Jeffrey Miron
When New York’s Attorney General Letitia James prosecuted Donald Trump for financial fraud—claiming he misstated property values to potential lenders—many Trump supporters viewed the prosecution as politically motivated.
When a federal grand jury indicted James for bank fraud—alleging she lied in a mortgage application—many Trump critics had the same reaction.
Is there a way to remove politics from these issues?
Yes. By repealing laws that outlaw business or financial fraud.
In these settings, the parties potentially affected by fraud can protect themselves, whether by investigating the claims made by the other party, by purchasing appropriate insurance, by requiring the posting of a bond, or by other means.
Plus, any party injured by fraud can sue for damages, with these suits adjudicated and enforced by the civil justice system. Such lawsuits would resemble those currently pursued by governments but be initiated by those allegedly injured.
This “privatized” approach will limit fraud suits to those where the defrauded party has suffered a non-trivial injury; a government ban on fraud allows prosecutions for all manner of modest and debatable deceptions.
Even more, the private approach eliminates politically motivated fraud prosecutions. Private parties will sue when it makes financial sense; no elected or appointed official determines which cases to pursue.
