President Obama did Attorney General Eric Holder a favor last week by finally appointing a deputy attorney general. The appointment may be a favor for the rest of us as well.
Obama nominated James M. Cole for the number two job at Justice last May. The Deputy AG more or less runs the place on a daily basis, overseeing the 100,000 + staff spread across the country, helping set policy, resolving disputes among offices.
The Senate Judiciary Committee supported the nomination and sent it to the full Senate in July; a final vote was blocked by the Republican minority. The stalled nomination circled back to the White House following the Senate's adjournment last month. The President used a recess appointment to put Cole into office, ending the longest vacancy for the post in thirty years.
Cole is your prototypical Democratic DC door revolver: private attorney/government official/power player. He spent thirteen years at Justice (1979-92), first as a trial attorney in the Criminal Division, and later as deputy chief of the public integrity section which handles prosecutions of public officials (elected and appointed), and where he worked with Holder. Following service on Bill Clinton's transition team, he returned to private practice. He joined the Washington office of Bryan Cave as partner in 1995 where he specialized in--you guessed it--white-collar criminal defense. Cole was back on the public payroll in 1997 as special counsel to the House Ethics committee's investigation of Speaker Newt Gingrich.
Eighty-four ethics charges were lodged against Gingrich during his four-year reign as Speaker. Eighty-three were ultimately dropped. Cole's investigation found that Gingrich had used a tax-exempt college course for partisan purposes, and then lied about it. The IRS let Gingrich off the hook but the House did not: it voted 395-28 to reprimand the Speaker and levied a $300,000 fine to recoup the costs of the investigation. Gingrich won the distinction of first Speaker ever to receive an ethics spanking.
Republicans had two complaints about Cole during the Judiciary Committee hearings in July. Senators Coburn, Cornyn, Grassley, and Sessions questioned Cole's role as an independent consultant for AIG hired in 2004 as part of an agreement with the federal government. AIG was charged with shoddy accounting; it paid a $126 million fine without admitting guilt. Cole was to ensure the company stayed out of legal trouble. We all know how well that went. Conveniently for Cole, he'd been sworn to secrecy as to what he did for the firm, and the mountain of documents underlying his work were also off limits to the committee as they concerned deferred prosecutions. Press reports had it that Cole had "allowed AIG management to revise his quarterly reports to the SEC."
Those same reports claimed that Cole had ordered an independent review of all AIG's derivatives transactions but exempted those made by the AIG-Financial Products group (AIG-FP). AIG-FP is the subsidiary of AIG that was responsible for the derivative deals that ultimately led to the $182 billion bailout, and a majority stake in the firm for the American taxpayer. Cole reportedly went so far as to recommend "the appropriate independent review of the proposed derivative transactions or programs should be conducted by AIG-FP."
Perhaps these were just nasty rumors designed to hurt the nominee. But given that it was the collapse of AIG-FP derivatives that brought the company to its knees, and the demise of the firm that triggered the meltdown to follow, it would surely be useful to understand Cole's role in the mess. Obama's recess appointment, however, means that we likely never will.