If a recent report is true the Justice Department will need a new name -- and some of us will have to step up and admit we were wrong.
It was clear that the foreclosure fraud settlement which the Administration and most states reached with major US banks was a great deal for the big banks -- and a lousy deal for the public. But some of us found reason to hope against hope that the settlement would be accompanied by real investigation of crooked bankers, after years of flim-flammery and disgraceful inaction by the Justice Department.
Not that we were entirely naive. The Administration's track record was poor. and even had a slight resonance of bad faith. when it came to prosecuting Wall Street criminality. So, speaking only for myself, that cautious support came with renewed pressure on the Administration to back its words with action.
Some of us knew that, pace Pete Townshend, we very well might get fooled again.
"The hypnotized never lie ..."
Now it looks like we were -- fooled again, that is. From a report published this weekend in the Huffington Post: "A last-ditch effort by federal and state law enforcement authorities to hold Wall Street accountable for nearly bringing down the U.S. economy is unlikely to lead to any criminal charges against big bank executives, according to a source close to the investigation."
The Huffington Post's anonymous source said that instead of criminal indictments, the task force "will instead most likely bring civil lawsuits against some of the banks involved." That would most likely mean more of what we've seen so far: Bankers earn hefty salaries and bonuses by committing crimes. Punishment is restricted to fines, which are paid by the bank and not the bankers -- giving them absolutely no reason not to do the same thing again.
Gee, what a surprise --
Not. In the months since the President boasted of the beefed-up task force in his State of the Union message, reports (including our own) have suggested that the Justice Department consistently refused to provide it with even the minimal resources it had requested. (It had asked for roughly 100 to 200 staffers, depending on the sources cited, as opposed to more than 1,000 which were assigned to the much smaller savings and loan scandal of the 1980s.)
In case the chain of command is unclear, let's spell it out: Everyone at the Justice Department reports to Attorney General Eric Holder. Holder reports to the President of the United States.
Barack Obama took office as the economy was suffering a massive collapse brought on by widespread Wall Street fraud. It wasn't a good sign when he appointed Eric Holder, a highly-paid attorney for the prominent Wall Street law firm Covington & Burling, to act as the nation's chief law enforcement officer. While it's certainly possible for talented attorneys to move from defense to prosecution or vice versa, when it comes to Wall Street Holder has managed the Justice Department like ... well, like a highly-paid attorney for a prominent Wall Street law firm.
First Holder tried to buffalo the public into believe he was fighting mortgage fraud with a deceptive publicity scam called "Blind Trust" -- which the Columbia Journalism Review reviewed with the headline, "Obama Administration's Financial Fraud Stunt Backfires."
Then Holder declined to prosecute anyone for the misdeeds of the AIG Financial Products group (note: I was a mid-level AIG executive in another part of the organization), despite the massive evidence of potentially criminal wrongdoing compiled the Levin Subcommittee and others.
(See "Law and Order: AIG" for, among other things, a chronology of events which includes an investor call in which executives made statements which their independent accounting firm considered false. There's a name for what happens when executives make false public statements about the material condition of their firm. That name is "investor fraud.")
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