"The other agencies have been working pretty hard on this effort," said a source. "But it's Justice's show, and they're not moving."
Political worries mount
The mood on Capitol Hill is even darker. One of the kinder words used by staffers there is "frustration" -- or extreme frustration" -- to describe their feelings the Task Force's lack of resources and results. Several of the people we spoke with expressed concern that senior Administration officials like Holder may be protecting their relationships on Wall Street because they hope to resume their careers there after leaving public service.
One Democratic political strategist expressed concerns that the Task Force's inactivity could cause irreparable damage to the President's re-election campaign, by undercutting his "Bain Capital" strategy. That strategy has been working for Mr. Obama, and Democrats on the Hill hope that it will help them too.
But if there are no concrete results from the Obama Justice Department before November, they fear that the entire strategy could be undercut. As his own contributors come under closer scrutiny, they're afraid that the President himself could be seen as "just another Wall Street politician," dealing a potentially fatal blow to his candidacy and that of Democrats further down the ticket.
No shortage of suspects
It's not as if there's a shortage of suspects for the Justice Department to pursue. We examined the role of accounting firm PriceWaterHouseCoopers in the AIG scandal. Now it's been implicated in the LIBOR scandal. As American Banker points out, PwC had at least two opportunities to catch the LIBOR deceptions. We would add that auditors have a legal obligation, at least in this country, to report any irregularities before signing off on the bank's financials.
And while a British official wants false reporting of lending rates (the heart of the LIBOR story) to be made illegal, fraud and misrepresentation already are illegal. Then there are the numerous violations of law admitted to by JPMorgan Chase. In the case of GE Capital, investigators were stunned by the lack of prosecutions after the SEC identified individuals inside that bank who prepared fraudulent documents.
The Justice Department has continued to say that it's difficult to win convictions in bank fraud cases, but a an old-fashioned, Mob-style prosecution recently proved them wrong. Worse, there's no evidence that this Justice Department has even tried.
What's more, until now Federal investigators have appeared to ignored evidence of drug use and prostitution among Wall Streeters -- evidence which experts argue could be used to obtain convictions. "High-End Prostitute Bust has Some Folks on Wall Street Sweating," CNBC wrote last year. They needn't have worried. As prosecutors and attorneys have pointed out, it's been common practice to push criminal investigations by pressuring lower-level informants over charges like these. (Attorney Abigail Field elaborates.)
And yet these avenues of investigation have gone unused, despite the many opportunities they provided for applying pressure -- and not just over prostitution charges. As Reuters reported, the organization in question was a "high-end prostitution ring catering to Wall Street clients who often would spend over $10,000 for a night bingeing on sex and cocaine." ("High-end" refers to the income level of the clientele, in case you were wondering.)
Other opportunities have been wasted as well. Whistleblowers have been ignored, rather than sent before a grand jury in order to obtain indictments. Other crimes have been passed over, rather than used to break larger cases.
Meanwhile in the absence of punishment the bankers' behavior is getting more and more extreme, like pyromaniac children begging to be caught. Some examples:
Wells Fargo has already been implicated in the laundering of money for the Mexican drug cartels that have murdered as many as 60,000 people, as well as having been found to have engaged in some of the most egregious borrower fraud. Now, as attorney Field notes, now it's even illegally closing the bank accounts of unfriendly bloggers to extract revenge.