I remember President Obama’s election in 2008, and before he was even sworn in, I was thinking that we would finally see the Justice Department put back together again. During the Bush years, we saw countless deferred prosecutions for banking criminals on top of the ridiculous torture authorization from then-Attorney General Alberto Gonzalez. “W” made the Justice Department look like just another dysfunctional, war hungry branch of government.
That optimism faded quickly, as President Obama announced that he was putting a corporate defense attorney names Eric Holder at the helm of the Justice Department. Holder became a millionaire working at the corporate law firm of Covington & Burling, a group of elite lawyers who represent clients like Bank of America, Morgan Stanley, Phillip Morris, and Halliburton. Almost every company that you’ve ever heard of that steals from taxpayers or poisons our environment can be found on Covington Burling’s client roster.
The end result was that bankster criminals operating on Wall Street who burned down our economy and cost us about $13 trillion dollars with their scams got off without a single CEO or executive spending a day behind bars. Instead, we got more deferred prosecutions and fines that were so low that the criminal activity actually became profitable for these companies.
The latest example is Citigroup. Between 2002 and 2007, right before the collapse of our economy, Citigroup convinced investors to buy into their hedge fund program. The suits at Citigroup told investors that these hedge funds were a safe and profitable bet – there was no way anyone would lose any money from these investments. Citigroup knew this wasn’t true, but their investors were confident that they were being honest.
When the economy tanked, these investors lost everything, but Citigroup pocketed $3 billion dollars. The investors were blind sided by this massive loss, but Citigroup knew from the start that this was going to be the end result.
The SEC ended up fining Citigroup for defrauding these investors, but the total amount of that fine was only $180 million dollars. That means that 94% of the money that the company gained from scamming investors stays in their pockets, distributed among shareholders as they smoke their cigars and laugh at the mom and pop investors who will never be able to retire because their investments are gone.
Again, Eric Holder did absolutely nothing about this problem, because he came from the law firm that represented these criminals. That’s where his personal fortune came from.
And Citigroup wasn’t the only bank to make a profit off of their illegal activity – here are a few others that found out how much crime pays for Wall Street:
Goldman Sachs sold about $33 billion dollars worth of mortgage-backed securities that they knew were toxic. When they got busted, they paid a fine of $60 million.
JP Morgan Chase agreed to pay a fine of $153 million for defrauding investors in the Summer of 2011, but turned a profit of about $5.6 billion that same quarter.
The story repeats itself constantly: A big, faceless Wall Street banking firm makes billions of dollars by scamming consumers and investors, the Justice Department and SEC slap a fine on the company, and both the bank and the defense attorney walk away with huge paychecks while investors are left penniless.
Its no surprise that Eric Holder decided to leave the DOJ to return to his high-paying position at Covington & Burling because when it comes to Wall Street, crime really does pay.
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