A New Civil Right

By Jack E. White

The 40th anniversary of brown v. board of education on May 17 unleashed a torrent of earnest commentary on the nation's op-ed pages. Story after story deplored America's lack of racial progress since the U.S. Supreme Court struck down segregation with that landmark decision. Somehow all the hand-wringing analysis overlooked a small but telling example of how far some blacks have come during the past four decades: the case of Joseph Jett.

Jett is a 36-year-old Harvard Business School graduate who has been accused of bilking the Wall Street firm of Kidder, Peabody by concocting untold millions in "phantom trades" during the two years he served as head of the company's government-bond trading desk. The allegedly fictitious transactions, which were discovered in April, bloated Kidder, Peabody's bottom line by $350 million and earned Jett $9 million. He was dismissed, and the company filed suit against him to get back the money. He has denied any wrongdoing and filed a countersuit against Kidder, Peabody.

Why is this financial peccadillo an occasion for racial rejoicing? Because it shows that equal opportunity for blacks is alive and well. When Brown was decided, it would have been unthinkable for an African American to be accused of a financial crime of such magnitude for the simple reason that no African American was in a position to commit one. Back then, being a messenger or clerk was the best job a black could hope for on Wall Street. Beyond that, many whites thought blacks lacked the intellect to devise a scheme as sophisticated as the one Jett is accused of, much less implement it.

How things have changed. If Kidder, Peabody's charges are to be believed, Wall Street and America have now progressed to the point that an African American is considered smart enough to run a bond-trading operation so arcane that many financiers, regardless of race, cannot fathom its complexities. And Jett was perceived as doing so well in the job that the firm's white leadership empowered him to trade for a two-year period with virtually no supervision. Leave aside whether Kidder, Peabody's charges against Jett are plausible. In a way his guilt or innocence is almost beside the point. What really matters is that a young black was able to rise to a position of enormous responsibility and earn millions in an industry that has discriminated against blacks for centuries, all because white executives thought he had talent. If a Wall Street firm's willingness to trust a black with that much money isn't a sign of racial progress, what is?

Most African Americans, to be sure, will not see the Jett case in so positive a light, for obvious reasons. There are already fears among the relative handful of blacks on Wall Street that the case will inspire a backlash that will make it harder for them to keep advancing in the financial world -- and it just might. On Wall Street and everywhere else in America, there is still a tendency for whites to hold all blacks responsible for the misdeeds of one, and blacks are still likely to feel defensive when some other black commits a crime. The death by drug overdose of Wardell R. Lazard, head of the most successful black Wall Street firm in history, will reinforce those proclivities. Yet it may be time to put aside such sensitivities and embark on a new phase of affirmative action that helps blacks move up the career ladder in crime as they have in other professions. Big-time financial crime is, after all, one of the last great bastions of racial inequality. Why should a small number of white financiers have a virtual monopoly on the only crime that really pays?

Right now most black criminals are stuck in entry-level positions with little hope for advancement. The nation's prisons are brimming with young blacks convicted of crimes that bring puny financial rewards and huge penalties. A typical convenience-store stickup yields only $402, but armed robbers, once convicted, serve an average of 41 months pumping iron in a tough maximum-security prison. That translates to about 30 days in prison for every stolen dollar, which any M.B.A. knows is an unacceptable balance between profit and risk.

On the other hand, Wall Street crooks -- almost all white -- have a lock on high-class felonies that pay off big with minimum risk. Some of them have managed to steal millions, hire expensive lawyers, make deals with the government to squeal on their co-conspirators, and get off with no more than a fine and community service. The few who actually go to jail serve their terms in relatively comfortable minimum-security prisons, get out early for good behavior and are often left with fortunes. Former junk-bond baron Michael Milken served only two years of a 10-year sentence for securities fraud, and, after shelling out more than $1 billion in fines and to settle civil lawsuits, is trying to make do with a piddling sum estimated at $300 million. He was even invited to lecture on ethics in business at ucla.

My fellow African Americans believe it would be better for ambitious young blacks, and everyone else, to direct their energies into legitimate enterprises, and most do. But one of the surest signs that an ethnic group is moving on up is that its members have developed the good business sense to abandon street crime for far more lucrative suite crime, which requires brains, training and access to important decisions from which blacks have long been excluded. Someday a black financier will have the power to commit a massive fraud that shakes stock markets around the world, get a slap on the wrist from the courts and walk away with millions. Blacks will have secured a new civil right: the equal opportunity to steal big-time, just like the white guys.