Eric Holder's Legacy

In a USAToday OpEd yesterday, University of Tennessee law professor Glenn Harlan Reynolds, urged Obama to reach across the aisle for his next Attorney General. He may be a law professor but he's also a deranged crackpot claiming Obama needs to pick a Republican because other crackpots like himself-- particularly in states like Tennessee filled with crackpots-- don't trust Obama because of the GOP-manufactured scandals propagated by Rush Limbaugh, Fox News and other partisan Republican propaganda outlets that apparently are the only sources of Professor Crackpot's vast array of knowledge. He actually cites Darrell Issa's nonsensical fakes scandals, everything from "the IRS's targeting of Tea Party groups, to the Fast and Furious gun-smuggling scandal" and claims Obama is "beset by numerous scandals." Thanks for the garbage dump, USAToday. Another far right kook like Reynolds, also operating on behalf of the GOP, Byron York, was echoing Ted Cruz in demanding to give the obstructionist right-wing nuts veto power over his nomination. Why? Just 'cuz. The racists who control the Republicans in the Senate and House have always been on the warpath against Holder.

When Holder announced he was retiring, we looked at some of what he was able to accomplish even as he had to face the most bitter and vicious, non-stop Republican Party racism any cabinet member has ever had to endure. That's not to imply that Holder is beyond criticism, not by a long shot. He was lacking in so many of the same ways that so many elite Democrats-- like Obama, Clinton, Cuomo, etc-- are lacking. A far more useful OpEd than Reynold's embarrassing derangement was put forward by Joe Nocera in the NY Times yesterday, The Hole In Holder's Legacy.

A few weeks ago, Attorney General Eric Holder Jr. gave a speech at the New York University School of Law on the subject of white-collar prosecutions. In it, he offered a full-throated defense of his department’s efforts in the aftermath of the 2008 financial crisis. With his resignation announcement coming eight days later, one can’t help but view his speech as a kind of valedictory.

The Justice Department, he said, had stood vigilant against financial fraud “wherever it is uncovered”-- and prosecuted “criminal conduct to the fullest extent of the law.” He took credit for negotiating huge fines against financial firms, and for forcing several big banks-- Credit Suisse and BNP Paribas-- to accept guilty pleas.

As for the prosecution of individuals involved in the financial crisis, he claimed that the Justice Department had “taken aggressive action, nearly doubling the number of mortgage fraud indictments and criminal convictions between 2009 and 2010, then increasing them even further the following year.”

Actually, Holder’s Justice Department has been notoriously laggard in prosecuting crimes that stemmed from the financial crisis, and much of what it has done amounts to an exercise in public relations.

Take, for instance, those guilty pleas extracted from Credit Suisse and BNP Paribas. Last March, Holder said that he feared that prosecuting large financial institutions could hurt the economy. This became known as his “too big to jail” remark-- which he quickly disavowed. No wonder he was eager to have some firms plead guilty! Yet, as Peter Henning notes in a New York Times DealBook article, the Justice Department made sure those guilty pleas didn’t inflict too much pain. In the case of BNP Paribas, prosecutors secured agreements from state banking regulators that they wouldn’t pull the bank’s license to do business.

Or take the claim that the Justice Department has been rigorously rooting out mortgage fraud. In fact, after a grand announcement that the department was putting together a mortgage fraud task force, U.S. attorneys around the country began aiming their fire at easy prey: small-time mortgage brokers, or homeowners who had lied on “liar loans.” None of the top executives from any of the major firms were indicted. Indeed, according to an article in the New York Times Magazine in May, only one executive of any kind-- a mid-level executive with Credit Suisse — has gone to prison as a result of his actions during the financial crisis. The notion that he’s the only one who committed a crime in the mortgage-crazed run-up to the financial crisis is, quite simply, implausible.

As for those big fines against Bank of America, Citigroup and JPMorgan Chase, not only did they come very late, but their terms were such that it was impossible to know for sure the extent of their wrongdoing. And, of course, despite fines that went into the billions, no actual human was prosecuted for any wrongdoing.

…Holder’s legacy is a mixed bag. As The Times’s Matt Apuzzo wrote last week, he “succeeded in reducing lengthy prison sentences, opened civil rights investigations against police departments in record numbers and challenged identification requirements for voters.” On the negative side, he subpoenaed journalists and went after their sources.

No matter how he tries to spin it, Holder’s inability-- or unwillingness-- to prosecute financial crimes is on the negative side of the ledger.

David Dayen, covering the same territory for The Guardian goes straight to the point that refusing to send banksters to prison for their dangerous criminal behavior equates to an outrageous dearth of justice-- as Holder prepares to go back into business defending corporate clients at Covington & Burling, whose clients include mega-banks like JP Morgan Chase, Wells Fargo, Citigroup and Bank of America. Bad enough, but Dayen felt there is worse to look at in evaluating Holder's performance as Attorney General, when it came to the criminal frauds perpetrated on homeowners by the banksters. That got off way, way too easy.

A recent series of securities fraud settlements with JP Morgan, Bank of America and Citigroup, which DoJ said cost the banks $36.65bn, actually cost them about $11.5bn. And shareholders, not executives, truly bear that cost.

Incidentally, the Wall Street Journal found last week that the Justice Department only collects around 25% of the fines they impose. So the banks may have gotten off even easier.

These settlements have actually perverted the notion of justice, turning accountability into a public relations vehicle. And Holder’s Justice Department has been guilty of cooking the books: they admitted last August to overstating the number of criminal financial fraud charges by over 80%.

The DoJ’s Inspector General criticized this in a March report, and also found that DoJ de-prioritized mortgage fraud, making it the “lowest-ranked criminal threat” from 2009-2011.

As for homeowners, the biggest victims of Wall Street misconduct, they received little relief. Victims who already lost their homes got checks in the National Mortgage Settlement for between $1,500-$2,000, compensating people wrongly foreclosed upon with barely enough money for two month’s rent.

Despite claims that 1m borrowers still in their homes would get principal reductions under the settlement, when the final numbers came in this March, just 83,000 families received such a benefit, an under-delivery of over 90%.

Considering that over five million families experienced foreclosures since the end of the crisis, that relief is a drop in the bucket.

…The decision to protect banks instead of homeowners should be laid at the feet of the president and his administration, not one man in the Justice Department. But Holder certainly carried out the policy, even if he didn’t devise it.

We’ll soon find out if Holder merely presided over DoJ in a pause between helping corporate clients at Covington & Burling. But the failure to prosecute during his time in office certainly makes it look like Holder’s sympathies were with those clients even while serving as attorney general.

Economist Dean Baker was even harder on Holder than Dave Dayen and he asked a simple question, why isn't Robert Rubin behind bars? "We can never know," he concludes, "[if] this pattern of prosecution would have nailed big fish like Goldman’s Lloyd Blankfein or Citigroup’s Robert Rubin. We do know that Holder never even tried. As a result the Wall Streeters who profited most from illegal acts in the bubble years got to keep their haul. This is the message that bankers will take away going forward. This virtually guarantees ongoing corruption in finance." And you still wonder why so many voters sneer when naive partisans tell them about the great difference between the two political parties? The "us" and "them" is less about Democrats and Republicans and more about issues that don't come neatly wrapped in red or blue t-shirts.