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March 2, 2015

New York Times: Instead of Wall St. Prosecutions, Holder Delivers a Deadline

“Attorney General Eric H. Holder Jr. tried to bury the lead.

“Toward the end of public comments he gave last week at the National Press Club, Mr. Holder slipped in that he had given his staff members at the Justice Department precisely 90 more days to come up with new civil or criminal prosecutions against Wall Street for wrongdoing involving the manufacture and sale of mortgage-backed securities in the years leading up to the financial crisis.

“I don’t know if I’m making news now or not,” Mr. Holder said sheepishly in answering the penultimate question of the day.

“He most certainly was making news, and it was not good. In fact, it was particularly awful news: After more than seven years since the onslaught of the financial crisis, the clock is ticking rapidly in what has been Mr. Holder’s abysmal track record of holding individual bankers, traders and executives accountable for what went wrong.”

“Forget for the moment that the Financial Institutions Reform, Recovery and Enforcement Act, known as Firrea, has a 10-year statute of limitations. Can it really be coming down to this? Is Mr. Holder content to have his legacy be defined, in large part, by the fact that exactly zero individual Wall Street bankers, traders and executives have been successfully prosecuted for their role in inflating a real-estate bubble that cost investors hundreds of billions of dollars in losses and millions of ordinary Americans their jobs when it exploded?

“In his defense, Mr. Holder said he did try. “To the extent that individuals have not been prosecuted,” Mr. Holder told the National Press Club, “people should understand it is not for lack of trying. These are the kinds of cases that people come to the Justice Department to make. Young people who want to be assistant U.S. attorneys in the Southern District of New York and Eastern District of Virginia, San Francisco, live for these big cases. The inability to make them, at least to this point, has not been as a result of a lack of effort.”

“This strikes me as just so much spin. The truth seems to be that federal prosecutors across the board lost their zeal for fighting Wall Street after November 2009, when a federal jury in New York found the hedge fund managers Ralph R. Cioffi and Matthew M. Tannin not guilty of fraud in connection with decisions that led to the liquidation of two Bear Stearns funds — costing investors most of their $1.5 billion.”

***

Read the full New York Times article by William D. Cohan here.

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