It was always understood that some people might have a legitimate need to withdraw large amounts of cash from banks, perhaps if they ran businesses that had to make a lot of cash transactions. The law against structured withdrawals of cash was aimed at people trying to hide other illegal activities. Blackmailing someone is a crime, whereas paying money to a blackmailer is not a crime. And yet it was Dennis Hastert who was prosecuted.

I’ve been pleasantly surprised to see a number of liberals criticize the prosecution of Dennis Hastert. Here is James Fenton:

There has been no sign that Individual A will face charges for blackmail, or that his handling of large sums of cash–$1.7 million by the time Hastert was indicted–has been held to be felonious in any respect. It is as if the large sums of money, as soon as they left Hastert’s hands, lost their radioactivity. They became uncontroversial in the eyes of the law.

What is Hastert being prosecuted for, and is it the same thing as what he is being punished for? If he is being punished for the large “structured” withdrawals of cash from his own bank accounts, then why should the involvement of Individual A not come under public scrutiny as well?

. . .

Very few people seem to have a problem with the idea that Hastert could be prosecuted for one thing and punished for another. Alan Dershowitz was among the few protesters:

“This case just smells…. I’m shocked that a prosecutor would allow this kind of case to be brought knowing that it will reveal the secrets, that it would open doors up to things that are alleged to have occurred almost half a century ago.”

The statutes about structuring cash withdrawals, Dershowitz said, “were intended to prevent money laundering, to prevent drug dealing, to prevent income tax evasion.” But the payment of hush money is not illegal and it

“is not within the heartland of what this statute was intended to cover. And then to have an indictment which essentially reveals that which Hastert was trying to conceal puts the government in the position of essentially being part of the blackmail–and it’s just not right.”

One problem with giving the government a lot of regulatory power is that it can be used to go after politically unpopular groups (like closeted gay Republicans), even in areas that were not envisioned when the regulations were drafted. George Selgin has another great example of this phenomenon:

[T]he Federal Reserve is now in the business of enforcing the U.S. government’s drug laws, even if that means making a mockery of both state governments’ right to set their own drug policies and the Fed’s own governing statutes.

The Fed’s involvement in drug prohibition became official last month, when the Federal Reserve Bank of Kansas City informed Denver’s Fourth Corner Credit Union — a non-profit cooperative formed by Colorado’s state-licensed cannabis manufacturers — of its decision to deny its application for a master account. Since asking any sort of depository institution to operate without such an account, and hence without access to the Fed’s payment facilities, including its check clearing, wire transfer, and ACH facilities, is like asking a commercial airline to make do with propeller-driven biplanes, and established banks don’t want the extra hassle that comes with dealing with pot growers, the Kansas City Fed’s action forces Colorado’s marijuana industry to do business on a cash-only basis, with all the extra risk and inconvenience that entails.

It gets worse, even the deposit insurance system is involved. I strongly encourage people to read the entire post. The government has already made it illegal to deal with large amounts of cash, at least if you are doing things that the government does not approve of. Now they are trying to force unpopular businesses into the underground economy, where they can be prosecuted for the “crime” of using currency.

Here’s something for liberals to think about. Obama won’t be president forever. Scott Walker has also been the recipient of some politically motivated investigations. If Walker becomes president, how will he use the federal government’s vast powers? We can certainly hope he doesn’t have Richard Nixon’s personality, and doesn’t use those powers to go after his enemies in the progressive community and labor unions.

And how about Hillary Clinton? Would she use federal powers to settle scores? I’d rather that a President Walker or Clinton not be tempted in the first place, which is one reason why I support a radical deregulation of the US economy. Abolishing the income tax and legalizing drugs would be a good place to start.