Attorney General Eric Holder Protecting His Own

The headline in Tuesday’s USA TODAY screamed in all caps: “Holder: NO ONE TO BIG TO JAIL.’” Wow. I’ll bet that has his friends on Wall Street quaking in their boots.

But that very manly threat by Attorney General Eric Holder, like so many other pronouncements by the administration of President Barack Obama, is just baloney. USA TODAY quoted Mr. Holder as saying:

“Some have used the phrase to describe the theory that certain financial institutions, even if they engage in criminal misconduct, should be considered immune from prosecution due to their sheer size and their influence on the economy.”

“That view is mistaken. No individual or company, no matter how large or how profitable, is above the law.”

Let’s leave aside the blatant hypocrisy of that statement by the man who refused to prosecute the Black Panthers for recorded voting rights violations, refuses to enforce the federal drug enforcement laws against marijuana sellers, refuses to enforce the immigration laws against repeated violators, refuses to defend the federal Defense of Marriage Act, and has repeatedly refused to hold any of his friends on Wall Street accountable for their serial misconduct. Rather let’s pay attention to what exactly is going on with Mr. Holder’s Justice Department and the two big financial institutions – Credit Suisse Group AG and BNP Paribas.

BNP Paribus has been charged with violating U.S. sanctions against a host of countries including Iran and the Sudan – basically they have been aiding and abetting terrorist regimes. Credit Suisse has been charged with providing illegal tax shelters for Americans – basically they have conspired to defraud the government of tax revenues.

Those are pretty serious accusations. So who is going to jail? No one. Tuesday’s Wall Street Journal described the pending deal with Credit Suisse thusly:

“U.S. prosecutors are close to securing a settlement of more than $1 Billion from Credit Suisse Group AG over allegations the bank helped wealthy Americans evade taxes, according to people familiar with the discussions.”

Does that sound like “jail” to you? Look, corporations are legal fictions. They exist for financial reasons. Because they are fictions they do not “act” – they are simply shells for the actions of men and women. It wasn’t Credit Suisse – a legal fiction – that aided in the evasion of taxes. It was the officers and directors – men and women – who designed, solicited, enabled, and profited from the conspiracy to evade taxes. Which one(s) of those miscreants is going to jail? No one – not one.

This is just more of the same:

In December of 2012, CNN reported:

In a historic fine, HSBC will pay out a record $1.92 billion to U.S. authorities to settle money laundering accusations — activities which have allegedly occurred with drug cartels in Mexico and terror-linked groups in Saudi Arabia. U.S. authorities declared HSBC, the UK’s biggest bank by market capitalization, in breach of a series of U.S. laws, including the Trading with the Enemy Act.

Who went to jail? No one, not one person.

A November 9 report from Rueters stated:

“The U.S. government urged that Bank of America Corp pay $863.6 million in damages after a federal jury found it liable for fraud over defective mortgages sold by its Countrywide unit.

* * *

“The government said the penalties were necessary to punish the bank and Mairone “and to send a clear and unambiguous message that mortgage fraud for profit will not be tolerated.”

“Bank of America and Mairone were each found liable for defrauding government-controlled mortgage companies Fannie Mae and Freddie Mac through the sale of shoddy loans purchased from Countrywide in 2007 and 2008.”

Who is headed for jail? No one, not one person.

And worse than that is who is going to pay the fines – not them, not the officers and directors who made the decisions to engage in felonious activities. No it is the shareholders who will pay. The shareholders who do not engage in the day to day operations or decisions to engage in felonious conduct will pay. For many of those shareholders – beneficiaries of a variety of corporate or union sponsored retirement plans – they are even further removed from specific knowledge or accountability but will still pay the fines.

And in addition to the fines, they will pay millions of dollars in attorney fees to the very Wall Street law firms from which Mr. Holder emanated and to which he will return after his tour in protecting them from any actual accountability. The officers and directors of these “felonious” institutions continue in place. They receive their astronomical pay and bonuses on a regular basis – undeterred by the actions of Mr. Holder. They continue to wine and dine with Mr. Holder and other representatives of the Obama administration as if nothing has happened – and, in fact, as it effects them personally, nothing has happened.

This is a game played by a club of Administration insiders, Wall Street Bankers, partners in the major law firms, and officers and directors of the major corporations. It is not confined to the current administration but pretty much permeates the relationship between the politicians and those with means. Membership is not defined by birthright, age, race or gender. There does seem to be a predominance of alumni from the Ivy League schools and other private schools. But the defining characteristic is not pedigree; it is a willingness to bend the law and parse morality to increase one’s wealth or power – or both. And, yes, Mr. Obama and Mr. Holder are prominent members. Periodically, the government will bristle – usually well after the fact about something they knew or should have known much earlier – and proceed to investigate, charge and settle some controversy. The politicians get big headlines and appear to be protecting the American public, the guilty parties are immunized from actual accountability – no jail time, and the shareholders pay the fines – and the parties return to the quest from larger profits by twisting the facts and parsing the law. It is a game in which the parties are expected to contribute handsomely to the politicians and if they don’t they are no longer invited to the “Georgetown parties” or immunized from their conduct. In exchange, the government officials are allowed to posture and condemn but never to punish the actual offenders.

And while Mr. Holder says that the fines are necessary to send “a clear and unambiguous message”, it will have no deterrent effect because those responsible have been immunized from actual punishment.

If you want the system to actually deter such activities, the punishment should require jail time for the offenders and loss of pay and benefits by the offenders – most of whom are multi-millionaires just like the politicians who protect them. Short of that the “record fines” that grab headlines will become more frequent and the felonious acts will continue.