As the rule of law declined in parallel with growing government intervention over the past few decades, Leviathan acquired the habit of threatening large companies, especially those who depend most on their reputation capital, with fines and judicial proceedings, counting that they will pay quickly and obediently in order to get the bureaucrats off their back. As Willie Sutton explained when asked why he robbed banks, “that’s where the money is”.
The latest example appears to be Deutsche Bank, which the Federal Energy Regulatory Commission wants to fine $1.6 million for executing trades that the bureaucrats deem illegal. The very idea of illegal trades with consenting adults should make everybody smell a rat, but such is the unquestioned power of the modern Leviathan.
In this case, though, something is going wrong from the bureaucrats’ viewpoint. Instead of coughing up the money, the bank unexpectedly decided to challenge the order in court even if, as it explained, the legal proceedings will likely cost more than simply pinching its nose and paying the protection money. The bank says it is a matter of principle. (See “Charged Atmosphere”, The Economist, November 10, 2012)
Evolution has probably wired man with a sense of justice that leads some of us—Deutsche Bank’s management in the present case—to provide at our own cost the public good of resistance to injustice. Perhaps inspired by Deutsche Bank, Barclays (another international bank) just announced a similar challenge against the same bureaucracy, which had ordered it to pay $470 million for an apparently similar paper crime. Let’s hope the resistance will spread.
One danger is that Leviathan, which is broke and hungry for money, resorts more and more to this sort of naked extortion. But it can cut both ways: Leviathan might be forced (by us) to save by slashing the budgets of its liberticidal regulatory bureaucracies.