Transcripts For CSPAN2 After Words With Jesse Eisinger 20170806

Serve people not to be selfserved. So next phase of my life is pointed toward bringing people together Mental Health and policy and funding and policy and Funding Police reform and funding necessary to make it happen and reconciling our differences and our using this platform, this abc news as well as contributor to just spring forward, resolving our wounds around race. Around police and around differences in our political system that just cannot sustain itself it in the way its going. Its got to be something that bridges what is divided. I hope to be a person that pays small, small part in that resolution. Heres the book its called call to rise, by retired it Dallas Police chief, david obrown, just out in the book stores. Thank you so much. Appreciate it. Take care. C are span where history unfolds daily. In 1979 cspan was created as a Public Service by americas Cable Television company and brog to you today by your kibble or satellite provider. Up next on booktv eying afterwards journalist jesse reports on how Justice Department handles White Collar Crimes in his book the chicken is hit club and fails to prosecute executives. Hes interviewed by jennifer, Vermont Law School professor and author of other peoples houses. My great pleasure to be here today with with jesse a policer prize winner reporter to talk about a new book this week the Chicken Shit Club so jesse when i first met you a few years ago. You were setting out to answer a still burning question for so Many Americans why did no high level bankers go to jail after the 2008 financial crisis . But after reading your book i can see that you also began to address a broad or inquiry which was why does it appear that the Justice Department fails to prosecute executives . So jesse lets begin. Why . Thanks so much for having me i cant wait to have this conversation. So i think this is the flip side of mass incarceration in the country where we have a two tiered Justice System one group of people disproportionately people poor, color people too punitively and then weve got what im writing about which is a class of people rich and powerful who seem to be impunity commit crimes im talking about executives at the highest level of Corporate America not just bankers not just in the aftermath of the financial crisis. This has been a problem that has been building before the financial crisis if persisted today and it affects not just executives at the big banks but industrial companies, retailers pharmaceutical companies. Tech companies. This is a pervasive problem with bringing Corporate America to it heal. How did we get here . In your book you talk about the fact that there never really was a golden age of enforcement of the laws, you know about when Corporate Executives and corporations violate them. You talk more about a silver age and so rye to figure out how he got here i notice in your book you said the following maybe you can address this. The aftermath of the 2008 called for aggress eveness the people demanded it. The politics were stable. The department of justice has chances to bring cases against company executives. Public trial the would have presented the evidence, juries would have decided if crimes have been committed. That this fear of failure took hold when it did. It is tragic so is that it which brings us back to the title of your book Chicken Shit Club i have to ask about it. Here is a major part of this, and concern about losing hence the title of the book. The title of the book comes from jim comey and viewers will know that he was that jim comey he was fired just recently. As fbi director by donald trump but before this 15 years ago, he was u. S. Attorney in the Southern District of new york. And as you know the Southern District of new york is premier office of the department of justice now the prejudice office is main justice but this was the place where hottest shots went. Brightest stars in the and gave them a speech when he brought them altogether and started out focusing and he love it is to talk and he said how many of you have never lost a case . Flesh and a bunch of hands shoot up these guys are the best of the best of the best gone to the best law school, best clerkship theyre really the brightest of course if you ask them theyll attest to that. And so theyre it very is proud of their record. And then he said well me and my buddies have a name for you guys the Chicken Shit Club and hand go back down. People are feeling sheep picture so what does he mean by that . What does he go on to say . He says your job is not about winning your job is not about preserving an undefeated record. Your job is about doing justice, and justice requires ambitious cases and raising your site so that not just ticking up long hanging fruit but going up against most powerful wrongdoers in society and not being worried that you cant take them on or that you might be might lose the case. And unfortunately after that period of time which starts with with a kind of high point silver age when the government prosecute and run Top Executive from philadelphia, those names if anybody remember ares those is after that theres a big backlash which i trace in the book that ends up changing the department of justice culture and makes them fearful of trying these Top Executives. So thats really fascinating and im really glad that you mentioned james comey because hes not the only familiar name that we see in this book who repghts, you know, elevating courage over a career ambition. I think i see that as a theme in the book so you know, its wonderful that proximate result he is a role model but encouraging them to take risks to try to do justice and not just, you know you know, build their resume. But something did change. You know, you mention well, during this enron era when prosecution of enron occurred and, you know, i think that it all wound down around 2004. You talked about that. The book is still with people some of the names are Robert Morgan and jed, and so on we even see Robert Muellers name and other familiar name which you might bring up but seems like theres these folks that you revere who were courageous. Who stood up, you know, for justice, but then something changed. And i i wonder whether Elizabeth Warren her expression that personal policy comes into play here. But what happened . We can find at any time in history courageous people so are is it simply the people or is it the system . What idea are those people not in the position right now. When did the change happen . Its a great question. Its certainly it certainly is the case that some of it is actually the people. But i think larger issue is that theyre institutional incentives because i do think largely the department of justice is filled with dedicated Public Servants who are intelligent and want to do a good job. But there are im glad you mentioned that there are some people that i consider heroic. Imperfect but really trying to do a good job of bringing justice and one of the guys was a hero early on in the book is family fork in larger than life character. He probably was most important bureaucrat in 1970s he was the director of enforcement through the the 70s and he wasnt even worked at the security sanction at the fcc and he wasnt the head of the fcc but he was probably regarded as the most important top on the beat for companies throughout the 1970s. And hes a huge guy big personality, and he used to be loyalist young guys working for him mostly guys. And terrified them and he would sit on a couch in his giant office. And people had a table in his office with a huge office and young guys were working on Different Cases and he would sit on the couch and work on these cases three, four at a time, and then he would bring in the lawyers for people at the fcc investigating and he would sit on the couch and button down lawyers would present their arguments for why theyre clients were not guilty, and fork and wood would appear to nod off on the couch and sink into the couch with a hideous looking couch with terrible ray of disgusting colors from the 1950s and he would sink into the seats and he would appear to nods off and lawyers had no idea what to do. And they didnt understand should we continue our presentation . You see asleep is he listening and they would continue the presentation to kind of halt the way, and he would wake up and cease on something they would said listening the whole time and he had this brilliant way of their argument and you know he was in their power. And he controlled the whole conversation and that so he was he was really a guy who put Corporate America on its heal through a variety of interesting technique and one hero of the the book. But unfortunately what i say is his innovation ends up 30 years later 40 years later souring and becoming kind of corrupted and corrupt the way the fcc and d. O. J. Do business today. Lets talk about that because the fccs mission at that time was solely to protect investors and he was in the part of the fcc where he had with a career it was a career employee. He was running, he was had a job that was not a political appointment he was wasnt one of the commissioners. He didnt really have political power but he built his power within the organization the way you are are describing by being sort of quirky and bril yngt and very popular with his staff, and tell, you mention, though, that even though he was courageous and there was innovation that got this sorted later so can you talk a little bit about what went wrong and what the unintended consequence was of it . And political protection in the in congress from both sides of the aisle republican and democrats, and so much so when they were featuring to be fcc chair they would say are you going to keep this in the office, and so his he was at powerful even though he was not the head of the agency. His he had a variety of innovations, but two of them were that one he wanted to go after gate keepers we think of investment bank, law firm and Accounting Firm. The ones that Companies Need to go public l on the public market. They have to have their books audited they have to have legal and investments, and what he thought was if we go after those firms, then they will be onguard for Fraudulent Companies and use their leverage as gate keepers of the company to protect federal fraudulent that was a great innovation. Hes kind of influenced in that way by another hero of the book Robert Morgan who was u. S. Attorney in the Southern District throughout the 60s and really kind of starts the the whole idea that they both should go after accountants and lawyers and also that they should have sort of raise their sights on a higher class of corporate white collar criminal. Can i just fill in here. So where sporken is in washington, d. C. Security Exchange Commission working as a top or lawyer in enforcement division. May be aware that fcc has Civil Enforcement authority and cant create criminal fine or put people in jail if you want to qorng on a criminal case fcc needs to reach out to the department of justice which also has a dc office that you mentioned earlier in our conversation that one of the more prominent of the 9 939 offices is Southern District and you mentioned robert was the head lawyer there. So they had to have a good working relationship if they wanted to bring criminal cases. Yeah and fdny in 60s and 70s is more prominent than it is today because there are fewer offices around in the country in the department of justice at that point that in these cases so really when families wants to do something criminal, with white collar corporate crime hes got to go to the Southern District. And he he comes in the 70s but morgan set this pattern and morgan is at the fcc in the 60s so he knows the fdny so what sporken what what theyre doing so theyre two kinds of enforcement and what theyre doing criminally is focusing on individuals. They dont prosecute companies endont think about prosecuting companies through 60s and 70s in the fdny they advise going after the highest level individual executives they can. Individual accountability for criminal wrong doing is what they put their emphasis . They have the power to do this. Theres a 1909 Supreme Court ruling that says if you theres one employee in the course of his or her job who commits a crime you can prosecute the company. But central. Exactly. But they dont to it. Its just not the practice. They and the reason is that as a sensible reason they think of corporations a piece of paper. And they think that individuals commit a crime. And they want to deter individuals so they want to prosecute individuals. And as well see that changes over the next decade. It sort of changes because of the innovation that sporken brings in civil arena with the fcc where he realizes that the fcc is underresourced and can leverage the resources it has by making companies voluntarily come clean on various problematic things that theyre doing. The main thing that hes focused on is he is watching water gate and seeing how their allegations of slush funds going to Campaign Donations and he realizes these its a very technical tax evasion kind of brilliant idea where he says these guys have slush funds to make illegal Campaign Donations, these Companies Major Companies Like taxico if we look at their books and records, we are not going to see the line item for secret slush fund. And that will be awkward. Exactly. [laughter] and therefore, what we can do is we can say youve been misrepghting your books and records to the public. So come clean now and this is a fee here you dont have to admit that youve tone something wrong you later are not allowed to do something wrong but in the early part, this great because companies are genuinely scared they hate him and dont want them on their case, and you come in and they do come to leave, about perverted over the next course over the knicks 40 years. Innovation that that enforcement what they figured out underresourced to make sure i have this right we dont have access to what folks are really thinking so rely on the company and their lawyers and say if you fess up and settle with us, then we, you know, we get a win. And maybe the hope will behave better and all will be better but we were going to make Companies Work for us is the innovation make them start to examine their own behavior put them on notice for a variety of things put them on notice for activities that before that saying no one was wrong or scrutinizing but scream bloody murder because all of a sudden theyre held it a new standard of behavior. But they do, you know, theyre doing a lot of foreign bribery that, thats the kind of thing that starts to police which this is before briberies technically is illegal. And so hes got to get them on the technicality of the book and records then sporken because of his intrepid enforcement ushers brings about the fcpa foreign corrupts practices act in 1977 if im correct. And makes it illegal to bribe officials. Foreign officials and government officials. So this is a really great innovation, and sporken is working with, hes working with young prosecutors in the Southern District like another hero of my book jed who learns anded ad mires sporken and really emulates him and then becomes a defense lawyer and then later a judge and he takes on the fcc the same institution that sporken had had worked for when sees it as degraded. I want to o return to where we started which is what went wrong and what changed . And to some degree when i think about your book i think of it as one of these reverse makeovers like a before and after. But the picture doesnt look as good at the end, and whats interesting is we have these examples of high tide but many people look back at the enron prosecution and say those were a success. Caveat, other than the fact that the conviction of Arthur Anderson Accounting Firm overturned by the Supreme Court there are many people who have not looked at this as closely as you have who think oh, well went to jail ken who was a ceo and kenneth lei who was chairman and later also became a ceo was also convicted although had he did die before he was sentenced and many of us have read the bock and seen the movie enron smartest in the room so again in materials was general public and folk who is havent study this closely they think thats another Success Story and we can also say i skipped a place in between, we have silver era you talked about. We have the thousand people who were prosecuted in connection with a savings and loan debacle under george bush sr. Then we have under george bush jr. We have what looks like a successful prosecution of the bad guys and enron. So folks were really waiting and wait, we think that bankers did something young. You know, theres kind of a list of folks and afnghts you mentioned which we can get to what happened. But what had i think is so fascinating about your book is faultlines requester there well before the Obama Administration takes over. In other words, what it seems like what i want you to really talk about is that the culture and the knowledge and the practices of the want of justice had already been weakened thered been a shift so if you talk a bit about you know what caused this shift and to see conversation more and similar what you talked with family sporken how much another innovation that occurred under mari joe white in 1994 with the prosecution agreement, changed things and so, you know, what weak ndz deo. J. Bit time president obama took over in 2009 it wasnt prepared to handle . This crisis right. Great, great question. So enron is a successful prosecution so what do they do . Molar who is head had of the fbi and Larry Thompson under ashcroft and michael who is a head had of the Criminal Division they pluck talented prosecutors from all over the country and essentially lock them in a room metaphorically even though feels like theyre locked in a room working 18 hours a day for years. To look at one case and by contrast this is skip ahead to the story one of the things in the Obama Administration doesnt do is create any kind of Operational Task force of prosecutors who are supposed to be looking at specific types of issues or banks and actually focussings on them solely so theres no prosecutor in the wake of the financial crisis whose job it is solely to look at financial crisis cases. She is juggling inside trade aring cases and ponzi scheme case and then some financial crisis case. Its a really major problem. So thats one thing. They work theyre focused about, theyre concentrate and dedicated to it and they have patience and they work for years and years. Feeling and laying are brought to trial in 2006. They task force has formed at the beginning of 2002. It takes years to do this. These are cases that are extraordinarily complex and one thing to note about the lay cases is they never did any stupid stuff on email which is sort of the way that we make cases now. Prosecutors know theyre supposed to find the dumb emails and leverage those to show whats going on in the mind, the criminal intent. But they didnt have that with lei they didnt have that direct evidence so what they have to do is the Old Fashioned way which is just a way you prosecute a mob operation which is that you get the soldiers to flip on the copo and they flip on copo, and you have to do that in a prosecution too and this is what raycof used to do in the early 2000s a skill set that really has been lost over the intervening 15 years. Why was it lost . Well it was lost because of an enormous corporate backlash against the perception that enron was overly aggressive and they were cowboys and they overcharged and primarily was focused around Arthur Anderson Auditing Firm that you alluded to just now. Fascinating so even though the enron prosecution you agree was successful buzz of a backlash against that success there was a shift. But i also want to mention that Something Else was happening and you mention that in 1994, when mari joe white was the for the Southern District of new york, she was working with a fellow lawyer and her name of the shira niman and came up with this idea that is might be a good idea to get an entity like sporken did to settle and to work on you know, getting this into the criminal side to get them to settle a case with whats called the deferred prosecution agreement. So you kind of hit a victory but you dont immediate to take the risk of going to trial, and what was fascinating is that this took place you can talk a bit about it in 94 but mari joe white never entered into another one from on the Southern District of new york her whole tenure there through i think it was 2002. But the other, the other offices across the regional offices across the country found this to be a delightful and easy tool. And there again was backlash against that so he talked about that and what that did what that did to the prosecutors d also what that did to the defense how it transferred defense bar. So mari joe white who is skdzed by jim comey is a legend in the Southern District and working with a force of nature and they really do a bunch of major prosecution. You were corporate prosecution than maybe i would like but a lot of terrorism and prosecutions, and then theyre looking at securities for sol criminal allegations and realize that trail has gone a little cold age the evidence was is old and allegation wrong doing was a long time ago, and they realize well why dont we take this innovation from the juvenile courts from a long time ago where if a young person 16 years old committed a crime, what the judicial system could do that prosecutor could do is say, were going to prosecute you. But were going it put it in a drawer, and were going to wait until youre 18 and if you keep a clean notes for two years were going to wipe slate clean but we have prosecuted you just so you know. So if you dont, we get to bring those charges right back. Were not dropping the case. We are prosecuting so they reach this with prudential, and whats amazing to me it be this and whats really emblematic important to understand about department of justice is this little very policy making and care and planning that goes into it. So this was a settlement from prosecutors and a lot of entrepreneurial i. Within the department of justice. Every u. S. Attorney likes to run his or her office in washington and attorney general doesnt have a lot of control over them and each individual prosecutor also is kind of entrepreneurial, and so the problem is then that theres little 30,000 foot analysis of what kinds of policies are happening so she invents the deferred prosecution agreement settles with a company and theyre settling for money so no individual is being prosecuted. It is a settlement, and its a sledges for money and the most important thing is that the money is not coming from any executive pocket coming from the shareholders so company you know the piece of paper is paying for it not any individual. She doesnt like it but it does become a little bit popular. Not very popular around the country and then the author anderson case comes Arthur Anderson is auditor for enron and hand made into the fraud at enron and if theres one thing in any book is to rehabilitate this prosecution because i think it was the right thing to do because i think it was it a rotten organization and many innocent people through and through systems were in place to help companies commit accounting fraughted. And it wasnt just enron that Arthur Anderson helped but Waste Management world come and many areas so early on enron test prosecutes the firm Arthur Anderson they win a trial. Arthur goes out of business, tens of thousands of people sadly unfortunately put on the street out of work and something amazing happens which is that theres a pr victory anderson manages to change the subject from accounting fraud to innocent people put out of work and so they essentially decide without a policy theres no policy. In place nobody ever says explicitly but they essentially take the ability to prosecute companies and indict companies off the table. Because of these collateral consequences because of employees going getting losing their jobs and then later worries about Capital Markets disruption you know financial crisis happening you prosecute a bank. So this is pass nateing shift because weve kind of reare defined success and failure as part of what i hear you saying today and in this book is that fear of failure is not just whether you win a case here theres a fear of being a kind of failure being perceived as big being unfair overly aggressive they internalize the pr sense. So there are other there are other things that you said that i want to pick up on because this also is what with another piece that weakened consequences can you talk about how that got ed and the prosecution policy for the department of justice and how that shifted over time depending on who was second in line under the Deputy Attorney general. Yeah, so theres a memo that comes from none other than o eric holder when hes the deputy, the deputies get to attach their name tots memo so eric holder now may have heard a lot current attorney general is Rod Rosenstein right now. So they tend even though it is second in line sometimes they have a big public profile and when it comes to the prosecutor memo so so holder outis license and a shear is author of this after they do the dpa shes mari joe white sengdz her down to make sure that washington dunts view up this memo and they come up with these principles for now to prosecute companies holder puts a name on it and memo says this is how we look at things and you need to cooperate with our investigation if you want o get brownie points with us and this is what corporation means and theres a variety of things. And one eve them is, you have to waive Attorney Client privilege to go in to really examine what we want to examine when were conducting our investigation. Hold on to that point and you cant be a love pest i love your are book but one place i do disagree. Lawyers love this so were going to talk about attorney , tells uncollateral consequences. So one of the things that they install in this is its okay for prosecutors, in fact, prosecutors should think about the collateral consequences of action when is theyre taking on corporation and by that, they mean the harm that they could bring to the innocent employees. And also some kind of vague notions that is not articulated in memo about some kind of disruption in the capital market. But theyre really taking it seriously. You know, you there are people who have who have attacked eric holder or beat origins of this as if one you know didnt writ memo. But two the department of justice doesnt really put this into place until post anderson, and what happens is, the Deputy Attorney general under ark cropped are the intruferses giew or interesting guy africanamerican who becomes up in missouri and becomes gold water republican rises to ranks of republican politics, and becomes the Deputy Attorney general and under ashcroft hes an old law anded or guy. Lauren thompson does not believe there should be two tiered justice in america he wants to treat corporate criminals as aggressively as street criminals a republican attitude that i dont think exist anymore old line law anded or guy and one that i deeply admire he comes up with he updates the holder memo but a few addition that talks about collateral cans consequence and attorney privilege and after anderson the aggressive prosecution of anderson, then big law white collar defense bar in corporations attacking anderson and they attack thompson memo over Attorney Client privilege and roll that back. Oh, and department of justice rolls it back in series of amended memo over course of next several years and in doing so what happens is they shift from thinking about even indicting corporations to the d. P. A. And dp. A. s take off in last 15 years had 15 in the first ten years there was about 18. So d. P. A. And n. P. A. Various source of settlement no at admission of gift most of the time no admission of guilt. And and then various formals of kind of promises to behave better in the future which dont which are not kept. We can get to that in a second. So inadequate. Whats interesting with any other tool it can mean appropriate thing to you but in this case, maybe it was for the public perceives that that its been overused you can look it from the defense side theyre going to to claim this is a shake down. Because they didnt have goods so what are we going to do and terrible for our stock price and official for shareholders bad for morale we made money thats a story that defense can take, and maybe some of the time was true maybe none of the time was true but thats the story and this from the public side they want to see trials because they think that this is just that its, you know, what its not really that until you see both a corporation being held accountable if it has done something wrong and individuals inside of the firm going to jail if theyre guilty of something. They believe that theres two systems of justice so there question of this tool. But this is other piece that you mentioned relying on d. P. A. That happens to defense bar because historically white shoe law firms were not experts and have experts in White Collar Crime so what is with the rise of the d. P. A. What happens is kind of like a kind of like evolution and darwin process what happens with law firms . What may argument is that department of justice and big law are creating each other and and influencing each other and changing because it is sort of like the old batman movie with Jack Nicholson where robber kills bruce waynes parents and he becomes he becomes batman and then batman chases robber into a bed of acid and each creates the other. Thats my very is high literary reference to the evening. But so what happens is we talked earlier about 60s and 70s and how Robert Morgan on the end of the set fdny raise aring sight and big law firms realized this and they realize now their clients, clients, their clients are Big Corporations and now their Big Corporation executives are in the sights of the federal government. And they start to represent them. Very is slowly overtime prosecutors who have been doing these prosecutions go to big law. What had happened earlier was prosecutors didnt really revolve out of the d. O. J. And into big law firms but if they want criminal defense work they would go to boutique not in a big law firm not what was then called the white shoe law firm like things like that. So slowly overtime people like jen, and some of the other stars of the Southern District start to move to big law and create these defense practices. And then slowly overtime theres movement to settle with corporations that the department of justice, and these that generates much more business for big law firms and big law firms realized how lucrative it is and how much better it is to enter into a settlement with a corporation because its not just a oneoff investigation of one individual. But a really sprawling kind of thing where they can do internal investigations and all of a sudden the business is internal investigations comes up and becomes a giant extraordinarily lucrative ailing aspect of big law and today many big law firms specialize in doing internal investigations of corporation and the dirty secret for corporations is that we have outsourced an privatized investigations. Law enforcement to the corporations themselves. Its like Pablo Escobar running cartel and then hiring lawyer to investigate whether escobar is drug dealer so its a big problem for American Society especially because now the prosecutors still go very commonly to become partners at the very firms. So part of that then is a bit of evolving door story. Although i guess door is northeastly going in one direction and how do you think that shapes the behavior of a young prosecutor . You, you note in your book that maybe one of the ways to solve this problem you can share that with us today but it seems like what youre implying here is that, you know, a young prosecution spends a few years successfully settles cases with big firms gets that skill, and with the corporations and then it is hired if theyre lucky becomes partner and one of these large firms and can make several million declare it is declares year in this white collar criminal defense practice. What are some solutions to that particular problem . Sure, well listen before we get to the solution we should pun pack that because its such a violent and important part of the book, and the argument against this so when prosecutors when i present this prosecutors they say no, no, no we have every incentive to go after the individuals in the highest most powerful individuals we can get because were going to get the glory and the career the career scalp, and career making scalps, and thats Preet Bharara say and eric holder but actual incentives that a staff prosecutor is facing. Well what it is that fern wants to produce, and wants to produce quickly, and a prosecuting and individual takes enormous am of time when executives have huge defense, defenses. They pay for the best kefs lawyers they can so youre going up against the best plawrs in the country. And its going to take years so if you lose a trial then youre going to have in feather many your cap you have not built your with resume or presented it. So theres enormous risk there. Theyre not afraid but they can understand the reward scenario and risks risk are very, very ht risk is too high for each individual prosecutor to respond to these kind of incentives is too much to ask to incentives to produce a lot of corporate settlements, and what theyre doing is theyre very complex, and they think that theyre doing a good job because theyre kind of reforming culture and looking holistically at the company, and having the company engage in all sorts of activities so they can justify it. The fines go up and up and up so they think this is really going to cost them a lot of money and therefore theyre going to feel the pain. And they can do them quickly because they have to come to the table to negotiate and no choice and dying companies are not stupid enough to fight this usually especially the big companies. And so you can do a series of d pennsylvania quickly knock them out and a getting accomplishments to put on your resume and who are you standing across the table . Youre across the table from your bosses former boss almost you know o very frequently. People who have been former prosecutors in chiefs of units at say the Southern District of new york or justice or Eastern District of new york. Theyre portraits are on the wall in the hallways as you walk into your office. And your incentive is to dazzle them with how smart you are, appear extremely tough as an negotiator. But then ultimately to be reasonable. You do not want to seem like a cowboy, reckless overly aggressive overly piewnive, on a jihad against the company, because you want to be seen as someone who those people on the other hand of the firm can envision as future partner and that is as you can imagine deeply corrupting incentive i think for a young prosecutor. So wheaf weve done now is really set the stage from where department of justice was bit time president Obama Took Office and january of 2009. And we did talk a little bit where the policy was when eric holder came become and became attorney general of the United States this top i think again of collateral consequences came up in part because in testimony i see four Congressional Committee he was asked about this. And mentioned that there were some concerns about collateral consequences of prosecutorring large firm and he was had immediately attacked for the two day to jail doctrine and backed off that have and actually put out a video that he put up on department of justice and no firm is to be prosecute. And sally yates who was then the Department Attorney general revised memo and it became yates memo so what there was a shift then to they added a a factor about prosecution policy to talk about the need for individual accountability so were shifting back. Not that this needs to be die conmy but enterprise and individual accountability both can happen. So that was supposed to happen. What went wrong with this new policy to hold individuals accountable why didnt it work . Well, so thats a great, a great question and youre absolutely right that you know, i think that this place for all of these things mpa, finding canes guilty all settlements corporate liability and individual liability i think that the emphasis has gone completely haywire and that they need to get back to the bread and butter needs to be individual accountability at the highest level so they were worried about the collateral consequences coming out of financial crisis of prosecuting banks aggressively. They thought that there was Financial Markets too fragile for it. I think that was a terrible mistake in misreading because i think if you prosecute companies aggressively you would have restored faith in the markets more quickly. But also more importantly, that i think if you were really worried about that then you should have shifted to these to prosecuting individuals. Because you should reject whole sale a notion to go after companies because the system is too fragile so were going to focus on individuals and as i was say ising earlier they didnt credit a task force and they have the wrong incentive and so they dont focus on individuals they dont really look so one of the defenses from holder and people in that department of justice is do you think we would shy away and preet will say you know we looked as hard as we could for evidence of crime and we didnt see any, and and one of somebody who doesnt figure in the book they wrote the new York Magazine piece and one was prosecuted for financial crisis a walking rebullets of that argument buzz what he did was he was an executive accredit and sarah gelman who oversaw traders who lied about portfolio the value and value of their mortgage portfolio and no one in wall street thinks he was the only one that did that. They, obviously, that was a crime that was committed rampantly. So skipping forward to yates. The yates memo is incredibly important for a variety of reasons. One, is that it is a admission that the holder regime and lanny regime made a mistake. That and without actually saying it so i think that was a good reform from her. Internal investigations conducted by law firm hired by companies that when they do focus on individuals, theyre going to get the guy who is getting thrown under the bus instead of going up to the top. So its interesting whether one of the questions that comes up is when you say maybe there just wrnght cases to be brought which you say you dont find credible and there are many examples in the book that you wondered about yeah, you know without i mention some names not saying that the folks are imt of anything. But could have these folks been pursued someones at lehman bros due to the 105 transactions and perhaps those with the fcc who were never, never prosecuted at all but besides saying that well the Different Cases there. One of the things that people say is that these things are just too complicated for jury. To understand which might be just another way of saying were afraid to fail. Because as you remember one of the first cases brought after the financial crisis criminal cases against the individuals were cases against the two Hedge Fund Traders that bear sterns and government lawsuit cases and i always wondered whether what difference it would have made if they had won them. I think it would have made a big difference that really put people on heels made them scared and nervous about the kind of evidence they have, and so how did we win the enron trial . This is why i start with the enron because can you imagine anything more complicated than enron fraud. They had off Balance Sheet vehicles and secret ownership and barges exactly it was just inpernghtly complex and multiple business lines, but they won the case and i try to quack through it carefully. But the investigation and why they won the trials of skilling because they managed to get a storyline that the jury could understand. They said this is not case it be complex accounting or aggressive Business Practices that were going to label illegal when they might not have been. This is about lies this is about truth and lies. Black and white. And they disstiled their case down to the cereals and really understood that the jury was going to listen to a lot of complex evidence but request a story that was clear and this skill set has been lost. One of the reasons why in law which we havent talked sb they dont do trials anymore. Average pus attorney does 2. 29 trials one trial every three years that compared in 70s early 70s to 8 trials year. So they just have very little trials a year. So then Flash Forward tobear sterns where Hedge Fund Managers were worried about asset and may be misrepresenting state of their fund and assets than their prices to the public and to the counterparties and acquitted by a jury. But my view is that that shows erosion of trial skillset and at the department of justice not that this should have been this is evidence with no crimes committed. Mings you know within you also talk about something that happened with Obama Administration instead of dolling out funishment the preventioning to stave off similar future crises and to be fair, as we remembered early 2009, we were trying to deal with large downturn since Great Depression pass legislation to help shore up the economy. Work on the Affordable Care act pass doddfrank this was all happening so a lot l happening. But there wasnt a task force set up immediately. And and i wonder on your thoughts if this would have been a higher priority would have been a major different so you see tim geithner saying we dont want a testament justice an eye for an eye that this notion that, we should have pitch forks and put people in prison and the Obama Administration was very tech no democratic and button down and i think they saw people as kind of people who had made mistakes but of their class and a they thought to reform this system overall have systemic reform rather than focus on a few bad apples and what happens in that is that the system lacks legitimacy the reforms lack legitimacy and they because people can see lack of accountability and say that is unfair. That is unjust. People are get away with crime. And what the democrats didnt recognize and i think the kind of tech no democratic notion that we have what they have and failed to recognize is that you needs to have individual accountability in order to persuade people that you care about punishing people when they do something wrong about fairness, the system and that your reform cant be believed that cant be trust ared without some punishment going handinhand. The old line republican idea of law and order of picking out a few bad apples and not doing any systemic reform no Regulatory Reform thats not adequate either these things have to go hand in hand and my view because we lack accountability individual accountability it undermined faith in obama. It cut the legs out of hillary clinton. In her Campaign Donald trump was able to campaign on this take advantage of this anger to rail against goldman sachs, and i think without with more individual accountability we may not have had donald trump wow so you see a line between failure to hold individuals accountable and his election i can see what youre talking about he draw on fop plus anger and with without evidence that government was actually did something to put people in jail who helped cause this crisis that he spoke to theafn though it is unlikely hell do anything about it. I would like to use our last few minutes to have you tell me what is your wish list . Weve got about two minutes so if you could, what tools do question need at the state or federal level to make a defense . Pay prosecutors a lot more money to reduce incentive. I cannot believe were out of time. Thanks so much. [inaudible conversations] good evening to barnes and noble Upper West Side Senior National correspondent focusing on political coverage over a the magazine and Cambridge News previously a Senior Editor of the of the antic also written for the new yorker and esquire and other pubti