents crime and saves lives by deterring criminals from carrying illegal weapons, making it easier to obtain convictions and preventing some crimes from occurring. Supporters argue that if you aren’t doing anything wrong, you shouldn’t object to being Stopped and Frisked.

NYC crime rates have declined over the course of the Bloomberg administration. However, causality (identifying what contributed most to the decline) is difficult to determine. Let’s assume, for the moment, that Stop and Frisk is actually effective as a crime-fighting tactic. Doesn’t that imply we should consider using similarly aggressive techniques to fight other types of crime, such as financial crime?

It’s estimated that the 2008 financial crisis cost over $6 trillion. In 2009 alone, it’s believed that an additional 5,000 people committed suicide due to the financial crisis and resulting unemployment. And based on the numerous investigations, guilty pleas and fines paid — significant elements of the financial crisis resulted from malfeasance by senior bank officers.

Given the serious impact of financial crime, why not subject the top officers, of the largest financial institutions, to Electronic Stop and Frisk? For these 3,000 or so people, the police/FBI/regulatory agencies would have complete access (just based on suspicion, without needing a warrant) to all their e-mails (personal and corporate), all their phone calls (personal and corporate), and so on — the electronic equivalent of a physical Stop and Frisk.

For example, Rajat Gupta (a member of the Board of Directors of Goldman, Sachs) was convicted of insider trading — but his malfeasance was discovered only by accident. If the authorities could record all conversations of bank officers and board members without the annoyance of going to court to get warrants, imagine how much easier it would be to obtain convictions. And, if these individuals have nothing to hide, they shouldn’t object to the government recording their phone calls.

To eliminate any doubts as to legality, executives at Federally-insured and supported financial institutions would sign waivers granting the government access to all their phone calls, e-mails, and so on (in effect waiving their Fourth Amendment rights as a condition of their employment). Executives refusing to waive these rights would be fired (or not hired). If this seems draconian, recall that innocent New Yorkers who refuse to be Stopped and Frisked — risk arrest and jail.

Arguably, Electronic Stop and Frisk should deter financial crime, make it easier to get convictions, and allow the authorities to prevent some financial crimes from happening. If you believe in the efficacy of physical Stop and Frisk, experimenting with applying Electronic Stop and Frisk to financial institutions would be a logical extension.

Strangely, the proponents of physical Stop and Frisk (imposed upon ordinary citizens) haven’t advocated applying this sort of tactic to highly paid executives at financial institutions. In fact, the conservative commentators who support Stop and Frisk are often the most vociferous defenders of the rights of our richest citizens.

So, if the civil rights of wealthy financial institution executives are sacrosanct and non-negotiable, shouldn’t that also be true for ordinary people on the streets of America’s cities? After all, this is America and we’re all equal in the eyes of the law — aren’t we?

Note: Stop and Frisk statistics are from NY Civil Liberties Union and NYPD, population statistics on NYC are from U.S. Census Bureau. For advice about what you should do if subjected to Stop and Frisk, see The NY Civil Liberties Union publication: What To Do If You’re Stopped By The Police.

Steven Strauss is an adjunct lecturer in public policy at Harvard’s Kennedy School of Government. Immediately prior to Harvard, he was founding Managing Director of the Center for Economic Transformation at the New York City Economic Development Corporation. Steven was one of the NYC leads for Applied Sciences NYC (Mayor Bloomberg’s plan to build several new engineering and innovation centers in NYC), NYC BigApps and many other initiatives to foster job growth, innovation and entrepreneurship. In 2010, Steven was selected as a member of the Silicon Alley 100 in NYC. He has a Ph.D. in Management from Yale University, and over 20 years’ private sector work experience. Geographically, Steven has worked in the U.S., Asia, Europe and the Middle East. You can follow him on Twitter at: @Steven_Strauss

This piece is cross-posted from The Huffington Post with permission.

One Response to "If ‘Stop and Frisk’ Is Such an Effective Tactic, Why Not Use an Electronic Version on Potentially Corrupt Bank CEOs?"

  1. retiredCFOguy   November 11, 2013 at 1:32 am

    Sigh.

    One hopes professor Strauss really does understand the difference between Stop & Search & financial supervision: assuming his numbers are correct, they are certainly incomplete: NYC officials claim Stop & Search has saved thousands of (primarily minority) lives.

    In any event, the financial equivalent of “Stop & Search” is already a part of every financial institution CEO’s daily job – it’s called regulation. Thousands of Federal and state regulators (not to mention external auditors…) crawl all over financial institutions without ever worrying about “probable cause”. Crafty bankers simply provide campaign contributions to reduce the political will to regulate (eg: Barny Frank)…and, as professor Strauss points out, $6 trillion of damage resulted.