A new report from the conservative Government Accountability Institute (GAI) finds that President Barack Obama’s and Attorney General Eric Holder’s failure to criminally charge any top Wall Street bankers is likely a result of cronyism inside the Department of Justice and political donations made to Obama’s campaign.
Despite Obama’s and Holder’s “heated rhetoric” against Wall Street (in 2009, Obama blamed the 2008 financial collapse on “reckless speculation of bankers” while Holder charged that “unscrupulous executives, Ponzi scheme operators and common criminals alike have targeted the pocketbooks and retirement accounts of middle class Americans”), they haven’t “filed a single criminal charge against any top executive of an elite financial institution,” GAI wrote in its report, exclusively obtained by The Daily Caller.
GAI argues that the Obama administration’s decision to not go after Big Finance is due to senior DOJ leadership — Holder, Associate Attorney General Tom Perrelli, Associate Attorney General Tony West, Assistant Attorney General Lanny Breuer, Deputy Attorney General James Cole and Deputy Associate Attorney General Karol Mason — who “all came to the DOJ from prestigious white-collar defense firms where they represented the very financial institutions the DOJ is supposed to investigate.”
The report details how Holder and Breuer both came to the DOJ from Covington & Burling, a “top-tier Washington law firm” with a client list that includes financial firms like Wells Fargo, J.P. Morgan Chase, Bank of America, CitiBank, Deutsche Bank, Goldman Sachs, ING, Morgan Stanley, UBS and Wilmington Trust.
GAI said that President Obama’s decision to choose Holder, “a white-collar defense attorney from Covington,” as his attorney general, over a “more fiery prosecutor,” appears to have sent “a subtle signal to the financial community” that this administration isn’t going to actually do anything, despite the harsh words.
Cole, the report outlines, was with Bryan Cave LLP — “a white-shoe firm with A-list clients” — before becoming Holder’s right-hand man at the DOJ. One of Cole’s clients while at Bryan Cave LLP, the GAI report shows, was insurance and financial giant AIG.
Cole had done $20 million worth of work for AIG between 2004 and 2008, but his close ties with the company — which was “at the heart of the financial crisis largely because of its noncompliance in regulatory and compliance issues” — didn’t stop Obama or Holder from welcoming him aboard their administration.
The Obama administration’s decision to not appoint an independent counsel to investigate the MF Global scandal, despite more than 60 members of Congress demanding it, also reeks of cronyism, the GAI report details. Obama bundler and former Democratic New Jersy Gov. Jon Corzine was at the center of MF Global.
GAI points out how West — the DOJ’s no. 3 official — worked as a white-collar defense attorney for Morrison and Foerster before he came to the DOJ. Morrison and Foerster is currently providing legal representation to MF Global. Holder and Breuer’s old law firm — Covington & Burling — provided legal services to MF Global too, before MF Global sought bankruptcy protection.
GAI adds that the appearance of MF Global cronyism is “further complicated” by how Reid Weingarten — an attorney at Steptoe & Johnson — was selected to be MF Global treasurer Edith O’Brien’s lawyer.
“Weingarten previously served as Holder’s attorney following the controversial pardon of Marc Rich in the Clinton Justice Department,” the GAI report reads, adding that the blog Main Justice points out how Weingarten is “one of Holder’s best friends.”
In addition to those officials’ potential personal financial interests — were they to return to their old firms after their time at the DOJ ends — in avoiding investigating those big banks, GAI points out how “Obama’s top DOJ officials played prominent roles in his 2008 campaign.”
Holder, the nation’s top DOJ official, “co-chaired the campaign with Tony West, the DOJ’s third highest official.”
“No other modern administration has staffed the DOJ with big money fundraisers,” GAI wrote. “Holder bundled $50,000 for Obama’s 2008 campaign, while Perrelli, West, and Mason all bundled $500,000 for the campaign. West also helped Obama raised an estimated $65 million in California.”
GAI president Peter Schweizer told TheDC that cronyism appears to be infiltrating the halls of the DOJ with the Obama administration, and that it appears Holder’s team has no interest in fighting for accountability when it comes to Wall Street because he, Obama and the rest of the DOJ team have a financial interest in not enforcing those laws.
“When we think of cronyism and the problems of cronyism and crony capitalism, we think in terms of economic loss and gain,” Schweizer said in a phone interview. “What we’re showing here is that cronyism is now permeating our justice system. So, it’s not just a question of dollars and cents, it’s a question of whether you’re going to face legal jeopardy or not on what you’re doing.”
“The issue of a revolving door — people who go in and out of, for instance, the Department of Energy who go work for energy companies then come back to the Department of Energy — is always there,” Schweizer added. “But, we’re not used to associating the top leadership of the Justice Department with the revolving door. And, I think that’s what makes this so troubling — because you can’t trust them. All their financial interests are tied up with these large firms that do an enormous amount of business with Wall Street.”
In the report, GAI details how the George W. Bush and Bill Clinton administrations both actually took down financial criminals — unlike the Obama administration. Between 2002 and 2008, for instance, GAI points out how a Bush administration task force “obtained over 1,300 corporate fraud convictions, including those of over 130 corporate vice presidents and over 200 CEOs and corporate presidents.”
“Clinton’s DOJ prosecuted over 1,800 S&L [savings and loans] executives, senior officials, and directors, and over 1,000 of them were sent to jail,” GAI adds.
But, despite having “promised more of the same,” especially in the wake of the 2008 financial crisis, the Obama administration’s DOJ has not brought criminal charges against a single major Wall Street executive.
The Bush and Clinton administrations’ track records on prosecuting white-collar crime, and the Obama administration’s failure to do so, Schweizer said, is “evidence that this has less to do with some sort of partisan or philosophical issue.”
“I think it has to do with the fact that, previously, under Clinton or under Bush, you had senior people who were prosecutors — who not only had previous experience, but were actually active prosecutors,” Schweizer said. “The problem that you have at the Obama Justice Department, particularly bizarre at this time and place where we were coming off the financial crisis, is that they really have no recent prosecutors at the top of the Justice Department. They’re all white-collar criminal defense attorneys. That’s what’s so troubling. One would think that, given the financial crisis, and the widespread conduct, they would have at least carved out some senior positions for prosecutors who could really drill down on this. That’s what Clinton did, and that’s what Bush did.”
As one of many examples of where Holder’s DOJ could have gone after Wall Street but failed, GAI cites how Michigan Democratic Sen. Carl Levin “proposed that the DOJ criminally investigate Goldman Sachs for its handling of the Abacus 2007-AC1 transaction” in an April 2011 Senate Permanent Subcommittee on Investigations report. In that 635-page report, Levin and his staff — who are Democrats — recommended that Holder’s DOJ investigate potential crimes committed. Levin’s subcommittee and the Federal Financial Crisis Inquiry Commission both made formal referrals to the DOJ for investigation – and Forbes magazine ran an article with the headline, “Criminal Charges Loom for Goldman Sachs After Scathing Report.”
Nothing happened. But, over the course of the rest of 2011, Obama went on a massive fundraising drive down Wall Street.
“By the fall of 2011, Obama had collected more donations from Wall Street than any of the Republican candidates, and employees at Bain Capital had donated more than twice as much to Obama as they did to [Mitt] Romney, the firm’s founder,” GAI wrote in its report.
“In the weeks before and after the Senate report on Goldman Sachs, several Goldman executives and their families made contributions to Obama’s Victory Fund and related entities and some contributors maxed out at the largest individual donation allowed, $35,800.”
“Five senior Goldman Sachs executives wrote more than $130,000 in checks to the Obama Victory Fund,” GAI continued. “Two of these executives had never donated to Obama before and had previously only given small donations to individual candidates.”
While GAI said in the report that it would be a “reach to conclude that the Department of Justice dropped its criminal investigation of Goldman Sachs solely in response to large campaign contributions” from its executives, it certainly doesn’t pass the smell test — and calls for investigations continue.