Allocating Resources: Financial Fraud vs. Terrorism
The FBI has been forced to transfer agents from its counter-terrorism divisions to work on Bernard Madoff’s alleged $50 billion fraud scheme as victims of the biggest scam in the world continue to emerge.
The Freakonomics blog discusses this:
This might lead you to ask an obvious counter-question: Has the anti-terror enforcement since 9/11 in the U.S. helped fuel the financial meltdown? That is, has the diversion of resources, personnel, and mindshare toward preventing future terrorist attacks — including, you’d have to say, the wars in Afghanistan and Iraq — contributed to a sloppy stewardship of the financial industry?
It quotes a New York Times article:
Federal officials are bringing far fewer prosecutions as a result of fraudulent stock schemes than they did eight years ago, according to new data, raising further questions about whether the Bush administration has been too lax in policing Wall Street.
Legal and financial experts say that a loosening of enforcement measures, cutbacks in staffing at the Securities and Exchange Commission, and a shift in resources toward terrorism at the F.B.I. have combined to make the federal government something of a paper tiger in investigating securities crimes.
We’ve seen this problem over and over again when it comes to counterterrorism: in an effort to defend against the rare threats, we make ourselves more vulnerable to the common threats.