One of the popular views in the philosophy of law, simplified to the point where it begins to sound crass, says that law is what powerful men agree on. There are many obvious problems with this formulation, and there are at least as many that are not so obvious. Among them is this question: if law is what powerful men agree on, then what happens after the men are not so powerful? Do they go to jail at that point?
Consider the case of Bank of the Commonwealth, one of the more spectacular bank failures in the history of banking in Virginia. While the bank was still operating, two of its top executives agreed, along with others, that the steps they were taking to make the bank appear more solvent than it was were the right thing to do. After the bank failed, though, indictments followed — indictments that would have been highly implausible, if not unthinkable, while the bank was still operating. Now the two executives have been convicted, along with two others, of a list of charges related to fraud and conspiracy.
Regulators and prosecutors hope this case sends a message to the banking industry, but I don’t see how it could. When you are the executives of one of the biggest banks in town, it is all too easy to believe that your task force meetings and strategic initiatives are the law. It is only after a bank goes under that people start to notice how many of the decisions ran counter to the actual laws on the books. But if the law has a deterrent effect only on former executives, and if current executives are effectively immune from prosecution, then what is the law really? This is, of course, a question for philosophers to discuss.