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Beazer Homes deferred prosecution agreement

NYT columnist Floyd Norris is on the warpath today, assailing the Justice Department's deal with the homebuilder as not punitive enough. Miriam Baer (Brooklyn) at Prawfsblawg offers a needed antidote, pointing out that "corporate criminal liability inevitably morphs into an often simplistic and not very helpful discussion about corporate governance":

But that above answer [involving weighing and balancing what is best for shareholders and other affected parties going forward] is not very satisfying if you are coming from the "throw the bums out and punish them" camp. And if you approach a corporate governance problem with a criminal law frame, emotions like anger quickly crowd out more cautious, introspective responses. That's the problem with corporate criminal liability and Deferred Prosecution Agreements. The mere presence of a criminal case suggests that People Did Very Bad Things and that a good dose of punishment is in order. But it's hard to punish companies without punishing a lot of people who had nothing to do with the Very Bad Things, and tossing CEO's out of their jobs for failing to prevent Prior Bad Things does not at all guarantee that their successors will prevent Future Bad Things. For a prime example of that, see AIG.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.