This post first appeared at Columbia Journalism Review.
There’s one word missing in too many major press accounts of Eric Holder’s tenure as Obama’s only attorney general: bankers.
It’s a baffling lapse for outlets like the Washington Post, Bloomberg, NPR, the Los Angeles Times, CNN and ABC News, none of which, in their main stories on the resignation, mentions Holder’s dismal record prosecuting Wall Street fraud in the wake of the biggest financial disaster since the Great Depression. The New York Times drops one line toward the bottom of its front-page story on the news, inaccurately calling it a “liberal” notion that the AG “should have used his power to prosecute those responsible for the financial crisis in 2008.”
Holder leaves office having been far outclassed by the Bush administration even in prosecuting corporate criminals, despite overseeing the aftermath of one of the biggest orgies of financial corruption in history.
In March 2009, a month after Holder was sworn in as attorney general, The New York Times reported that “federal and state investigators are preparing for a surge of prosecutions of financial fraud” and that the DOJ considered it a “a top priority.”
Holder came from the white-shoe DC law firm Covington & Burling, which represented half of the top 10 mortgage servicers, along with MERS, the mortgage records system that played a big role in the foreclosure fraud scandal (the firm and the Justice Department declined to tell Reuters in 2012 whether Holder worked on any of those cases). He brought along his Covington colleague Lanny Breuer as enforcement chief, and Breuer would play a key role in the lack of indictments of major executives.
By the end of 2010, it was clear the financial prosecution surge hadn’t happened, and the media began making noise about it. Holder announced the results of a financial fraud task force, claiming more than 300 scalps.
The press quickly exposed Holder’s campaign as a public relations stunt, reporting that many cases were started years earlier by the Bush administration, other were double-counted, and that almost all of the rest were small fry. Even The New York Times’s Andrew Ross Sorkin, who’s no anti-bank populist, mocked Holder’s financial fraud task force as an exercise in missing the point.
Two years later, Holder did it again, announcing a mortgage fraud sweep had resulted in 530 prosecutions and a billion dollars in fines. Bloomberg immediately noticed that the DOJ had again included Bush-era cases in its tally. Several months later, the administration quietly admitted it had inflated the real numbers, which were 107 prosecutions and $95 million in fines — almost all from small-time criminals.
Then there’s the Holder Doctrine, set forth in a 1999 memo when he was Clinton’s deputy attorney general. It says that prosecutors should take “collateral consequences” into account when “conducting an investigation, determining whether to bring charges and negotiating plea agreements.”
By 2012, Breuer all but admitted that the administration didn’t criminally charge banks because it worried about the collateral consequences. “In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected and even that global markets will feel the effects,” he said.
“Those are the kinds of considerations in white-collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.”
We know now — too late to do anything about it — that Holder never even really tried to investigate the banks. By early last year, 60 Minutes was confronting Breuer with reporting that sources inside the DOJ’s criminal division who said, “There were no subpoenas, no document reviews, no wiretaps” of Wall Street for the financial crisis. Eventually, after the political pressure grew intolerable, Holder squeezed billions of dollars in civil penalties from Wall Street without forcing a single individual to face trial. Contrast that with the Holder DOJ’s aggressive criminal prosecution of insider trading, which is basically a Wall Street-on-Wall Street crime.
Holder and Breuer were part of a pattern within the Obama administration of weak Wall Street enforcement — one that leads right back to the president himself. The tally of top officials who were close to Wall Street and have since left for finance or finance-related jobs includes former Treasury Secretary Tim Geithner, former SEC chairwoman Mary Schapiro, Breuer, former SEC enforcement chief Robert Khuzami, and, soon, you can bet, Eric Holder.
Here’s Holder’s legacy on the financial fraud front, which was one of the biggest issues he faced when taking office: