Wes is frightened as he is handcuffed and thrown into the police car. He is terrified that his mother, whose approval he wants, will have to pick him up at the police station. His desire is to confess the spray painting to the police and apologize.
Shea, in contrast, is defiant in his attitude, staring back at the police officers and denying they spray painted—even though the police have the bag with the spray paint.
The police officer ends up uncuffing Shea and Wes and letting them go without bringing them into the police station. He realizes the two are very young. We can infer, too, that because their crime is nonviolent, in the grand scheme of life in the Bronx, it is of little consequence. This is the period before "zero tolerance" was ushered in, and the police officer seems to have calculated that a good scare would be enough to shake up the two. The implication, as well, is that Wes's fear and remorse might have moved the officer to let them go.
It's difficult to assess if the police officer did the right thing, as Shea and Wes go back to spray painting, though his heart was in the right place. The incident informed Wes's future decision-making process because he realized he didn't want his body and destiny ever again to be totally in the control of another person.
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