Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Eniola Odetunde/Axios

America has waited a decade for an aggressive government crackdown on white-collar crime. Now, just before the election, and in the middle of a bull market, it has arrived.

Why it matters: When times are good, investors become more trusting and more greedy. That makes them more likely to put their money into fraudulent or criminal enterprises.

  • After a decade-long bull market, there is no shortage of those frauds to prosecute.

Driving the news: Just this week we've seen headlines about multi-billion dollar fines for Goldman Sachs and Purdue Pharma; the unveiling of a major antitrust case against Google; venture capitalist Elliott Broidy pleading guilty to accepting millions of fraudulently-obtained dollars; an allegation that software magnate Bob Brockman criminally evaded taxes on some $2 billion of income; and an admission of tax fraud by Robert Smith, the founder and CEO of Vista Equity Partners.

Background: Historically, waves of prosecutions arrive after a market bubble bursts, rather than before an election.

  • In 2002, after the dot-com crash, there was a series of major prosecutions of white-collar crimes at high-flying companies like Enron, WorldCom, and Tyco.
  • In 2009, after the financial crisis, a series of prosecutions and settlements targeted banks who engaged in massive fraud when they issued and securitized subprime mortgages.
  • This year, the difference is that the crackdown is happening when markets are still healthy — but while prosecutors and defendants both have an incentive to settle before a new administration is sworn in.

Be smart: When markets surge, investors lower their guard. They invest in fraudulent companies like Theranos and Wirecard, and glorify self-described rule-breakers like Uber's Travis Kalanick and Tesla's Elon Musk.

  • "There are always fraudsters out there who are trying to appeal to investors," says Yale Law professor Jonathan Macey. "The question becomes: How successful will they be. During times of irrational exuberance, we see upticks in the success rate that people have in prying people from their money."

How it works: "At any given time there exists an inventory of undiscovered embezzlement in—or more precisely not in—the country’s business and banks," wrote the great economist JK Galbraith in 1929. "This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars."

  • "It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful... The rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly."

The bottom line: The greatest bull market in history has been accompanied by a predictably enormous degree of fraud and other illegal corporate behavior. That means rich pickings for politically-appointed U.S. Attorneys on the lookout for ways to grab credit for cases before a new administration arrives in January.

  • Defendants, too, have every incentive to settle now. "Irrespective of politics, you don’t want to deal with a new team," says Robert Driscoll, a former deputy assistant Attorney General under George W. Bush who now works in private practice at McGlinchey.

Go deeper

Felix Salmon, author of Capital
Updated Oct 29, 2020 - Economy & Business

How central banks can save the world

Illustration: Aïda Amer/Axios

The trillion-dollar gap between actual GDP and potential GDP is a gap made up of misery, unemployment, and unfulfilled promise. It's also a gap that can be eradicated — if central banks embrace unconventional monetary policy.

  • That's the message from Eric Lonergan and Megan Greene, two economists who reject the idea that central banks have hit a "lower bound" on interest rates. In fact, they reject the idea that "interest rates" are a singular thing at all, and they fullthroatedly reject the idea — most recently put forward by New York Fed president Bill Dudley — that the Fed is "out of firepower."

Why it matters: If Lonergan and Greene are right, then central banks have effectively unlimited ammunition in their fight to increase inflation and employment. They are limited only by political will.

1 hour ago - Health

Biden says it's "not the time to relax" after touring vaccination site

President Biden speaking after visiting a FEMA Covid-19 vaccination facility in Houston on Feb. 26. Photo: Mandel Ngan/AFP via Getty Images

President Biden said Friday that "it's not the time to relax" coronavirus mitigation efforts and warned that the number of cases and hospitalizations could rise again as new variants of the virus emerge.

Why it matters: Biden, who made the remarks after touring a vaccination site in Houston, echoed CDC director Rochelle Walensky, who said earlier on Friday that while the U.S. has seen a recent drop in cases and hospitalizations, "these declines follow the highest peak we have experienced in the pandemic."

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: FDA advisory panel endorses J&J COVID vaccine for emergency use — About 20% of U.S. adults have received first vaccine dose, White House says — New data reignites the debate over coronavirus vaccine strategy.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.