Lack of Prosecution of Bank Fraud: Conflict of Interest?

Eric Holder and Head of DOJ’s Criminal Division Were Partners for a Firm Which Used to Represent the Big Banks, Fannie, Freddie and MERS

by Guest Author Washington’s Blog

Obama’s Department of Justice isn’t prosecuting any big fish.  Indeed, the Obama administration is prosecuting fewer financial crimes than Ronald Reagan, George W. Bush, George H.W. Bush or Bill Clinton.

This is true even though the big banks – such as Bank of America, Citigroup, JP Morgan and Wells Fargo – committed some fraud, but their entire business model is fraudulent. See this, this, this, this and this.

The same is true of Fannie, Freddie. And even more so with Mers, where its entire purpose – from day one – was fraudulent. Here, here, here, here and here.

So why haven’t the fraudsters running these chop shops been prosecuted by Attorney General Eric Holder, and the head of the DOJ’s criminal division Lanny Breuer?

Reuters helps explain why today:

U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division [watch this to get a sense of Breuer], were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington’s biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.

The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

***

While Holder and Breuer were partners at Covington, the firm’s clients included the four largest U.S. banks – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co – as well as at least one other bank that is among the 10 largest mortgage servicers.

***

Covington represented Freddie Mac …. [and] MERS Corp …. Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks.

***

Covington in 2004 also wrote a crucial opinion letter commissioned by MERS, providing legal justification for its electronic registry. MERS spokeswoman Karmela Lejarde declined to comment on Covington legal work done for MERS.

This isn’t as bad as Department of Justice lawyer John Yoo’s letter justifying torture by the Bush administration, but it’s arguably somewhat analogous, as it is a legal opinion trying to justify blatant illegality.

No wonder top financial crime expert Bill Black says that we have to fire Eric “Place” Holder and all other government officials who are blocking prosecution of the criminals who caused the economic crisis.

Indeed, it makes one wonder whether the Department of Justice still dispenses justice … or has turned into a “protection racket” for the rich and powerful.

Of course, most of the rest of boys in D.C. are not much better.

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