The word ‘kleptocracy’ has been historically applied to a substrata of not-quite-failed states (Nigeria today, Indonesia under Suharto, Fujimori’s Peru) where rulers and elites have enriched themselves at the expense of raising people’s living standards. As more of the backstory around the current financial crisis comes to light, the United States is coming dubiously close to earning the moniker it once used to justify military interventions elsewhere (Philippines, Panama).

As yesterday’s New York Times reported, the F.B.I. is struggling against chronic staff and resource shortages to properly investigate the deluge of financial fraud cases that have been shaken out of the now emptied federal piggy bank. The situation is largely the result of decisions to reallocate resources toward counter-terrorism and national security in the wake of 9-11. But even four years ago, F.B.I. officials pleaded with the Bush administration for more agents to deal with white collar crime. From the article:

“Since 2004, F.B.I. officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.

“According to previously undisclosed internal F.B.I. data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes like mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels.

“Over all, the number of criminal cases that the F.B.I. has brought to federal prosecutors — including a wide range of crimes like drug trafficking and violent crime — dropped 26 percent in the last seven years, going from 11,029 cases to 8,187, Justice Department data showed.”

Which is kinda crazy when you consider the many high profile corporate malfeasance cases (Enron, WorldCom) during that same period. The unwillingness to embrace any meaningful government oversight is illustrated in another recent Times article that details a meeting between senior economic officials in the Bush administration in February 2002. At the meeting, a seemingly out-of-character Alan Greenspan is reported to have said, “There’s been too much gaming of the system. Capitalism is not working! There’s been a corrupting of the system of capitalism.” Along with then Treasury Secretary Paul O’Neill, he argued for urgent action against reckless executives and fraudulent accounting practices.

O’Neill and Greenspan lost the argument. Just like the F.B.I. lost the argument for more resources devoted to criminal investigations. From 2001 to 2007, the agency requested 1,100 new agents for non-counterterrorism cases; instead, it lost 132. Yesterday’s Times article suggests this neglect was not simply post-9/11 mania, but a willful attitude of the administration.

“After the collapse of Enron in 2002, the Justice Department moved aggressively against corporate fraud — too aggressively, in the view of some people within the administration. It set up a national task force to tackle the problem, garnered hundreds of convictions at companies like WorldCom, Adelphia and Enron, and forced the closure of Arthur Andersen, the accounting firm, for its role in the Enron collapse.

“But several former law enforcement officials said in interviews that senior administration officials, particularly at the White House and the Treasury Department, had made clear to them that they were concerned the Justice Department and the F.B.I. were taking an antibusiness attitude that could chill corporate risk taking.”

In entirely unrelated news: former Teenage Head frontman and CanPunk icon Frankie Venom has died. Sadly, his passing coincides with the 30th anniversary of the Last Pogo concert at which Teenage Head, the Viletones and other local trouble-makers brought to a dramatic close the first act of the Toronto punk scene. (Colin Brunton’s documentary of the event is out now on DVD & a concert is planned for late November.) At the risk of embarrassing myself, I share with thee a live recording of my high school punk band (the unfortunately named Newest Industry) performing a cover of Teenage Head’s car cruising classic “Top Down” at the Cabana Room, circa 1986.