"Eric Holder Vows ‘Significant’ Financial Crisis Prosecutions Against Banks"
Wall Street should brace for “significant” civil or criminal charges from the Department of Justice (DOJ), according to Attorney General Eric Holder. The promise comes amid intensifying criticism of the DOJ’s financial enforcement decisions.
In an interview with the Wall Street Journal on Tuesday, the nation’s top law enforcement official refused to give specifics about what sort of charges his department will be filing and would not discuss the number or type of cases he expects to pursue. He has announced that he will step down before the end of the year, meaning the charges could be one of his last major actions. “I expect to be here to announce a series of significant matters that we’ll be bringing,” Holder told the newspaper, and warned the finance world against “the belief that they are out of the woods because of the passage of time.”
Recent reports have suggested some government financial enforcers will fail to file significant charges in time to avoid the five-year statute of limitations for many financial misdeeds in the 2008 crisis. Holder himself has recently been shown to have greatly exaggerated his office’s prosecutorial achievements relating to mortgage market abuses.
Holder did not specify if the charges he expects to bring this fall will be civil or criminal. But if reports are correct, his Criminal Division is poised to get a new chief prosecutor, Leslie Caldwell, six months after the departure of longtime Wall Street defender Lanny Breuer. Whereas Breuer had spent his career working on behalf of the banks he declined to prosecute while heading the Criminal Division and returned to the Wall Street defense firm Covington & Burling after stepping down, Caldwell headed the government’s Enron Task Force from 2002 to 2004 and was a prosecutor specializing in white collar crime prior to that.
If the DOJ does produce serious charges against any significant number of financial actors over the financial crisis this fall, it will reverse years of ineffective and insufficient enforcement actions that critics say have been largely cosmetic. The Obama administration trumpeted a task force on mortgage fraud at the beginning of 2012, but that working group went months without hiring staff, finding an office, or even plugging in a telephone. Rather than originate new casework, the task force’s biggest accomplishments to date have come from hiring private attorneys who had already built strong cases.
The $25 billion National Mortgage Settlement has been a manifest failure, with banks manipulating the settlement to their advantage and continuing abusive practices. Sen. Elizabeth Warren (D-MA) will send Holder a letter on Wednesday accusing him of “settling on the cheap” on one provision in the $25 billion deal, according to Politico.
Homeowner frustration with the DOJ’s paucity of effort boiled over this summer into protests and sit-ins that led to the arrest of seven mothers and grandmothers who had been victims of wrongful foreclosures.