A Distracted FBI?

The oddity of terrorism as an enterprise is that, in essence, it’s an effort by a weaker party to trick the stronger party into weakening himself by engaging in panicky overreactions. In particular, though 9/11 had an appalling cost in terms of lives and money we’ve actually seen a somewhat larger cost in lives and much larger cost in money in our response to those events.

Benjamin Friedman offers up a thought along these lines that I hadn’t heard before:

In other cost-of-fear-of-terrorism news, both Stephen Dubner of the Freakonomics blog and Bruce Schneier ask whether the diversion of federal attention from crime to terrorism since 9-11 helped cause an outbreak of financial fraud. They cite this New York Times article discussing the shift of FBI resources to counterterrorism. Dubner is unsure, but I say it’s a no-brainer that moving 2,400 FBI agents from crime to counterterrorism and the resulting 40 percent drop in financial crimes referred to US Attorney’s for prosecution caused more financial crime.

I’m not sure I buy this. Despite the increased focus on terrorism, the FBI seems to have had plenty of time to undertake missions that were considered priorities—fighting pornography, investigating Elliot Spitzer’s consensual sexual activities, etc.—and the FBI was hardly the only agency to see its interest-level of combating corporate malfeasance tumble during the Bush years. It’s true, in other words, that we ought to take a look at whether we’re getting the balance between counterterrorism and other law enforcement priorities right. But I wouldn’t be too quick to assume that it’s really the pressure of fighting terrorism that led the FBI to ease off on financial crimes.