Obama transition should include booting Holder

This is my Sunday column ...
 


With the exodus of Obama administration Cabinet members over the past several weeks, it’s disturbing that the one department head who needs to go, Attorney General Eric Holder, is apparently staying on for the president’s second term.
More than four years after the U.S. banking system suffered a self-imposed meltdown due to unchecked greed and rampant recklessness, Holder has yet to prosecute anyone for the blatant fraud that occurred.

The mantra “too big to fail” that led to the distasteful $1 trillion dollar TARP remedy has morphed into “too big to prosecute” under Holder’s shameful watch.

Worse yet, overwhelming evidence of criminal fraud by corporate executives is not only ignored by the Justice Department, many of these hucksters have received multi-million dollar corporate bonuses for their work.
In the real world, street-corner scams with a few thousand dollars in play can bring prison terms, yet the unrepentant Wall Street crew that cost the U.S. economy trillions of dollars appears untouchable.
Holder, the nation’s chief law enforcement officer, and his sidekick, Justice Department criminal investigations chief Lanny Breuer, may never be held accountable for their inaction.

According to critics, the evidence gathered since the financial industry’s free-fall paints a picture of interest-rate rigging, money laundering, securities fraud and wild speculation.
Numerous reports and studies and whistleblower’s testimony and congressional hearings since the 2008-09 Wall Street collapse have revealed fraudulent activities at every level: the fly-by-night street-front mortgage brokers who sold subprime loans as fast as they could; the biggest banks on the planet who bought, packaged and sold those worthless mortgages to unsuspecting investors as incomprehensible derivatives; the ratings agencies such as Standard & Poor’s and Moody’s who shamelessly gave these junk financial instruments top ratings in order to coddle well-heeled customers; and huge insurance/investment firms such as AIG, which engaged in credit default swaps and artificial labeling that they knew were phony and potentially disastrous.

Former prosecutors and Securities and Exchange Commission officials have stepped forward to bemoan the complete lack of arrests and prosecutions of top-flight bankers.
Yet, the spineless Holder remains on the job.

The AG tried to boost his reputation within these confines by announcing last week that he was filing a civil suit against Standard & Poor’s for artificially inflating financial ratings for countless Wall Street transactions.
The ugly, unfathomable aspect of this story is that the Justice Department is essentially suing on behalf of financial industry behemoths like Citibank, who claim they were damaged by S&P’s overly generous AAA ratings.
But Citibank executive are not victims, they are participants. How could Holder ignore the fact that Citibank’s former risk management officer testified that as early as 2007 approximately 80 percent of their loans were defective?

The bungling of this case comes on the heels of one of Holder’s biggest embarrassments. His lackey, Breuer, recently announced that banking giant HSBC would face no criminal charges for money laundering funds to terrorist groups and drug cartels.
The cover-ups within the bowels of our financial oligarchs just keep coming.

The fringies (my word) on the left and right share responsibility for the debacle of Holder staying put.
The left-wing closed their eyes to the AG’s cowardly approach, largely because they didn’t want to damage one of Obama’s pals and hit the president with collateral damage.
The right-wing gave Holder a pass by obsessively focusing only on Fast and Furious, a terribly ineffective program designed to track the Mexican drug cartels’ thugs by keeping tabs on the high-powered weapons they bought in the U.S. The result, as the conservatives lament, was the death of two U.S. border agents at the hands of Fast and Furious-related guns.

Yet, I would suggest that Holder’s passivity regarding Wall Street shenanigans is far more damaging.
Surely, the human toll of the financial system’s meltdown was 10,000-fold worse, with seniors losing much of their life savings; middle class folks losing their home or their job or their business; and low-level Wall Street bank employees being summarily tossed onto the street when the panic set in.

Who pays the price for that economic carnage?

Cynics will say that the obvious explanation for the unethical shielding by the AG lies in the huge sums of campaign cash that Wall Street and big-time investors poured into the president’s re-election campaign, as well as the campaign warchests of Democrats and Republicans on Capitol Hill who will never bite the hand that feeds them.
That is certainly a part of this systemic deception that allows Wall Street executives to avoid any consequences for their actions. In addition, we have the revolving door, with financial titans taking high-level government jobs, perpetuating the buddy-buddy system, and then returning to the well-heeled lifestyle of the Wall Street casinos, where the “house” always wins.
While the exceedingly complex and slow-moving regulatory changes in the Dodd-Frank legislation and the Volcker rule proceed, some analysts are suggesting that the near-collapse of 2008-09 could happen again.

It seems that Wall Street has an attitude problem.

Documents revealed in one ongoing civil court case alleging fraud by Morgan Stanley show that a $500 million package of toxic assets sold by the bank was internally labeled by snarky financial analysts as “Subprime Meltdown” and “Nuclear Holocaust.” In the end, nearly all of this junk sale proved worthless.
The investors victimized by this massive fraud should not have to rely solely upon high-priced attorneys engaged in protracted civil court cases to right the wrongs.

More importantly, the Justice Department, by failing to prosecute anyone, has perpetuated perhaps the deepest chasm in our revered “equal justice for all” system in many decades. Deterrence is nowhere to be found. And in Holder, the banks know they have a friend.

Meanwhile, time is running out. It’s time, in this political transition period, for Obama to make a change. Don’t let us endure another four years in which Holder is comfortable holding the bag.