The program effectively puts on full display the outright complicity between the government and the too big to fail/too big to jail banks. Lanny Breuer, the revolving-door white collar criminal defense lawyer in question, as much as admitted that his personal angst about the continued existence of financial monster institutions was the prime driver in his decision not to prosecute any head honchos. Moreover, he claimed, since so many of the alleged institutional victims of the various frauds were just as crooked as the perpetrators themselves, and probably knew and didn't care that they were being cheated, he can't prove that crimes were committed. Plus, if he went after the big shots, he'd have to go after their lawyers and accountants too. Lanny Breuer, a former defense lawyer for white collar criminals, would never dream of eating his own:
And if I show that sophisticated Bank One is doing a transaction with sophisticated Bank Two, and sophisticated Bank Two knows fully what it’s getting into or doesn’t care at all what the first representations are, then I cannot bring a case.
… The other issue we have here in those kinds of transactions [is] for the most part, you had the most sophisticated bankers and lawyers and accountants as consultants. So for me to bring a criminal case, I have to show that the very sophisticated lawyers on Wall Street who worked on this, the very sophisticated accountants, that either they were in on the crime, or frankly, what is reality is that in these disclosure documents out there, there was enough disclosure that we cannot bring a criminal case.Breuer just admitted we have a two-tiered system of justice in this country. If you can afford an army of lawyers and better yet, if you can prove your alleged victim has a nasty case of dirty hands himself, you are home free. This truth is old news, but it is a pretty stunning admission to make on national television.
The first half of the Frontline documentary showed various whistleblowers telling reporters that they were under direct orders from their Wall Street bosses to overlook the fraud on the "liar loans" that were ultimately sliced, diced and repackaged into investments which the sellers also bet against for even more profits. The whistleblowers were never contacted by the Justice Department for help in investigating the massive fraud. Breuer made himself look petty and inept as he actually dissed these witnesses:
Another criticism that has been thrown at you is that you’ve not done enough to go looking for the whistle-blowers that are out there. We have been able to contact a number of people who were inside the banks, doing due diligence work as contractors, who all told us that they were never contacted by the Justice Department.
I can’t talk in general about nondescript, anonymous whistle-blowers. But here’s what I can tell you. Whenever I personally have been in any public setting, I’ve invited whistle-blowers to come forward.
But why don’t you go out and look for them?
We do go out and look for them. I don’t even know what more I could do. I speak publicly. Preet Bharara, [U.S. Attorney for the Central District of California] Andre Birotte on the West Coast, the U.S. attorneys speak about it. We have a forum where we talk about mortgage fraud and investment fraud, and we go around the country, and we have fora.
We’re available to the press. I’m available to Congress. We passed Dodd-Frank [Wall Street Reform and Consumer Protection Act], which gives whistle-blowers a financial incentive to come forward. I talk to our regulators more than ever. And when journalists come forward and they talk about whistle-blowers or TV shows come on that talk about whistle-blowers who make your very claims, we have FBI agents and lawyers and regulators come speak to those people right away.
… It shouldn’t be so easy for journalists to go out and find whistle-blowers that at this point, four years after the meltdown, haven’t been contacted by Justice.
I don’t accept for one moment that you all are finding whistle-blowers that we’re not. What I do believe is then when we speak to the whistle-blowers, we have to make a determination whether what they say is really a criminal case.
So in your scenario, before where you say, “How is it possible that the bank is able to keep some of the proceeds and not pass it over?,” the whistle-blower may say, “I saw that the bank kept those proceeds.” I’m offended by it, but unfortunately, when we look at the documents, when we look at the origination materials and we look at the contracts, it says in those contracts that this reprehensible conduct is permitted. …I am not a lawyer, but I seem to remember learning that contracts which condone/allow criminal behavior are illegal and uninforceable on their face, and can actually be thrown out of court, especially if they do harm to a third party. I guess criminal conspiracy laws don't apply to banks, especially since the lawyers and lobbyists banks actually write the laws in the first place.
Above all, Lanny Breuer is clear that his priorities lie in protecting the banks over the people of the United States:
I think I am pursuing justice. And I think the whole entire responsibility of the department is to pursue justice. But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case there’s some huge economic effect, it affects the economy so that employees who had nothing to do with the wrongdoing of the company –
Well, first let’s talk about the employees. Employees may lose their jobs. Shareholders may or may not lose, and shareholders invested. But the employees perhaps did something different.
If it creates a ripple effect so that suddenly counterparties and other financial institutions or other companies that had nothing to do with this are affected badly, it’s a factor we need to know and understand.
We have, as a government and as an administration, dug out of one of the great financial crises in the world. And at the Department of Justice, we’re being aggressive, but we should in fact take into consideration what the experts tell us.And those order-giving experts, of course, come straight out of the Obama Treasury Department, and its revolving doors to and from Wall Street. It is surely only a coincidence that Treasury Secretary Timothy Geithner is also blowing town for greener pastures this week, right along with Lanny. These guys could play the identical cousins in a remake of the old Patty Duke Show. The duo may not look alike, but they sure talk alike, they walk alike, and they are definitely two of a kind. They both have that annoying habit, for instance, of huffily whining about how "personally offended" they get by both Wall Street greed and those who have the effrontery to challenge them about not getting deeply offended enough to actually prosecute the fraudsters. See Lanny's deep offense defense in the film and transcript. See a few of Tim's throes of extreme and deep personal offense here, here, and here. Geithner also performed a prelude to the Breuer Defense in D-Minor at the Brookings Institute last year:
"Most financial crises are caused by a mix of stupidity and greed and recklessness and risk-taking and hope," said Geithner, who helped tackle the crisis for the Bush administration when he was the head of the New York Federal Reserve and has been urging Europe to act more aggressively to contain its debt problems.
"You can't legislate away stupidity and risk-taking and greed and recklessness. What you can do is make sure when it happens it does not cause too much damage and to do that you have to make sure you have good rules against fraud and abuse, better protections and you force banks to hold more capital against their risk," he said.What the Frontline documentary did not mention was that after a smirking Goldman Sachs CEO Lloyd Blankfein was raked over the coals by Senator Carl Levin in 2010, and Levin handed evidence of crimes on a silver platter to the Department of Justice, employees of the bank made a hasty and generous donation to the Obama re-election campaign war chest. And later, coincidentally of course, Breuer's boss, Eric Holder, decided that the evidence of fraud was not evidence of fraud.
The relationship between the Obama Administration and the banking industry has been long apparent, though new revelations of complicity are emerging all the time, thanks to private lawsuits and investigative journalism. The day after the PBS blockbuster aired, ProPublica was revealing that Morgan Stanley bankers were humorously aware enough of their own fraud to name their garbage packages such things as "Nuclear Holocaust", "Subprime Meltdown" and "Shitbag." Morgan Stanley executive William Daley, you may remember, served a brief stint as Obama's chief of staff before the revolving doors took him straight back to Morgan Stanley. His purpose at the White House was to make nice with big business and push back against Republican claims that Obama is not business-friendly. If only.
Meanwhile, JP Morgan Chase CEO Jamie Dimon, who managed to "lose" billions of dollars of client money in the London Whale Fail scandal, not only is walking free and acting like a jerk at the elite Davos convention in Switzerland this week, he is boastfully broadcasting his own immunity from prosecution. He sported, not FBI cuffs, but FBI cufflinks on the first day of the confab. When he was called before Congress to testify about the swindle last year, he wore his official magical protective Presidential Seal cufflinks as amulets. They worked.
Are you deeply offended? Or, like me, just deeply cynical?
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