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

Thursday, January 24, 2013

Mid-Atlantic People of Color Conference

The 2013 Mid-Atlantic People of Color Legal Scholarship Conference at the University of Pennsylvania Law School is scheduled for this weekend, January 24-26, 2013.  The timely theme of the conference is "President Lincoln's Emancipation Proclamation: On the Doubts, Questions, and Problems of Full Citizenship."  The conference schedule and website are available here

Monday, January 21, 2013

Martin Luther King and the War on Poverty

Dr. Martin Luther King Jr. with President Lyndon B. Johnson
On the day where the United States celebrates the memory of Dr. Martin Luther King, Jr., it seems appropriate to remember his legacy through highlighting his lesser known campaign against poverty.  Following an era that witnessed Dr. King winning the Nobel Peace Prize and leading the civil rights movement in the 1960s, he turned his attention squarely upon economic inequality prior to his assassination.  In the last few years of his life, Dr. King implored the nation and those in power to allow, even provide, equal opportunity for all.

From Dedrick Muhammed's article "The Economic Lessons of Martin Luther King" we see that:  "In fact, in the last year of his life, Dr. King was organizing the Poor People's Campaign, a multiracial effort to alleviate poverty and provide guaranteed income for every citizen. King understood that without greater economic equality, racial disparities and divisions could not be overcome."  Muhammed notes further that "[d]uring Dr. King's famed speech at the March on Washington for Freedom and Jobs, he stated, 'We refuse to believe there are insufficient funds in the great vaults of opportunity of this nation.' One of the great economic lessons Dr. King has for us all is this: The road to prosperity requires of us faith, struggle, sacrifice, and investment, particularly for the most vulnerable."

In 2012, the Corporate Justice Blog detailed Dr. King's influence and call for equal opportunity and economic equality.

MLK Dreamed of Economic Equality

MLK's Vision of Social Justice

"King" of All Nations

As we are inspired today by MLK's messages of social equality, it is just as important to remember that economic justice and equality of opportunity were just as significant a part of his life and legacy.

Happy MLK Day.

[photo is in the public domain]

Saturday, January 12, 2013

Lawless Capitalism and the Economic Rule of Law Interview

Last week Richard Baker interviewed me for his Perspective show which will air throughout Kansas this weekend on public radio. Richard's thoughtful questions proved again why he is one of the top interviewers in radio today.

Here is the interview:

Friday, January 11, 2013

Is a Corporation a Person for Purposes of the Carpool Lane?

A self-described "social entrepreneur" recently argued in a California traffic court that while he was alone when ticketed for driving in a 2-passenger minimum carpool lane in Marin County, California, that because he had incorporation papers of a company sitting beside him in his passenger seat, that he in effect had a "corporate person" in the car with him which should total two persons or passengers in his vehicle.  As such, the driver argued that he should be immune from paying a fine for driving in a carpool lane with only one passenger.  This novel argument stretches the parameters of the corporate personhood doctrine and essentially forced a traffic referee to determine whether a corporation could be viewed as a person for purposes of carpool lane passenger requirements.  The judge in this case held that a corporation did not constitute a person for purposes of carpool lane travel.

After Citizens United decreed that corporations are persons with first amendment free speech rights in 2010, management and executives of companies throughout the U.S. have been empowered to engage in political speech and electioneering activity with very little restriction.  The Corporate Justice Blog has reported often on the impact of Citizens United and the utility of providing a corporation with free speech protection.

According to the San Francisco Chronicle:  "By [driver Jonathan] Frieman's estimation, if corporations are indeed persons as was first established in the 1886 Supreme Court case Santa Clara County vs. Southern Pacific Railroad Co., and he offered evidence that a corporation was traveling inside his vehicle - riding shotgun, of course - then two people were in his car.  'The question of personhood is a very poignant one, Frieman said before he entered the courtroom. 'This is designed to bring a very strong point to bear upon the legal system. Corporations have grown into large, huge, fictional entities. Now I am taking their power and using it in order to drive in the carpool.'"

A traffic referee in California refused to follow the corporate personhood fiction to its logical extreme, refusing to hold that while corporations enjoy free speech rights, they do not represent actual living, breathing human beings for purposes of carpool lane requirements.  Per the SF Chronicle:  "[Traffic referee] Frank Drago . . . admired the unusual argument.  'I must say it's a novel one,' Drago said. 'But I look at it a little differently.'  Drago directed . . . Frieman to the vehicle code's subsection, which addresses the intent of the carpool lane - to relieve traffic congestion.  'Common sense says carrying a sheath of papers in the front seat does not relieve traffic congestion,' Drago said. 'And so I'm finding you guilty.'" 

Frieman plans to appeal the decision.

Monday, January 7, 2013

The Memory Failures of Angelo Mozilo

The audacity of disgraced former Countrywide CEO Angelo Mozilo is stunning.  In depositions recently made public, Mozilo claimed that he did not know the difference between "stated income" and "verified income" in connection with loan/mortgage applications.  This is too rich to not restate, the former Chief Executive Officer of an enormous lending institution claims under penalty of perjury, that he did not and does not know the difference between "stated" and "verified" income.  Seriously?

Matt Taibbi at Rolling Stone first wrote about this "devastating amnesia" in his post "Angelo Mozilo, Former Countrywide CEO, Claims He Doesn't Know What 'Verified Income' Is."  Taibbi writes:  "Another day, another corporate titan suffering from devastating amnesia. This time, the memory-loss patient is none other than Angelo Mozilo, the former CEO of Countrywide Financial. . . .  If you were going to assign blame to any single person for the financial crisis, Angelo Mozilo would rank right up there with people like Lehman's idiot CEO Dick Fuld, deranged credit-default-swap peddler Joe Cassano of AIG's Financial Products unit, and deregulatory pioneers like Bob Rubin and Phil Gramm. Mozilo's role, however, was probably the single most shameful, as he represented the conscious decision of mortgage underwriters to abandon lending standards in order to claim ever-larger chunks of market share. . . . Angelo Mozilo, onetime CEO of America's biggest mortgage originator, is claiming that he didn't know the difference between verified and unverified income."

As previously discussed on the Corporate Justice Blog, Mozilo escaped jail time for his fraud in the years leading up to the mortgage crisis by simply settling with the SEC for just over $67 million dollars, a fraction of the over $500 million he banked as Countrywide CEO in the period leading up to the crash. 

Wednesday, January 2, 2013

Happy New Year


The Corporate Justice Blog wishes all of our readers and supporters a happy and healthy 2013.  We hope that 2013 is a rewarding year for all, one filled with greater national and global strides toward economic equality and a level playing field.

[photo courtesy of Katie Rommel-Esham through Wikimedia Commons]