An investigation by Peter Schweitzer's Government Accountability Institute (GAI) has concluded that conflicts of interest among President Obama's top Department of Justice appointees may explain why nobody on Wall Street has been prosecuted by the government following the economic meltdown of 2008.
The conflicts stem from longstanding employment relationships of the appointees with law firms that represented key Wall Street giants like Goldman Sachs and AIG, according to the GAI report. The GAI was founded by Peter Schweitzer, whose book "Throw them all out" exposed members of Congress in both parties profiting on insider information obtained as a result of their offices.
"Understanding the Justice Department's relationship with Big Finance may shed some light on the situation. Attorney General Holder and other top Justice officials came to the DOJ from prestigious white-collar defense firms, where they represented the very financial institutions the DOJ is supposed to investigate. Many Justice officials also played prominent roles in the president's 2008 campaign," the GAI report said.
Prosecutions in other areas of white collar crime such as Medicare fraud have increased significantly during the Obama administration, according to figures cited by the GAI report.
Based on data compiled by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University, the GAI report noted that Medicare fraud prosecutions have increased 68.9 percent under Attorney General Eric Holder who was appointed by President Obama in 2009. Civil rights abuse cases have also gone up under Holder.
But the increases in those areas highlight the lack of action on Wall Street financial misdeeds because, the report said, "the federal government has yet to file a single criminal prosecution against any top executive of an elite financial institution. Financial fraud prosecutions by the Department of Justice are in fact at a 20-year low, although the DOJ explains that the number would be higher if new categories of crime were taken into account."
As an example, the report points to Holder's relationship with Covington & Burling, a white-shoe law firm that represents many top Wall Street corporations, including Goldman Sachs, Bank of America, Citibanks, Wilmington Trust, Deutsche Bank, NG, Morgan Stanley and UBS. Prior to his 2009 appointment as Obama's attorney general.
Holder was a Covington & Burling partner for a decade before his appointment, earning $2.1 million in 2008 and $2.5 million in 2009, according to GAI.
During Holder's partner tenure, Covington & Burling was involved in the creation of the Mortgage Electronic Registration System (MERS) that figured prominently in the robo-signing portion of the mortgage industry's multiple scandals. "MERS was intended to speed up mortgage registration and transfers, but it led thousands of bank employees to sign their names as MERS officials. In 2004, Covington wrote an instrumental opinion letter for MERS that provided the legal justification for its electronic registry," the GAI report said.
The report also notes that white-collar legal defense work is among the most profitable for front-line law firms largely because Fortune 500 public companies "purchase directors' and officers' liability insurance, rendering the corporation not solely responsible for covering the cost of litigation. A statistical analysis of the top firms in the field shows that firms with white- collar criminal defense practices perform substantially better in gross revenue as a result."
You can read the full GAI report here.
Mark Tapscott is executive editor of The Washington Examiner.