Sunday, January 27, 2013


Watch The Untouchables on PBS. See more from FRONTLINE.
Frontline aired The Untouchables Tuesday night and it adds to the parade of Lawless Capitalism seen in recent weeks. Every citizen must watch this brilliant and deeply distressing investigative documentary. After watching this episode, tell everyone you know to watch and to write their elected leaders demanding that the law be enforced and that the senior leadership at the United States Department of Justice immediately be fired. It is available above and PBS includes great background information, like interview transcripts here.

It is beginning to look like the DOJ never even conducted any major grand jury investigations of the Wall Street bankers. Congress and the President should immediately investigate if that is true. If DOJ never conducted any thorough grand jury inquiries then every statement they have made that they did not have sufficient evidence to proceed is a fraud on the public. If they never sent out subpoenas then they declined to prosecute with a blindfold on. That is an outrage without precedent in our history. Here is the key exchange with the DOJ Deputy Attorney General Lanny Breuer (from the Frontline transcript of the interview with Lanny Breuer):

Q: We spoke to a couple of sources from within the fraud section of the Criminal Division, and through mid-2010 they reported that when it came to Wall Street, there were no investigations going on; there were no subpoenas, no document reviews, no wiretaps.

A: Well, I don’t know who you spoke with. I mean, I don’t think you spoke to people in my fraud section, because we have looked hard at the very types of matters that you’re talking about. The Financial [Crisis] Inquiry Commission came forward. I testified before that commission. I gave Mr. [Phil] Angelides and others my commitment. We would look hard. And we looked hard at every one of the referrals that we had. In fact, many of the referrals we had were the very matters that we brought to the attention of the Financial [Crisis] Inquiry Commission. When the PSI [Permanent Subcommittee on Investigations] looked at matters, we looked hard at those. And indeed when any whistle-blower came forward, at least to my division, I brought in some of the finest and brightest lawyers in the country to look at those matters.  They’re the same kind of lawyers who brought in BP. And we’ve brought the BP case, the largest criminal case. It’s the same lawyers who brought Libor [London Interbank Offered Rate]. Libor will prove to be one of the largest, if not the largest white-collar case in history. It goes after financial institutions, and it goes after the most major players in Wall Street. So I absolutely reject the notion that we didn’t look hard at these kinds of matters.

What befuddles me about this colloquy is that Breuer could have simply said: "That is wrong, we conducted grand jury inquiries, we issued subpoenas and I am prohibited from saying anything else under Rule 6(e)."  Rule 6(e) of the mandates that DOJ attorneys "shall not disclose matters occurring before the grand jury." It further provides that "no obligation of secrecy may be imposed on any person except in accordance with this rule." So Breuer certainly cannot disclose anything that happened before any grand jury--testimony given, questions asked, targets, documents reviewed, etc. But note that a general statement that some Grand Juries did issue subpoenas to some banks is not a matter "occurring before the grand jury." As the DOJ manual states: "Generally, it is necessary to disclose at least some information describing the nature of a grand jury inquiry during the course of an investigation. In most circumstances, such information should be very general. For example, a Government attorney could say, 'We are investigating a possible price-fixing conspiracy in the road building industry.'"

Note also that Rule 6(e) does not apply to witnesses. So usually any high profile or important grand jury inquiry leaks to the press. I cannot find any such leaks.

Finally, the same former prosecutors also told Frontline that "at the weekly indictment approval meetings that there was no case ever mentioned that was even close to indicting Wall Street for financial crimes." It is hard to imagine that any bona fide grand jury inquiry of Wall Street would not warrant a discussion at such meetings.

It looks like, in sum, that there were no substantial grand jury inquiries focused upon criminality at the megabanks related to the subprime debacle. If so, this is a scandal of epic proportions.

Congress should immediately investigate and the President needs to ask directly what grand jury inquiries occurred. Heads must roll if they failed to even investigate with grand juries and a special prosecutor should be appointed. It does not help that both Breuer and Attorney General Holder hail from Covington & Burling which represents most of the megabanks. Breuer appears to be looking for a new post--Obama should fire him before he lands at some megabank job for mega dollars. Either President Obama endorses the Breuer approach that some economic actors are too big to jail or he repudiates it by firing its top promulgator.

To its credit, the Bush DOJ empaneled a grand jury for the Bear Stearns hedge fund case which led to a criminal indictment (and acquittal). President Obama must confront his Attorney General and demand an explanation. Does this administration really want its legacy to be that it went easier on the banksters than Bush?

Professor Steven A. Ramirez
Loyola University Chicago

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