Why Pick on Goldman?

By NOAH K

Frank Partnoy, a finance professor at the University of San Diego, writes in the FT of May 11 that the SEC has unfairly targeted Goldman Sachs for censure in an act of "misguided political theatre." For Partnoy, Goldman is being punished for its success. In his counter-factual, if everyone had taken the positions Goldman had on sub-prime, we wouldn't be in this mess. I'm no philosopher -- or economist -- but I'm not sure that such a counter-factual world exists in the realm of possibility. But the core of Partnoy's case is that the SEC is not doing its job, which is to protect "investors." By going after Goldman, the SEC is advocating for "European banks" instead of Joe Six-Pack. Never mind that Joe Six-Pack, if he's lucky, has his retirement tied up with the fortunes of some of these "European banks." What Partnoy and others no doubt are really mad about is Goldman being singled out.

So, is it legitimate for the government to prosecute selectively? Absolutely. The SEC is a law enforcement agency with limited resources with which to prosecute. They are bound to prosecute selectively, but what makes their selection legitimate is the discretion awarded to them in the law. Not that this discretion hasn't been challenged and circumscribed. For example, in 1996, the Supreme Court heard United States vs. Armstrong, et al. Christopher Armstrong and his co-respondents filed a motion for discovery or dismissal alleging that they were unfairly selected for prosecution on federal crack cocaine charges because they were black. The due-process and equal protection clauses of the Constitution are meant to protect against "invidious discrimination in the exercise of prosecutorial discrimination." In other words, there are limits on prosecutorial discretion. You can't prosecute somebody on the basis of race, for instance. But in the Armstrong case, the court ruled in favor of the government, confirming a broad, robust concept of prosecutorial discretion.

Targeting Goldman precisely because of their stature in order to deter other banks from similar misdeeds is entirely within the scope of prosecutorial discretion as confirmed in Armstrong. For Partnoy, "these government officials do not understand modern markets." On the other hand, his understanding of the law leaves something to be desired.

Jewish Kindergarten Attacked in Berlin

Police search the crime scene. The graffiti reads "[Get] out of here." (Spiegel)

Vandals defaced a Jewish kindergarten in Berlin with swastikas and antisemitic messages last Sunday. They also threw a smoke bomb into the building and apparently tried to set it on fire. The Chabad-run "Gan Yisrael" was unoccupied at the time. As of today, there are still no leads in the police's search for suspects (Berliner Morgenpost). However, most of the press has been reporting that the attack was carried out by neo-Nazis.

There has been a revival of Jewish life in Berlin over the past 5 years. The growth in infrastructure is due largely to the activities of Rabbi Josh Spinner, backed by the Ronald S. Lauder Foundation, on the one hand, and Chabad on the other. Spinner established a yeshiva in the eastern part of the city (Rykestrasse in Prenzlauer Berg), while Chabad has built a new synagogue, community center, and kindergarten in the west, not too far from the city's main traditional synagogue. They have been trying to meet as well as to stimulate the increased demand for Jewish religious life that has accompanied the immigration to Germany of Jews from the former Soviet Union since the early 1990s.

Neither the members of the yeshiva nor the Chabad rabbi, Rabbi Yehuda Teichtal and his shluhim (lit., "emissaries" - basically young interns) hide their Judaism. The Israeli rabbi of the traditional Joachimsthaler shul, Rabbi Yitzhak Ehrenberg also walks around Berlin as if he were in New York or Bnei Brak. Aside from staying true to what they would do in North America or Israel, the rabbis have been trying to inspire their congregants to be public about their Judaism. There is no doubt, however, that attacks such as the one on the kindergarten will make those few religious Jews who do wear kippot in public reconsider.

Unlike the rabbis, the young hazan (cantor) of the shul, who hails from Har Nof in Jerusalem, slightly adjusted his wardrobe (at least when I last saw him several years ago), opting for a beige stetson in favor of a black Borsalino.

Many, though not all, Jewish institutions in Berlin are protected by two security details. City police officers maintain a 24-hour presence in front of the community synagogues, while Israeli security guards monitor all those who want to enter, during regular hours. I am surprised that the kindergarten was not equipped with surveillance cameras at the least.

To my knowledge, the incident has not made the pages of Ha'aretz, but the Jerusalem Post carried a wire report on it last Monday. Deidre Berger, the director of the American Jewish Committee's Berlin Office, visited the kindergarten after the attack to express the organization's solidarity with the staff, parents, and children.

Racist Attacks up in Germany

(Source: Perry-Castaneda)

ADDENDUM: Two men in their mid-twenties from the town of Sangerhausen in Saxony-Anhalt have been indicted for their role in an arson attack on a facility housing applicants for political refugee status. The suspects, who are known neo-Nazis, threw three Molotov cocktails into an apartment in the facility early on Saturday morning. No one was hurt in the attack (SZ).

Last Friday afternoon, an Israeli and a Yemenite student, both in their twenties, were attacked by five men in a Magdeburg streetcar. The assailants pushed the victims and taunted them with racist slurs. One of them pulled a knife and threatened the students. However, the two were able to fend off the attackers, and the tram-driver alerted the police who arrested the five men, aged 35 to 46. They have been charged with sedition [Volksverhetzung, literally "incitement of the people"], uttering threats, and assault (Spiegel).

Magdeburg is a mid-sized city in the former East German Land of Saxony-Anhalt, which currently leads all other German Bundesländer in the number of hate crimes committed by right-wing extremists. In the statistics, Saxony-Anhalt is followed by three other former East German Bundesländer, Brandenburg, Thuringia, and Saxony. However, Schleswig-Holstein and Hamburg also reported significant increases in hate crimes. Overall, German police are reporting record numbers of such crimes for the year 2006.

These crimes are often attributed to young people who came of age in the 1990s. There is indeed a strong right-wing extremist youth culture in many towns of the former East Germany, that rose to prominence especially after the fall of the Berlin wall. In this particular case, the attackers came from a slightly older generation, educated entirely in the German Democratic Republic.

I last visited Magdeburg sometime in December 2003, when I had the chance to visit the Jewish community there. It is a rather dreadful city, visibly depressed. Like much of Saxony-Anhalt, it suffers from high unemployment. For some reason or another, its university has attracted a number of Israeli and other foreign students - one of whom I met in the synagogue. A former artillery-man who had served in Lebanon until the withdrawal, he complained bitterly about living conditions in the East. Most of the Jewish community, as elsewhere in Germany, consists of immigrants from the former Soviet Union. Few of them have any desire to stay in Magdeburg; I remember a group of high schoolers who were especially enthusiastic about leaving for Canada (rather than the U.S. or Israel).

Volksverhetzung under German criminal law (Paragraph 130) covers incitement to "hatred or violence against certain parts of the population," or attacks on "the human dignity of others through insults, malicious libel, or defamation," (German Ministry of Justice). Paragraphs 130.3 and 130.4 also outlaw Holocaust denial and the use of symbols from the Nazi era. Convictions can lead to imprisonment from 3 months to 5 years and/or a monetary fine.

German Government Reaction to Brutal Attack on German-Ethiopian in Potsdam

A few days ago, a German citizen of Ethiopian origin was viciously assaulted late at night. Apparently, the victim, who is currently in an induced coma and still in mortal danger, managed to reach his wife's voicemail by cell phone during the attack. In the background of the recording, one can hear people yelling racist slurs. A taxi driver intervened in the scene and chased away two men. According to his testimony, they seemed to have been skinheads or other right-wing extremists (bomber jackets, very short hair...fairly plausible conclusion given the context). This is what CDU Interior Minister Wolfgang Schäuble had to say, quoted in the Sueddeutsche Zeitung:

„Wir wissen die Motive nicht, wir kennen die Täter nicht“, sagte Schäuble noch am Donnerstag im Deutschlandradio Kultur. „Es werden auch blonde blauäugige Menschen Opfer von Gewalttaten, zum Teil sogar von Tätern, die möglicherweise nicht die deutsche Staatsangehörigkeit haben.“

[We don't know what the motives were; we don't know who the perpetrators are. People with blond hair and blue eyes are also victims of violence, in part even by perpetrators who possibly do not have German citizenship].

An unbelievable remark, no? He should be censured by Angela Merkel.

In the meantime, the German police have arrested two suspects. Their initial indictment notes that xenophobia and right-wing extremism were highly likely motives in the attack on the victim.