President Obama’s Wall Street Problem

By Pam Martens: April 24, 2014

Candidate Obama Promised Change We Can Believe In

If one tallies up the members of President Obama’s cabinet who played a role in crashing a bank before coming to help him govern the country or worked for a major law firm serving Wall Street before being hand-picked by the President to head up the bodies charged with investigating Wall Street, the Executive Branch begins to feel a lot like Wall Street West. That might explain why so many fellow Americans feel like Wall Street is running (and ruining and rigging) the country.

Is the President naïve or being maneuvered by the invisible hand? We were asking the same kind of question on May 6, 2008 during the President’s first campaign for the Presidency:

“We are asked to believe that those kindly white executives at all the biggest Wall Street firms, which rank in the top 20 donors to the Obama presidential campaign, after failing to achieve more than 3.5 per cent black stockbrokers over 30 years, now want a black populist president because they crave a level playing field for the American people.

“The number one industry supporting the Obama presidential bid, by the start of February, — the crucial time in primary season — according to the widely respected, nonpartisan Center for Responsive Politics, was “lawyers/law firms” (most on Wall Street’s payroll), giving a total of $11,246,596.

“This presents three unique credibility problems for the yes-we-can-little-choo-choo-that-could campaign: (1) these are not just “lawyers/law firms;” the vast majority of these firms are also registered lobbyists at the Federal level; (2) Senator Obama has made it a core tenet of his campaign platform that the way he is going to bring the country hope and change is not taking money from federal lobbyists…”

When the President appeared on stages across the country and said he was not taking money from Federal lobbyists, he was making a less than forthright statement to the American people. In February 2008, as the President’s campaign ramped up, 27 of his bundlers (people soliciting donations from others) were employed by law firms registered as Federal lobbyists, according to the nonprofit watchdog, Public Citizen. Many of these lawyers were equity owners in their law firms – meaning they stood to profit from the lobbying fees.

Last September, President Obama announced that he was nominating Leslie Caldwell to head the Criminal Division of the U.S. Department of Justice. While Caldwell had previously worked for the U.S. Department of Justice for 17 years, for just shy of a decade she has more recently been a partner at Morgan, Lewis & Bockius LLP, a law firm representing almost every major Wall Street bank as well as being a registered Federal lobbyist.

According to The Legal 500, Morgan, Lewis & Bockius LLP’s current or recent clients include JPMorgan Chase, Goldman Sachs, Citigroup, UBS, Credit Suisse, Deutsche Bank, HSBC, and Morgan Stanley. The Legal 500 web site also notes that Morgan, Lewis & Bockius LLP “provides key regulatory expertise thanks to its suite of over 35 lawyers with prior experience at the SEC, the Financial Industry Regulatory Authority, and the DOJ, a great asset to clients seeking SEC relief in matters such as exemptive orders and no-action letters.”

Caldwell has yet to step into her new role because she has not been confirmed by the full Senate. Caldwell’s predecessor in the post, Lanny Breuer, announced he was stepping down one day after the PBS program Frontline aired an investigation in January of 2013 titled The Untouchables. Breuer returned to his partnership at Covington & Burling where he now serves as Vice Chairman. Eric Holder, the U.S. Attorney General, also came to his government post from Covington & Burling – a firm that also represents some of the biggest names on Wall Street.

During The Untouchables, producer Martin Smith shares this with viewers:

MARTIN SMITH: “We spoke to a couple of sources from within the Criminal Division, and they reported that when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”

Another partner from Covington & Burling played a key oversight role in the lead up to the Wall Street collapse in 2008. John Dugan, a former bank lobbyist, headed the Office of the Comptroller of the Currency (OCC), which regulates all national banks, from August 4, 2005 through August 14, 2010. According to Covington & Burling’s web site, Dugan now chairs their Financial Institutions Group – that is, he’s back to representing Wall Street.

Yesterday, it was announced that Marshall Miller, the head of the Criminal Division for the U.S. Attorney’s office in the Eastern District of New York, had assumed the role last week as number two in the Department of Justice Criminal Division, ostensibly to serve under Caldwell if she gains full Senate confirmation. Unfortunately, Miller’s background is heavy on terrorism and light on Wall Street prosecutions, which are typically handled out of the Southern District of New York.

According to Miller’s bio at Fordham Law, where he has served as adjunct faculty, he was “lead prosecutor in United States v. Russell Defreitas, in which five defendants were convicted after two trials of plotting to bomb the fuel tanks and pipelines at John F. Kennedy International Airport, United States v. Sathajhan Sarachandran, in which four LTTE operatives were convicted of attempting to purchase approximately $1 million worth of anti-aircraft missiles, missile launchers and other high-powered weaponry, and United States v. Shahawar Matin Siraj, in which two defendants were convicted after trial of conspiring to detonate explosives in the Herald Square subway station in New York City.”

Miller also served as the Eastern District’s National Security and Anti-Terrorism Advisory Council Coordinator and supervised the prosecutions of Al Qaeda operatives Bryant Neal Vinas and Najibullah Zazi.

The FBI, an agency within the U.S. Department of Justice, recently announced it was commencing an investigation to determine if the stock market is being rigged by high frequency traders. It has also been reported that the DOJ is investigating Wall Street’s potential involvement in rigging the interest rate benchmark known as Libor; in rigging physical commodity markets and foreign currency exchange — activities which add up to billions a year in losses to U.S. investors and consumers.

We hope, but are highly doubtful, that before the next financial crash, someone within the Executive Branch will have the epiphany that it was not terrorists in caves in the Middle East who destroyed the U.S. economy and the jobs of millions of Americans but men in well-protected caverns on Wall Street — and make staffing decisions accordingly.

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