Transcripts For CSPAN2 After Words With Jesse Eisinger 20170

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 practi