Special Counsel Investigation of Trump Team Hits Headwinds

By Pam Martens and Russ Martens: May 22, 2017

Special Counsel Robert Mueller

Special Counsel Robert Mueller

Robert Mueller, the former FBI Director who has been appointed as Special Counsel to oversee the investigation of ties between the Trump campaign and Russia during the 2016 Presidential election may find out quickly that there is an obstacle course of roadblocks preventing him from doing his job. (Mueller served from September 4, 2001 to September 4, 2013 as FBI Director, under both Presidents George W. Bush and Obama. He is widely respected by both Congressional Democrats and Republicans in Washington.)

On January 28, President Trump quietly and with little fanfare signed an Executive Order that bars an Executive Branch employee from participating “in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.”

This concept is further defined in the Executive Order to mean “matters in which the appointee’s former employer or a former client is a party or represents a party.”

Since 2014, Mueller has worked for the sprawling international law firm, WilmerHale. With approximately 1,000 lawyers working in twelve major cities around the globe, its conflicts are infinite as well as specific.

According to Reuters’ wire service on Friday, the Trump administration is already looking at this ethics rule “to undermine the special counsel investigation into ties between President Donald Trump’s campaign team and Russia, two people familiar with White House thinking said on Friday.”

Finding conflicted client relationships at WilmerHale won’t be hard. Politico reported in March that a partner at WilmerHale, Jamie Gorelick, represents Trump’s daughter Ivanka and son-in-law Jared Kushner. According to the report, Gorelick also represented former Exxon CEO Rex Tillerson in the confirmation process to become Secretary of State under Trump. Adding to the intrigue, Gorelick had been active in Hillary Clinton’s 2016 campaign for President.

Kushner has been heavily rumored to be of interest to the investigation over his meeting last December with an executive of a Russian state-owned bank. In March, American Lawyer reported that Paul Manafort, Trump’s former campaign adviser who is a subject of the investigation, was being represented by a top WilmerHale partner, Reginald Brown, chairman of the firm’s financial institutions group who also heads up the firm’s congressional investigations practice.

Wall Street On Parade has found yet two more potential conflicts at WilmerHale. According to this roster at the corporate law firm, Steptoe & Johnson, Benjamin Powell, a partner at WilmerHale, served on the Trump transition team for the Office of the Director of National Intelligence. Powell’s profile at WilmerHale states that he iswidely recognized as one of the country’s top authorities on handling cybersecurity, data breach and related investigation matters.” On January 6, 2017, the Office of the Director of National Intelligence released a declassified report to the public with the following findings:

“We assess with high confidence that Russian military intelligence (General Staff Main Intelligence Directorate or GRU) used the Guccifer 2.0 persona and DCLeaks.com to release US victim data obtained in cyber operations publicly and in exclusives to media outlets and relayed material to WikiLeaks.

“Russian intelligence obtained and maintained access to elements of multiple US state or local electoral boards. DHS [Department of Homeland Security] assesses that the types of systems Russian actors targeted or compromised were not involved in vote tallying.”

According to the roster, another WilmerHale partner, Matthew Martens, served on the Trump transition team for the Securities and Exchange Commission. Martens’ profile at WilmerHale indicates that he “is an experienced litigator of complex, high-stakes criminal and civil matters.”

If all of this weren’t enough to raise questions about an unimpeded investigation moving smoothly forward under Mueller, Reuters noted in its Friday article that while the Justice Department might grant a waiver for the WilmerHale conflicts, the White House could potentially use the rule to “create doubt about Mueller’s ability to do his job fairly” during “press conference and public statements” as well as to potentially launch a court challenge of any negative findings by Mueller.

Just what the U.S. taxpayer doesn’t need is an open-ended investigation that results in an open-ended court challenge. All of this raises the question as to why a Special Counsel from a less conflicted law firm wasn’t thoroughly vetted before the appointment was announced to the public.

Editor’s Note: Wall Street On Parade has previously written about the public service performed by WikiLeaks in releasing emails that alerted the public to the manner in which the serially charged mega Wall Street bank, Citigroup, was simultaneously receiving massive Federal government bailouts while one of its executives was staffing up the first term of the Obama administration.

The WilmerHale attorney, Matthew Martens, is not related to Pam or Russ Martens, as far as we are aware.

As Fiancée Looks On, Mnuchin Faces Hostile Senators on Banking Committee

By Pam Martens and Russ Martens: May 19, 2017 

Actress Louise Linton, Fiancee to U.S. Treasury Secretary Steven Mnuchin, Listens to His Testimony During Senate Banking Committee Hearing on May 18, 2017

Actress Louise Linton, Fiancee to U.S. Treasury Secretary Steven Mnuchin, Listens to His Testimony          During Senate Banking Committee Hearing on           May 18, 2017

If the plan was to soften the grilling by Democratic Senators at yesterday’s Senate Banking Committee hearing by bringing along his Stoic-faced fiancée Louise Linton, U.S. Treasury Secretary Steven Mnuchin was disappointed. Neither Linton nor Mnuchin should have been surprised. Mnuchin had faced an equally hostile reception from Democrats at his January 19 confirmation hearing before the Senate Finance Committee.

During yesterday’s hearing Mnuchin dispelled the lie that the Trump administration has fostered for months — that it was considering restoring the Glass-Steagall Act and breaking up the big banks on Wall Street. After Mnuchin attempted to say this had never been their position, Senator Elizabeth Warren called his testimony “bizarre,” “crazy,” and “like something straight out of George Orwell.”

Mnuchin’s reception from Senator Catherine Cortez Masto of Nevada was equally frosty. Masto, who previously served as the Attorney General of Nevada for eight years, told Mnuchin that “the dancing around that you’ve done” reminded her of “bankers and Wall Street executives who were in my conference room as Attorney General during the worst foreclosure crisis we’ve ever seen.”

Masto reminded Mnuchin that he had recently spoken at a conference “where the cheapest ticket to attend cost $12,000.” Masto said Mnuchin had joked at the time that “you should all thank me for your bank stocks doing better.” She said the remark had come during Mnuchin’s comments about his efforts to “roll back Wall Street reform, including under an Executive Order signed by President Trump before a room full of powerful Wall Street executives.”

After reading desperate pleas from her constituents to stand firm against the Wall Street banks, Masto told Mnuchin: “I have not heard today anything that you have said that is looking out for the interests of the people that I just talked about.” Mnuchin said he could reassure Masto that he was interested in looking out for all of those people.

The Democrats’ reaction to Mnuchin was something of a replay of what had occurred at his January 19 confirmation hearing before the Senate Finance Committee. A particularly harsh assessment had come from Senator Ron Wyden, who stated the following:

“Mr. Mnuchin’s career began in trading the financial products that brought on the housing crash and the Great Recession. After nearly two decades at Goldman Sachs, he left in 2002 and joined a hedge fund. In 2004, he spun off a hedge fund of his own, Dune Capital. It was only a few lackluster years before Dune began to wind down its investments in 2008.

“In early 2009, Mr. Mnuchin led a group of investors that purchased a bank called IndyMac, renaming it OneWest. OneWest was truly unique. While Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the street faster than just about anybody else around.

“While he was CEO, a OneWest vice president admitted in a court proceeding to ‘robo-signing’ upward of 750 foreclosure documents a week. She spent less than 30 seconds on each, and in fact, she had shortened her signature to speed the process along. Investigations found that the bank frequently mishandled documents and skipped over reviewing them. All it took to plunge families into the nightmare of potentially losing their homes was 30 seconds of sloppy paperwork and a few haphazard signatures.

“These kinds of tactics were in use between 2009 and 2014, a period during which the bank foreclosed on more than 35,000 homes. ‘Widow foreclosures’ on reverse mortgages – OneWest did more of those than anybody else. The bank defends its record on loan modifications, but it was found guilty of an illegal practice known as ‘dual tracking.’ One bank department tells homeowners to stop making payments so they can pursue modification, while another department presses on and hurtles them into foreclosure anyway.”

Before the confirmation hearing concluded, Senator Wyden added the following:

“Mr. Mnuchin, a month ago you signed documents and an affidavit that omitted the Cayman Island fund, almost $100 million of real estate, six shell companies and a hedge fund in Anguilla. This was not self-corrected. The only reason it came to light was my staff found it and told you it had to be corrected.”

Louise Linton had also sat stoically behind her man at the January 19 confirmation hearing.

Mnuchin Says Trump Administration Never Intended to Restore Glass-Steagall Act

By Pam Martens and Russ Martens: May 18, 2017

Treasury Secretary Stephen Mnuchin Testifies at a Senate Banking Hearing, May 18, 2017

Treasury Secretary Steven Mnuchin Testifies at a Senate Banking Hearing, May 18, 2017

At a time of growing loss of confidence in the credibility of President Donald Trump, his Treasury Secretary, Steven Mnuchin, declared today that the Trump administration never had any intention of restoring the Glass-Steagall Act and separating the taxpayer-backstopped insured commercial banks from the high risk Wall Street investment banks.

Under intense questioning from Senator Elizabeth Warren at a Senate Banking hearing today, Mnuchin effectively said that his idea of supporting a 21st Century Glass-Steagall Act meant doing the opposite of what Glass-Steagall did: he would leave the commercial banks and investment banks under the same roof.

The Glass-Steagall legislation enacted in 1933 did only two key things: it enacted Federal insurance on bank deposits to restore confidence in the country’s deposit-taking banks at a time of unprecedented defaults tied to Wall Street gambles and it barred those insured commercial banks from combining with Wall Street investment banks going forward. That legislation protected the U.S. banking system for 66 years until its repeal in 1999. Nine years later, Wall Street crashed again in epic fashion, blowing up large insured banks like Citigroup, Wachovia and Washington Mutual, along with century old investment banks like Lehman Brothers.

Senator Warren at one point called Mnuchin’s remarks “crazy” and “like something straight out of George Orwell.” Indeed they were. (See video below.)

Senator Elizabeth Warren Grills Treasury Secretary Stephen Mnuchin on His Flip Flop on Reinstating the Glass-Steagall Act

Senator Elizabeth Warren Grills Treasury Secretary Steven Mnuchin on His Flip Flop on Reinstating the Glass-Steagall Act

After reminding Mnuchin that the President had stated that he supported a 21st Century Glass-Steagall Act while running for President and Mnuchin himself had said the same thing during his Senate confirmation hearing, Warren chided Mnuchin: “There are aspects of Glass-Steagall that you support, but not breaking up the banks, and separating commercial banking from investment banking?” Warren said. “What do you think Glass-Steagall was, if that’s not right at the heart of it?”

As the surreal exchange continued, Warren showed exasperation with Mnuchin’s preposterous position, stating: “So let me get this straight,” Warren said. “You are saying that you’re in favor of Glass-Steagall, which breaks apart the two arms of banking…except that you don’t want to break apart the two parts of banking.”

Warren suggested that Trump and Mnuchin had reversed their position under pressure from Wall Street, stating: “In the past few months, you and the President have had a number of meetings with big bank CEOs and lobbyists. Is that the reason for the reversal on Glass-Steagall?”

Mnuchin said “No, not at all.” He said there had been no reversal. The Republican Party platform promised the following:

“The Dodd-Frank law, the Democrats’ legislative Godzilla, is crushing small and community banks and other lenders…We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.”

On October 26 of last year, speaking at a rally in Charlotte, North Carolina, Donald Trump personally echoed the pledge in the party platform, stating:

“The policies of the Clintons brought us the financial recession — through lifting Glass-Steagall, pushing subprime lending, and blocking reforms to Fannie and Freddie. Two friendly names but they’re not so friendly. It’s time for a 21st century Glass-Steagall and, as part of that, a priority on helping African-American businesses get the credit they need.”

Dems Press Conference May Have Contributed to Naming of Special Counsel

By Pam Martens and Russ Martens: May 18, 2017 

Congressman Eric Swalwell Speaking at Press Conference, May 17, 2017

Congressman Eric Swalwell Speaking at Press Conference, May 17, 2017

Yesterday, an earnest group of House Democrats held a widely covered press conference to variously cajole and shame Republicans into signing legislation that would result in the appointment of an Independent Commission to investigate Russia’s involvement in the 2016 Presidential election. At the end of the day, there was no Independent Commission but there was the stunning news that Deputy Attorney General Rod Rosenstein has signed an order naming the widely respected former FBI Director, Robert Mueller, to become Special Counsel for the inquiry.

At the press conference, Congressman Elijah Cummings, the Ranking Member of the House Oversight and Reform Committee, chided the Committee’s Republican Chairman, Jason Chaffetz, for repeatedly threatening to use his “subpoena pen” but never actually getting around to doing so. Cummings said:

“In March, just a month after the President allegedly pressured Director Comey to drop the [Michael] Flynn investigation, Chairman Chaffetz and I sent a bipartisan letter to the White House requesting documents relating to General Flynn. But the White House completely refused. The White House is obstructing our investigation, covering up for General Flynn, and refusing to provide not a single document – not a single syllable; zilch, nothing.” (See video of full press conference below.)

Equally strident were the comments made by Congressman Eric Swalwell, a former prosecutor from California. Swalwell and Cummings had introduced legislation in December to create the Independent Commission and as the press conference took place, their fellow House Democrats were circulating a discharge petition to force a vote on the bill. Swalwell made the following appeal to Republicans:

“I just signed the Discharge Petition on the floor and I did it because the costs of these events have become too much for the people that we represent. What is the cost? What is the cost of the President’s alleged ties to Russia? What is the cost of the President’s alleged obstruction into the investigations that are taking place? And what is the cost of the President’s abuses of power in firing people investigating him – in Sally Yates and Director Comey. Well the cost is that our democracy has become a mess. Our ability to help people put food on their table, a roof over their head, and provide opportunity to their kids has been gridlocked and brought to a halt.

“And the future costs of future elections is now threatened. It is not disputed by anyone but the President that Russia attacked our democracy, violated our sovereignty. It was an attack ordered by President Putin. It was multi-faceted. They had a preferred candidate in mind who they sought to help and they didn’t do it because they were bored. They didn’t do it because they were testing software. They did it because they wanted something out of it. They wanted sanctions lifted.

“They saw a candidate who admired their President. And they wanted to reduce the role of NATO. Now what does this mean to all of us?

“The campaign that they ran was quite complicated. But understanding what it means to everyday Americans is not complicated at all. It means that our right to go from the debate stages to the stump to the ballot box and have a free and fair election has now been threatened.

“The most disturbing finding from the Intelligence Report back in January is not what Russia did but what they intend to do again. They are undergoing a lessons-learned campaign to attack America again. And by the looks of Washington today, they’ll probably do better next time. Because we have seen a failure of leadership from Republicans to stand up and protect this great democracy.

“Fortunately, two Republicans have signed onto this bill: Walter Jones and Justin Amash. But to protect our election systems and the structural integrity that is going to be needed going forward to make sure the American people are more aware, we need to have an independent commission.”

Swalwell is in his second term representing California’s Fifteenth District. He was previously a prosecutor in the Alameda County District Attorney’s office for seven years. Swalwell serves on the House Permanent Select Committee on Intelligence and is the top Democrat on the Subcommittee on the Central Intelligence Agency (CIA), responsible for the oversight and budget of the CIA.

Four Big Banks Lose $37.60 Billion in Market Cap in Trump Fallout

By Pam Martens and Russ Martens: May 18, 2017

Logos of Wall Street BanksFour of the largest Wall Street banks that were counting on a powerful President Trump to roll back Dodd-Frank financial reform regulations lost a combined $37.60 billion in their market capitalization yesterday. The worst hit in terms of percentage decline was Bank of America, parent of the giant brokerage firm Merrill Lynch, which fell 5.92 percent for a market cap loss of $14.14 billion.

Goldman Sachs, which has become closely associated with President Trump as a result of a raft of its former partners and its immediate past President serving in his administration, fell an eyebrow-raising 5.27 percent yesterday for a market cap loss of $4.676 billion.

JPMorgan Chase and Citigroup added to the carnage.  JPMorgan Chase fell 3.81 percent with a hit to its market cap of $11.87 billion while Citigroup fell 4.02 percent, losing $6.91 billion in market cap.

Both Goldman Sachs and JPMorgan Chase are among the 30 stocks that make up the Dow Jones Industrial Average. They helped to fuel the carnage there. The Dow closed down 372 points.

None of these mega banks can afford hits to their common equity capital. A key strategy of ending too-big-to-fail, which dumps insolvent banks on the taxpayer for bailouts, is to strengthen the common equity capital at these behemoth institutions.

So when the troubles swirling around the President of the United States gut almost $40 billion from the shares of four major Wall Street banks, people in Washington pay attention.

Shortly after the market closed came the stunning news that Deputy Attorney General Rod Rosenstein, who only days earlier had indicated he was not considering appointing a Special Counsel to take over the investigation of Russia’s involvement in the 2016 U.S. presidential election and its interactions with Trump campaign associates, did just that. Rosenstein signed an order naming former FBI Director, Robert Mueller, to become the Special Counsel for the inquiry.