Fleischmann, she forced the bank to pay one of the largest fines in American History. You might be surprised what she says about the bank, as well as the obama white house. She is featured in a new Rolling Stone hes peace. The significance of the story to me is that it talks a lot about the legacy of eric holder. We finally have someone from the inside who is telling us what a lot of people expected all along that the Obama Administration had enough evidence to proceed against these guilty banks and they just did not do enough of that evidence and those witnesses. We finally have someone like Elaine Fleischmann who can tell us all about that and what went on. All of that and more, coming up. This is democracy now democracynow. Org, the war and peace report. Im amy goodman. Cliff Juan Gonzalez with Juan Gonzalez. Meet the woman Jpmorgan Chase one of the largest fines in American History to keep from talking. One year ago this month the Justice Department announced that Jpmorgan Chase would avoid criminal charges by agreeing to pay 13 million to settle claims that they had routinely overstated the quality of the mortgages they were selling to investors. With the toxic mortgage security startup turning bad, investors lost faith in the Banking System and the housing crisis turned into the 2008 financial crisis, with millions of home foreclosures. Eric schneiderman unveiled the settlement last november. Not only will chase have to pay the largest settlement ever levied against the financial institution, but they have admitted in our statement of facts that their own employees employees of bear stearns and Washington Mutual made material misrepresentations to the investing public about oh large number of organs backed securities that they issued prior to the crash in 2008. This settlement is a major victory in the fight to hold accountable those who were responsible for the crash. Soon after the deal was reached, u. S. Attorney general eric holder discussed the banks misdeeds during an interview with pete williams. They package loans that they knew did not pass their own stated Due Diligence tests. We had a whistleblower who indicated that she expressed concerns about what the strength of these Mortgage Backed securities were and they put the elements out to the market and said that they were perfectly fine when they were, in fact not. To be clear, you are saying that the conduct contributed to the housing collapse . Is not only them, but the conduct of other banks doing similar kinds of things leading directly to the collapse of our economy in 2008 in 2009. During the interview eric holder mentioned the role of the writ of the whistleblower at Jpmorgan Chase who aided the Justice Departments case against the bank. Until this week the whistleblower, Elaine Fleischmann, was a lawyer who worked for jpmorgan and had never spoken publicly about what she witnessed inside the bank. That changed yesterday, when Rolling Stone magazine aired a piece headlining the 9 million witness. Meet the woman that jpmorgan hey one of the largest fines in hearing in history to keep from talking. He criticizes not only the banking practices, but how banking regulators responded to the banks lawbreaking. Today, in her first televised interview, Elaine Fleischmann joins us here on democracy now along with matt eb matt t aiebe. We welcome you both for the hour. Elaine fleischmann, start at the beginning. Why did you decide to come forward . How did you end up at chase . For a long time i was expecting it to come out. I have been talking to the government for two and a half years. First we went to the fcc, then the Civil Division of the doj. At some stage after watching all of these major banks have deals where the fax got wiped away, i started to feel that if i did not come forward there was a real chance of that happening here to. In terms of Jpmorgan Chase, i started there in march of 2006 at the height of the boom. When i started, everything seemed normal. I did not realize the things that were happening in the background. And then things started to change a couple of months after i had been there. What, specifically, was your job . Can you walk us through how you began to realize the huge problem that the bank was a part of . I started as what they call a deal manager. He basically coordinated between the different groups when we brought the loans in and sold them to investors. I first noticed that there was a problem when they brought in a new person to do the diligence switch to reveal the loans themselves to make sure that they were of good quality. As soon as they came in, these laws this wall came down between myself and the group. You could not get information that you would normally get. On top of that there was immediately a sort of no email policy. He would not send emails and we were not allowed to send him emails. He would come out and yell at you if you sent him an email. What was the reason . It was never given, which was extremely worrisome. Normally the reason you have a compliance in diligence apartment is to have written policies about what you are doing in order to explain to people how you make your decisions. The opposite of what you would normally expect. When you talk about reviewing the quality of the loans, for those not aware, you were in essence certifying that these individual loans could be packaged into a group of securities to be sold to investors in a huge package. That is pretty much what happens. It really is that youre taking the filed on between the lender and the borrower and looking at them to make sure that everything looks right. Does this person have enough money to pay off their loans . Did they have the history where we think they will pay the loan . If we find that they do not we are actually not supposed to purchase them and certainly we should not sell them to other investors without telling them that there is something wrong. What was the smoking gun, for you . Everything about what really started happening in particular became apparent in october. Sometimes we had deals coming into her even though i was not the person looking at the loan, you could tell from where i was that something was wrong. The greenpoint deal, which matt talks about in his article, even when those loans came in they were very old. Usually you try to sell these loans within two months to three months. These went back to close to the beginning of the year. If you work in the industry you know what that means either they could not sell them because the buyers told them they were no good, or even worse they have been sold and had missed a bunch of payments, so they had been sold back to the originator. Any of those loans you would not normally sell to investors as regular loans. In your article you refer to these loans is basically selling old, beat up used cars as if they were new. Explain that . Exactly what elaine was talking about. Basically the bank these companies, these mortgage lenders out there, a company that might be familiar to people, countrywide, in this case it was a Country Company called greenpoint. They would go out and give mortgages to everybody and everybody with a policy. Especially in low income neighborhoods. They were offering these very advantageous loans to people whether they could afford the houses are not. They were buying huge amounts of these loans. Where there was a stated income where no one even check that the person had the income. Exactly right. The verbiage was a liars loan. We were warned that there will be an epidemic of these in two thousand four. The industry and the government ignored these warnings. There was this huge influx of the stated income loans where people could just say that they made an enormous amount of money and no one would check. So, the bank buys all of these loans and what they were doing was essentially throwing them into big pools, making hamburger out of them, then selling the hamburger to Pension Funds and insurance companies, hedge funds, all kinds of investors. Typically ordinary people were the people on the other end buying the stuff. Often they did not even know it. She was involved with making sure that these were loans of good quality. That when they bought these they were not buying something that was going to blow up the year. What she found was that they were buying loans of very dubious quality that were extremely risky and should not have been made into that hamburger. We interviewed them in november when his article, the 9 billion witness, came out in Rolling Stone. Stay tuned for part two of our interview. [ ] [ ] this is democracy now , democracynow. Org, the war and peace report. Im amy goodman. With Juan Gonzalez. We interviewed Elaine Fleischmann in november. The Rolling Stone headline was the 9 billion witness. Jpmorgan chase pay one of the largest lines in American History to keep her from talking. This was the first time that she appeared on television. Eric holder appeared on nbc news just after the settlement was reached over a year ago in november of 2013. He was questioned by nbcs pete williams. What about those who say that the message here is that if you do wrong, you pay for it and move along. This is not simply something where they signed the check and smiled and said that this is a good deal for us. This inflicts pain on that institution. Was this in essence a template that we can expect to see in other settlements . Ethic that the way that this case has been settled is a template for what we can expect in terms of getting maximum amounts of money and then using that money to get to people give to people who suffer the greatest amount investors are homeowners. That was attorney general eric holder. Elaine fleischmann lets take it back a step. When you started to alert your colleagues and supervisors at Jpmorgan Chase, what did they say . The transaction at one point just stopped. It turned out that 40 of the loans had problems with the deal. When we tried to bring this up to our superiors, what happened was they just started yelling at their diligence managers. Sort of yelling, berating them, using the reports over and over again. It became clear, although they would not say it, that it was going to be like that until they were clear of the loan. What actually happened was the loans started to be cleared by brute force. I raised it first with the managing director and executive director. I could not get any response. After that i decided the best possibility would be to write a letter to another managing director that actually laid out everything i was seeing. I used the greenpoint deal as an example, which is why the letter specifically says exactly who was doing what all over the deal. But it also lays out general problems around Due Diligence, that the sales people were involved that there seemed to be a lot of pressure on diligence managers to clear loans that should not have been purchased or sold. And the importance of putting all of the facts down in the letter what that meant inside the company . It used to be that the way you could stop these things from happening was if you wrote a memo that laid out what was happening, management would not go forward because they would realize that if they do there would this evidence of what happened. A paper trail. The thing with the settlements in the way that they are being done i am not the only whistleblower in these cases you have these emails and memos, but nothing happens. A fine gets paid and then all of the facts get washed away. As a whistleblower, you are taking this i did all this, the doj has all this, but for some reason they are not Going Forward on it. What happened when he went outside the company . How did you go outside . One issue that i had was even thgh i warned not to secure that type of loan, i was blocked off after i raise complaints. Right there it shows that something was wrong. So after i left i actually had no idea for four years that the loans had been securitized. On the one hand i was worried that they would but i really thought that no one would actually securitize them. This is an important distinction. She had no idea that a crime had been committed until she had concrete knowledge that the loans had actually been resold to someone else. They are certainly allowed to buy as many bad loans and risky mortgages as they want. Is not until they go to an investor and represented them that these are highly rated securities that they are actually committing fraud. She had no way of knowing that, even though she was laid off from the company she had no knowledge of what actually happened. She could not actually report the crime yet, she only saw one half of the deal. You were laid off at the beginning of 2008, right . Actually before the crash. There was turmoil in the home loan market, but the crash had not happened. So, the bank, with jamie diamond and others, they later said that they had no realization that the market was tanking as fast as it could. In your memos you certainly indicated to them that there were major problems. The funny thing is they said two completely opposite things. There was an article later in 2008 in Fortune Magazine in which they reported that jamie diamond, the ceo of the company knew as early as october of 2006 that the industry was rife with underwriting problems. All the things that elaine is talking about, the company was aware of this. There are quotes in which the ceo tells of subordinates to get out of these investments because the whole thing could go up in smoke. In the meantime they are selling their own investments in these mortgages and taking the same mortgages and selling them to investors and not telling them they had these concerns. Later, when they testified in front of the Inquiry Commission in 2010, jamie diamond said the opposite erie it he said essentially well, we had no idea that these things were happening. We got caught up in the fact that housing prices were just going up. Talk about the settlement. What happened next . The settlement happened, i guess, one year ago this month. What is interesting about it is that a lien at that point had already talked to civil investigators in the u. S. Attorneys office in sacramento. She spoke to some very talented lawyers who were anxious to press this case and they were about to release a detailed civil complaint in september of last year. Just hours before that press conference, reportedly jamie diamond again, the ceo of chase called up the assistant attorney general, asked to renegotiate. They canceled the press conference and went back into negotiations. A few months later they had a settlement in which they pay a lot of money, but none of the facts came out. Just like if you are in trouble you could make that call. Right, i could make a court case go away. That is what it that is exactly what happened in this case. They put a phone call into the top of the criminal Justice System. What happened to your contact in the criminal Justice System . How detailed they want to get into the information that you had . Let first conduct the First Contact came from calgary. He introduced himself as an investor from the Enforcement Division. As i pause for a minute he joked and said that you were not expecting to hear from you, were you . After that they set up my first interview. It was very short, maybe an hour and a half. They were only interested in one deal. Even though i kept bringing up greenpoint and they have the letter i have written, they were not and that. The sec settlement was based on the other deal. It was not until later, december of 12, that i first met with the doj investigators. It was very clear that this was going to be very different. As soon as they walked in and you could tell that they knew the securities up and down and that they were really anxious to go forward with it and felt very comfortable Going Forward with the case. So, that was a very detailed meeting. Sort of hours of going through how the process works and what happened. And then i had an actual deposition in about may of 2013 where they nail down a lot more of that. At that stage you could see first i got to find out for the first time ever, the of these loans had actually gone into them and sold to investors in the pool. It was hundreds of millions of dollars worth of them, with nothing actually disclose about the problems of the loan. Second, i got to really see what their case was. They clearly realized they had no credible case. Testifying before the Senate Judiciary committee in 2013, eric holder suggested that some banks are too big to jail. I am concerned that the size of some of these institutions becomes so large that it becomes difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you bring a criminal charge, it will have a negative impact on the National Economy perhaps even the World Economy. I think that is a function of the fact that some of these institutions have become too large. I think that it has an inhibiting influence on our ability to bring resolutions that i think would be far appropriate. Respond to what eric holder is testifying. Is crazy thing. When the leading Law Enforcement official in thnation comes out and says that some companies are so big that we cannot prosecute them no matter what they do . In that case he was testifying in the wake of a settlement that the government had entered into with hsbc, the biggest bank in europe, the biggest bank in great britai they had admitted to laundering over 800 million for a pair of south American Drug cartels. If you cannot send someone to jail for laundering 800 ilion dollars in drug money because the country is company is too big, clearly something is seriously wrong. Yet this became the unofficial official policy of the Justice Department. The crazy effect is the way they dealt with Companies Like j. P. Morgan chase citigroup, bank of america. They found a way to effect a resolution that did not involve criminal charges, affect individuals in that monopoly board game all over again, instead of paying 2000 to get out of jail, you pay 2 billion. But the amount of money the governments are getting as a result, new york state alone this year with a windfall of 5 billion. Also the federal government only is huge infusions with other stuff that we talked about, sumer relief portions. The governments actually give cash settlements, but then they negotiate more. Kate talk about that . Can you talk to that . Mike the numbers are always looking about the and the accounting. 13 Million Dollars, there are a couple of important factors here in that means that all of us american citizens, anyone who pays tax, actually picks up the check for about 2. 4 billion in a settlement. The ordinary person who pays a speeding ticket cannot deduct that. These people cratered the World Economy and they get a tax reduction for it. 4 million in settlement was what they called consumer relief. What this broke down to was loan forgiveness where they allowed payless principle towards their home loans. But mostly it came down to letting people have a little bit of extra time to pay off their payments. It is not always the bank doing that, it is often the investors in the loans, it is just a number. Eric holder renounce that he would resign. Information, inflation, consumers of financial fraud. The Justice Department has brought over 60 cases against financial institutions, winning some of the largest settlements in history. The practices related to the financial crisis, recovering 85 billion, much of it returned to ordinary americans who were badly hurt. Matt taibbi, your response . Ok, they brought a bunch of settlements and money, but there is not a single individual in this tableau who is individually paying any kind of penalty. No executives had to pay a fine. No executives had to do a single day in jail. What was the actual crime that you feel jamie diamond should have been committed for . I could not sit here and tell you that he had committed a crime, but in these cases someone and at a lower level i think it would be hard to prove. That is what they did not do in this case. They did not aggressively go after everybody. They just sort of went into a back room, and that after the settlement and stock of the company went up dramatically. Stock price went up dramatically. He wound up getting a huge raise on the board of directors. In those first weeks the market cap did into about 12 million in value. That is more than the entire settlement right there. Just a few weeks after being dinged for the largest regulatory fail in the history of capitalism he got a release by the chase board. Earlier this year Elizabeth Warren criticized the size of jamie diamonds salary. In 2013 alone, jpmorgan and nearly 23 million to settle claims with the federal government. Things related to its sale of fraudulent Mortgage Backed securities and that she would adulation of Energy Markets in california in the midwest, as well as its handling of the disaster is london whale trade. At the end of the year jamie diamond he received a 75 raise , bringing his total compensation of 20 million. Now, you might think that providing over activities that resulted in 17 billion in payouts for illegal conduct what hurt your case for a pay bump. But members of the board of directors bought the jamie diamond earned the raise, in part by acting as chief negotiator in working out a string of banner government settlements. Life that was Elizabeth Warren. That was Elizabeth Warren. I would like Elaine Fleischmann to respond. Do you think that part of what you exposed to the government earned jamie dimon this increase of 75 . I suppose the question is whether you are concerned about making money or if there is criminal activity going on at banks. There is an excellent website with lawyers involved in the madoff case where they have been tracking all of the fines for fraud and illegal activity. They are at 29 billion in the last four years alone. The question that needs to be asked is how can you be ceo over 29 billion in fines and get a raise . It also clearly shows that there is no deterrent for these fines happening over and over again. If there are no individuals held accountable, there is no reason for any of them to stop doing the serious crimes. If those fines are continuously occurring, where other crimes that are the basis . That is one of the really important points. There is very little difference between civil securities fraud criminal securities fraud, or even wire fraud. Once you have that wrong of the civil fraud case, the only real difference is that they had to really intentionally engage in the fraud and had to be proved to a higher standard, beyond a reasonable doubt that this was what they were doing. When you look at these cases these are some of the easiest whitecollar crime cases you are ever going to see. One of the things that has been sold to the public is that these are complex, difficult, or that we dont know who did what. In my case and what i have seen from these other cases in terms of who knew what the idea that they were too complex . These securities themselves are complex, but the fact of the investors were lied to about the quality of the loan is really easy. Obviously if you have people that cannot afford their loan there will be no money coming out of these loans. That is not a difficult thing to understand. Why did you not go to the press back then . What made you decide to do it now . For a long time i believe that the government would do their investigation and come forward with it. It has actually taken a long time for me. It is a bit of an incredible thing to believe. But after watching all of these cases over and over again, at some stage i am in the position where if i keep silent and the statute of limitations runs or they do one of these agreements were they whitewash everything, that it is too late. That is what has happened over and over again so far. I am trying to change the pattern, coming out first so that they have to follow these properly the way that they would for any other criminal defendant or explain why they are not doing it. The reality that all of the claims from the Obama Administration that pursued the civil cases that they never really went after the people who practically wrecked the World Economy, and how that relates to this election result that we just had, where obviously americans across the board, from democrats to republicans and independents are still furious about their Economic Situation and the failure of holding these people accountable. I think it is hard not to make the connection between the total lack of enthusiasm that we saw in the Democratic Party this past week and for instance their behavior in pushing investigations of Financial Services communities. We saw it with the occupy protests. I have spoken to people on wall street. All my sources come from wall street. They all say the same thing. Barack obama had an Incredible Opportunity in late 2008, just after he took office. With his Communications Skills he could have gone to the American People and explain exactly what happened, saying that this is why the economy is bad, this is why you are losing your jobs. There is massive criminal activity. It is not just an accident. Then he could have put some people in jail. Instead it was all swept under the rug. Even if people do not completely understand what happened they sensed that nothing was done and it is important to understand. I presume that you had a comprehensive analogy confidentiality agreement when you left Jpmorgan Chase. Are you violating that . There are different arguments about whether i am or am not violating it, because of the criminal nature of what i am bringing forward. For me at some stage it is just sometimes you are involved in something that is bigger than you, personally. Even right now there are also hurts of seats out there from private investors and private plans trying to get the money back. In a lot of cases they dont know that i have information. I have emails coming in asking for help from me so that they can get this money that was really stolen from their investors, their retirees, back to these people. For me that is more important. Are you concerned about repercussions . At some stage i think i decided that this was more important. At the end of the day, i will be ok. I will figure out something and get through it. I think we are at the state where unless a lot of people start coming forward to say that we care about this, we know whats happening and we want someone to do something about it , that this will pass into history. The government contacted you again this summer . In august. Do you feel that they can reopen the information in these cases . I did meet with them and was happy to see that they werent enthusiastic group. The concern that i have is that even when there are really strong cases like the jpmorgan made off case no matter how strong it is it just gets hushed. Another important distinction is that it is often not the line investigators who are the problem. The career investigators doing the digging are often talented and aggressive lawyers who know what they are doing. The problem is the political wing of the Justice Department can take those cases and do what they want with them. We saw this with many other cases. They take these excellent investigations and just turn them into these slap on the wrist settlements. I wanted to close by asking you about how you would judge the tenure of eric holder. Obviously now that he is going to be leaving and in terms of his particular role in going after these banks. This whole idea of being able to call a record of the Justice Department, the deals to stop prosecutions. For years now i have been covering this stuff. I have spoken to a lot of people and Law Enforcement. There are two types of people that i talk to who are prosecutors. One is the kind of oldschool lawenforcement type that wants to get the bad guy at all costs. These are career Civil Servants who want to do their jobs. And then there is this new kind of person now who comes out of the corporate defense sector. People who grew up as corporate lawyers defending these kinds of companies. That is to eric holder is. He spent a lot of time in these companies. This type of lawenforcement official is much more interested in coming up with a settlement that everyone feels good about when they walk out of the room as opposed to the oldschool kind of justice where the bad guy gets his or her comeuppance in the end. Its a seachange in how we do whitecollar crime in this country. That was met by eb and alain fleischmann. She is matt taibbi and alain fleischmann. They appeared on our program in november. It was her First Ever Television interview. When we come back, we speak with matt about his book, the divide. This is democracy now and we will be back in a minute. [ ] [ ] this is democracy now , democracynow. Org, the war and peace report. Im amy goodman. In april, journalists matt taibbi joined us on democracy now to talk about his new book, the great divide the great divide. Looking at why the vast majority of whitecollar criminals have avoided prison while an unequal Justice System imprisons the poor and people of color on a massive scale. I interviewed him with aaron and began by asking him to talk about this divide. This is about my experience in covering wall street. I have been doing it since the crash of 2008. Over and over again i would cover these complex and socially destructive capers committed by whitecollar criminals. The punchline to all of the stories was basically the same. No one got indicted, no one went to jail. After a while i started becoming interested specifically in that and was that there was no enforcement of any of this. Around the time of the occupy protests i decided to write this book. Then i shifted my focus to try to learn more for myself about who does go to jail in this country. I thought we cannot make this comparison accurately until you learn about both sides of the equation. It is actually much more grotesque to consider the nonenforcement of whitecollar criminals when you do consider how incredibly aggressive Law Enforcement is with regards to everyone else. You have spent time with the poor and vulnerable, the people of color who have been targeted by the system. There was one case of a man in new york and bedside standing outside of his home was arrested. I was in a law office in brooklyn and i was waiting to speak to a lawyer about another case when i met this 35yearold africanamerican man, a bus driver. I asked him what he was therefore in he said he had been arrested for obstructing pedestrian traffic. I thought he was kidding. I didnt know what that meant. I asked him to show me the summons and he pulled out a piece of pink paper and there it was. It was written right there. Turns out that it meant that he was standing in front of his own house at 1 00 in the morning and the police did not like the way that you look and they arrested him. This is part of the Disorderly Conduct statute in new york. It is one of these offenses that people get roped in for this part of what another city councilman in another city called an epidemic of false arrests. Basically this new statistical based strategy, the whole idea is to rope in as many people as you can, see how many of them have guns or warrants and then throw back the innocent ones, but the problem is they do not throw back the innocent ones they wind up charging the innocent with really pointless crimes. He goes to court and has a hard time convincing his public defender why he does not want to pay a fine for standing in front of his home. And i encountered this over and over again. People charged with these minor sort of harassing offenses, when the state discovers that the case against them is not very good, they start offering deals to the accused. When people would protest because they did not do anything wrong they keep offering better and better deals and no one can understand why they wont the guilty, because in reality most people do. All the bankers do. Exactly. The opposite situation on the other side of the coin. The man arrested for protest obstructing pedestrian traffic could not convince his own lawyer that he was innocent and it took a long, long time before they got the judge to ask for placement on duty if there was anyone else on the street to obstruct. It wasnt until that moment that they dismissed the case and it took that long. Lets talk about the other side. I want to talk to eric holder about his remarks from last may in which he suggested that some banks were just too big to jail. I am concerned that the size of these institutions became so large that it becomes difficult for us to prosecute them when we are hit with indications that if you do prosecute, that if you do bring a criminal charge it will have a negative impact on the National Economy, perhaps even the World Economy. I think that that is a function of the fact that some of these institutions have become too large. Hsbc, this is a more general comment, but it hasnt inhibiting influence on our ability to bring resolutions that i think would be more appropriate. That was eric holder testifying before congress. His remarks were widely criticized. This is a federal judge speaking last november at the university of pennsylvania. A federal judge who takes an oath to apply the law equally to rich and poor, this excuse, sometimes labeled the too big to jail excuse, is frankly disturbing for what it says about the departments apparent disregard for equality under the law. That is federal judge breakoff. Matt taibbi if you could respond and talk about the history of eric holder and where he came from. First of all the study of the some companies are too big to jail, it makes some sense in the abstract. In a vacuum, of course it makes sense. If you have a storied company that may have existed for 150 years that employs tens or hundreds of thousands of people you may not want to criminally charge that company willynilly and correct the company and cause lots of people to lose their jobs. There are two problems with that line of thinking used over and over again. One is that there is no reason you cannot proceed against individuals in those companies. It is understandable to maybe not charge the company, but in the case of a company like hsbc, which admitted to laundering 850 850 Million Dollars for their south American Drug cartels, someone has to go to jail in that case. If youre going to put people into jail for having dime bags on the corner, you cannot let people who want or 800 million from the worst drug offenders in the world walk. Explain what you are talking about with hsbc. Again, this is one of the Worlds Largest banks, europes largest bank, and a few years ago they got caught, swept up for a variety of offenses, moneylaundering offenses. One of them involved admitting that they had robbed 850 million from to drug cartels. Including the notorious drug cartel in mexico that is suspected in thousands of murders. In that case they paid a 1. 9 billion fine. Some of the executives had to do further bonuses for a. Of five years. There were no individual consequences for any executives. No one had to pull money out of their own pockets permanently. No one did a single day in jail in that case. To me that was an incredibly striking case. I asked around to the dumbest drug case was that day and they found someone who was thrown into rikers for 27 days were having a joint in his pocket. Is that illegal . It is not in new york city. It was decriminalized in the late 1970s. But now that they have stop and frisk what they do is they stop you and search you and force you to empty your pockets and when you empty your pockets it is no longer concealed and it is now illegal again. In that year they had 50,000 marijuana arrests even though having marijuana was technically decriminalized at the time. My point was that she was someone at the bottom, consumer of illegal narcotics was going to jail. Then you have these people at the very top illegal narcotics business getting a complete walk, which is an acceptable. What about this doctrine that you cannot punish entire companies because you might hurt the economy or shareholders . Pension holders, Pension Funds and so forth . How do you get from hurting how do you equate hurting an entire company to just not jailing a couple of executives . Thats the point, they have conflated these things. To answer the second part of your original question, where does this come from . In 1990 nine, when eric holder was a Deputy Attorney general in the Clinton Administration he wrote an order that has come to be known as the holder memo. In it he outlined a number of things. It was originally considered a get tough on corporate crime corporate crime memo because it gave them tools to go after corporate criminals but at the bottom there was this thing that he laid out call the collateral consequences doctrine. What it meant was that if you are a prosecutor and you are talking about one of these big corporate offenders and you are worried that you may affect innocent victims, shareholders or innocent executives that might lose their jobs, you may consider other alternatives, other remedies besides criminal prosecutions. Again, at the time it was a completely sensible thing to lay out. Of course it makes sense to not always destroy a company if you can avoid it. But what they have done is conflated that sometimes sensible policy with a policy of not going after any individuals for any crimes which is totally acceptable. Is it not the case that in some of these cases they are just too complex to explain to a jury . Yes well, they are complex injuries do have a difficult time with them but they are not impossible to explain. I was at a trial involving bid rating at the Municipal Bond markets where they obtained a conviction. I could not have been more complicated. That was as hard as a case gets. I actually watched some of the jurors fighting off sleep in the early days of the trial. That is a difficult it was. In that case one of the attorneys for the banks got up initially and tried to defend his clients behavior by saying that when you call up if youre washing machine breaks and you call the repair man and he tells you how much it costs, you just have to trust him with the price because you do not understand how to fix the washing machine but we do. In other words the stuff is so complex, you have to take our word for it that he did not commit a crime. But that is a weak excuse that prosecutors get out. It is a copout for not taking on difficult cases. Rich or poor black or white, if someone has broken the law you should want to go after them though matter who they are. The fact that it is a difficult crime to prove should be just more of a challenge for you. I want to turn to remarks from lanny brewer about prosecuting large companies. At the time he was the assistant attorney general speaking at the york city bar association. My duties to consider whether individual employees with no responsibility for or knowledge of misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large, Multinational Companies the jobs of tens of thousands of employees can literally be at stake. And in some cases the health of an industry, or the markets, are a very real factor. Those are the kinds of considerations in whitecollar cases that literally keep me up at night erie it and which must, must play a role in responsible enforcement. That was lanny brewer from 2012. Basically the top cop in america. He was an enforcer. Eric holder was an attorney general from the same company. Respond to what he said and then talk about coming to this. First of all, the whole thing about innocent whitecollar employees losing their livelihoods at night, i want to know what his response is to the idea that maybe a single mother on welfare might lose her kids because she is going to lose custody in an hundred dollar welfare fraud case. So many of these cases were overwhelming to me. Those are the things that would keep me up at night if i wasnt attorney general, thinking about the consequences felt by ordinary people when they are caught up in the criminal Justice System. For instance, going back to welfare fraud, your relatives can lose their section eight housing. Again, if you are on welfare and get caught in a fraud case, it may just involve checking the wrong box or having one of your neighbors say that you have a boyfriend in your house when you dont. Your mother or your grandmother can lose their housing because of Something Like that. That is the stuff that would keep me up at night. I would not worry about millionaire and billionaire executives. That tells you a lot about the priorities of someone like him. Talking about many brewer eric holder, where do they come from, where do they go back to . They both came from a law firm called covington and burling, basically they have represented everyone on the too big to fail banks. They were involved in the setting up of an electronic mortgage registry playing an enormous role in the subprime mortgage crisis. Here is the key thing about the presence of these two people at the head of the Justice Department. Prosecutors by and large and i interviewed a lot of them, they all basically have the same personality. They just want to get their target by hook or by crook. They have this ferocious aspect of their personality. They are all kind of the same. In the 2000s that kind of person started to be replaced by a new kind of figure who tended to come from the corporate Defense Community. Their attitude was not to get the target at all cost, it was more lets remember two people in the room and hammer out a solution where all sides walk out happy. That is how we wind up with settlements like the one last year, instead of prosecutions. With a host of other banks involved in nonprosecutions during the time. You have a whole bunch of people at the top of the regulatory agencies, maybe the Enforcement Division of the fcc who all came from these big banks or law firms that represented these big banks. It is a very incestuous community, just like you talk about with james kidney, the sec official who left. As a result of this kind of merrygoround of people who all work for the same companies saying that they will go to the government for a while and then back to the corporate Defense Community when they leave, they are very reluctant to be aggressive against these companies. Culturally they are the same people as your targets. Where is there is not that same simpatico and it is an important distinction to make. People dont understand that. You also show that they are overly concerned with their conviction rate . Something i heard over and over again from the Justice Department. It came down from above, the edict that we were absolutely sure we would go after cases only if we were absolutely sure we would win. Often times the cases are difficult to prove. The state has a moral obligation to proceed with those investigations and in many cases criminal cases against those who are guilty. That is why you saw in the cases against these big banks a ridiculous number of resources with cases where there only were a couple pieces of evidence but they did not know how to succeed even in those cases. Matt taibbi, author of the divide. Democracy now is looking for feedback from people who appreciate the closed captioning. Email your comments to outreach democracynow. Org or mail them to democracy now p. O. 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