July 15, 2015

Nicole Colson looks at what Eric Holder will be up to for his new employer.

IS IT any wonder that none of the Wall Street bankers that wrecked the U.S. economy ever ended up in jail?

Former Attorney General Eric Holder--the man responsible for holding accountable the people who caused the Great Recession--recently announced that has a job back at his old Washington law firm, Covington & Burling, with a corporate clientele made up of the likes of...Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, among others.

In other words, the very firms that wrecked the U.S. economy--the firms that, as attorney general, Holder should have prosecuted but instead helped to protect and ensure they returned to profitability.

In a statement, Holder said the move felt like "coming home." Coming home to a fat paycheck, more like.

According to the Washington Post, Holder's "new job description describes vaguely that he'll work on 'complex investigations and litigation matters.' He said that will include the intersection of business and public policy, and matters ranging from antitrust to taxes."

Former Attorney General Eric Holder (Department of Health and Human Services)

This is par for the course in Washington, of course, where former politicians and White House insiders routinely leave "public service" to return to cushy private-sector gigs where their insider knowledge helps them advise wealthy clients on the best ways to maximize profits. No doubt, that's what Covington & Burling is hoping Holder will do:

As David Dayen noted at Salon.com:

If we had a more aggressive media, this would be an enormous scandal, more than the decamping of former Obama Administration officials to places like Uber and Amazon. That's because practically no law firm has done more to protect Wall Street executives from the consequences of their criminal activities than Covington & Burling... Holder has joined several of his ex-employees there, creating a shadow Justice Department and an unquestionable conflict of interest. In fact, given the pathetic fashion in which DoJ limited punishment for those who caused the greatest economic meltdown in 80 years, Holder's new job looks a lot like his old job.

In fact, Dayen notes that Covington & Burling played a particular role in the Great Recession, having in the 1990s drafted the legal justification for "MERS"--the Mortgage Electronic Registration System--on behalf of Fannie Mae, Freddie Mac, Bank of America, JPMorgan Chase and other large banks. The system allowed banks to transfer mortgages without having to submit documents or pay fees with county land recording offices. Among other things, this helped facilitate the market bubble around mortgage-backed securities that was partly to blame for the Great Recession.

And, as Dayen notes, Holder isn't the only former administration official to land at Covington. In fact, the company has used its ties to former Washington insiders as a selling point to woo clients, writes Dayen:

I wrote in Salon last March about the firm's boasting, in a cover story in the trade publication American Lawyer, about avoiding jail sentences and reducing cash penalties for executives at companies like IndyMac and Charles Schwab. Included in the praiseworthy article is Lanny Breuer, who ran the Justice Department's criminal division under Holder. Breuer, a vice chairman at Covington, vowed not to represent companies under Justice Department investigation, but his presence in a marketing document specifically wooing bank clients is clear: Sign up with Covington, and you get access to insiders at the highest level.

COVINGTON WAS likely salivating to get Holder to come back. After all, this is a man who, as attorney general, proved himself a friend to corporate interests at every opportunity.

As attorney general, Holder once declared that "there is no such thing as 'too big to jail'." But that's the exact logic he used to justify the almost total lack of prosecutions of the Wall Street banksters who crashed the economy.

As the top law enforcement official of the Obama administration, but even before, Holder argued that some banks and firms were, essentially, "too big to prosecute"--that their large size and the way they had their tentacles wrapped around the U.S. and even world economy should dissuade the government from prosecution as a result of potential "collateral consequences."

The lack of Wall Street prosecutions "is a function of the fact that some of these institutions have become too large," Holder told a Senate Judiciary Committee in 2013. "It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate."

In one eyebrow-raising description, the Post noted that as attorney general, Holder once said that "he learned that mostly corporations 'are trying to do the right thing, but often they operate in an advice vacuum where they seek counsel too late.' That's where he hopes to be most effective, stepping in before Covington's clients do the wrong thing."

But the economic logic of capitalism means that corporations are primarily concerned with "trying to do the right thing" for their own investors and profit margins--not for the rest of us. And Covington makes money by betting on that fact.

As journalist Matt Taibbi told Democracy Now, in addition to failing to prosecute, Holder also specifically cut backroom deals with some of the worst Wall Street offenders, allowing them to pay fines which amounted to a pittance and then helping them get right back to business:

He spent six years essentially guiding all of these Wall Street firms--many of which are clients of this company that he's now working for--he guided them all back to profitability. He allowed bankers to escape prosecution. And now he's going right back to that firm, where he's going to enjoy a very lucrative partnership, whether he ever works again, you know, for the rest of his life... Holder, in general, pioneered a number of different ways where essentially a lot of these too-big-to-fail companies were allowed to buy their way out of trouble...Holder just started striking deals and not submitting them for judicial review. He did a $13 billion settlement with JPMorgan Chase where no judge signed off on the deal. The whole thing was done in secret. He essentially institutionalized the back room. This was just a deal where a bunch of bankers got together with a bunch of Justice Department officials, money changed hands, and that was it. All of their criminal problems went away.

In other words, Holder's been going to bat for Corporate America for the past six years. Now, however, he'll be cashing in on his former position as a White House insider--and getting paid to do it.