A few years go, a media firestorm erupted over the urban “Stop Snitchin” campaign promoted by gangs and a few hip hop icons. Stop Snitchin refers to the effort to intimidate informants to prevent them from cooperating with police about gang violence or drug trafficking schemes. Rapper Cam’ron received heavy scrutiny for endorsing the trend during an interview on the issue for CBS’s 60 Minutes.
A new Stop Snitchin campaign to deter would-be informants, in this case against people speaking up against crimes on Wall Street, is quietly taking shape, this time far from the media’s eye.
Financial experts and academics agree that strong whistleblower regulations could have prevented the Bernie Madoff Ponzi scheme and indeed much of the financial crisis if employees at firms engaged in fraudulent activity had spoken up early or had reported complex crimes to the appropriate authorities. Employees at firms at the center for the financial crisis, including troubled lender Countrywide, have cited intimidation and other illicit tactics as the reason few people spoke up as whistleblowers. Since the old whistleblower laws provided for weak legal protections for informants and relatively rare rewards, the Dodd-Frank financial reform law passed last year revamped the system with new rights for informants blowing the whistle on financial crimes.
Bank lobbyists and Fox News, however, have made such protections enemy number one.
Fox News, part of a company known for its legal harassment tactics against whistleblowers, has promoted a smear campaign against financial whistleblower protections for months. In this recent segment, Fox Business reporter Charlie Gasparino, who refers to financial whistleblowers as “rats,” claimed that the new Dodd-Frank whistleblower protections are hurting the big banks:
GASPARINO: If you create all these incentives to sue. Well it seems like we’re increasing litigation at a time against businesses at a time when you know lets face it, all these banks, they’re getting hammered. You just saw that ugly chart of Goldman Sachs. […] Yes, there’s a sort of slimyness about this. Its not like someone just coming forward, remember they’re getting paid to do this, you know yea those are all the counter arguments. Under Dodd Frank this thing is here to stay until you know they repeal Dodd Frank!
Trade associations for the big banks, including the U.S. Chamber of Commerce and Business Roundtable, lobbied aggressively against the new rules, but failed to stop them. Now, bank lobbyists are attempting a rollback.
Freshman Rep. Michael Grimm (R-NY) sponsored a bill specifically to repeal the whistleblower law. Grimm’s legislation is a wish-list for corrupt banks: it would not only reduce rewards for reporting fraud, but would force whistleblowers to report crimes to their supervisors before notifying authorities. Consumer groups have decried Grimm’s proposal as an “extreme approach that would silence would-be whistleblowers, endanger critical inside informants, undermine investigations, hamstring enforcement at the [Securities and Exchange Commission] and [Commodity Futures Trading Commission], and provide lawbreaking financial firms with an escape hatch from accountability.”
Rep. Steve Stivers (R-OH), a lawmaker-turned bank lobbyist-turned lawmaker again, is among the team of four legislators working to whip up support for the legislation. Stivers and Grimm have been showered with contributions from top Wall Street firms, including JP Morgan and Bank of America.
Point of Law, a blog hosted by a think tank run by far right billionaire investors, has promoted attacks on the new whistleblower laws. The Chamber, which counts firms like Fidelity and AIG as major contributing members, has testified in support of Grimm’s bill.
While it is unlikely that Grimm’s measure is passed and signed into law as a stand-alone bill under President Obama, it could be forced through by the Republicans using a budget stand-off or another debt ceiling hostage situation.