We’d be remiss to not flag Frontline’s outstanding investigation into the shameful failure of the Obama administration to pursue, much less prosecute, Wall Street for financial crisis fraud.
Less than 24 hours after “The Untouchables” aired on PBS, its main target, Justice Department criminal-division head Lanny Breuer, abruptly resigned. Perhaps that’s a coincidence, but I seriously doubt it after seeing the program, which you should watch in its entirety.
Frontline’s Martin Smith just nails Breuer, and by extension, his boss Eric Holder and Obama for their baffling failure to indict anyone on Wall Street for financial crisis fraud.
It’s hard to remember now, but there was a point when it seemed likely that financial-crisis prosecutions would make the S&L scandal look minor. Recall back in March 2009 when The New York Times reported that “Spurred by rising public anger, federal and state investigators are preparing for a surge of prosecutions of financial fraud.”
Since then, no Wall Street executive has been indicted or prosecuted for the crisis. Breuer, in his Frontline interview, as in previous interviews like this one with 60 Minutes, professes moral outrage about bankers’ actions, but says immorality isn’t illegal—that his hands are tied.
But Frontline has Breuer’s number here thanks to its deep reporting, which exposes the DOJ’s marked lack of aggressiveness. Smith tells viewers that two high-ranking prosecutors who worked under Breuer said he “was overly fearful of losing” and asks him about it:
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.
LANNY BREUER: Well, I don’t know who you spoke with because we have looked hard at the very types of matters that you’re talking about.
MARTIN SMITH: These sources said 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.
Now, if it’s actually true that there “were no investigations going on” that’s an outright scandal. I suspected that wording was somewhat overstated, but look at the full transcript of the Smith-Breuer interview:
SMITH: We’ve spoken to people inside the Residential Mortgage-Backed Securities Working Group who said that when they began their work in January, February, March of 2012 that they found nothing at the Justice Department in the pipeline, no ongoing cases looking at securitization.
BREUER: So I don’t know with whom you spoke. Here’s what I can tell you. We looked hard at — it’s public — we looked hard at Goldman Sachs. We looked at it for years, and we made a determination. Our colleagues in the West Coast looked hard at issues like WaMu [Washington Mutual]. They looked at it for years, and they looked at others for years…
It’s simply a fiction to say that we haven’t looked at it, and it’s simply a fiction to say they weren’t in the pipeline.
This reporting is compounded by an interview with Kevin Perkins, an associate deputy director of the FBI, whom Smith gets to admit that Breuer shot down investigations the FBI thought should have been prosecuted:
Yes. And we would argue this back and forth. And then we— but when we finally came to a decision, sometimes I would be frustrated. Sometimes I would be disappointed.
Now, granted, it’s hardly exceptional that a cop would want a prosecution that the prosecutors don’t, but it’s still pretty remarkable that Frontline got a sitting, high-ranking FBI official to say that on camera.
Adding to Frontline’s case against Breuer and DOJ are the whistleblowers Smith digs up who have never been contacted by the feds. This is becoming something of a running theme of these televised exposés. In the 60 Minutes piece I noted above, Steve Kroft talked to Eileen Foster, who not only had been the top fraud-investigations executive at Countrywide, but had won a whistleblower suit against the company. Michael Hudson of the Center for Public Integrity had spotlighted her in a standout piece months earlier, but by the time Kroft got to her, she had never been contacted by the Justice Department.
Frontline’s whistleblowers were dug up by attorneys for private litigants. One due-diligence supervisor, Tom Leonard, said he had never heard from the feds until “just recently.”