Justice: Is this the New Normal?
Part I: Throwing Slabs of Raw Beef to a Pack of Hungry Dobermans
Sworn in on Monday, April 27, 2015, Loretta Lynch said her confirmation as U.S. attorney general showed that "we can do anything" and pledged that the agency would "use justice as our compass" in confronting terrorism, cyber-attacks and other threats facing the country. She pledged to "imbue our criminal justice system with both strength and fairness, for the protection of both the needs of victims and the rights of all. We can restore trust and faith both in our laws and in those of us who enforce them." Sounds promising. Let's see how she addresses the following unfinished business.
In late August, 2014, a newsflash was released about the Bank of America settlement with the justice department. Forbes stated, "Nearly six years after the collapse of Lehman Brothers, Bank of America reached a $16.65 billion deal on Thursday to resolve federal government accusations that it misled investors into buying cratering mortgage securities prior to the financial crisis...Most of the mortgage securities involved in the big Bank of America settlement were actually issued by Countrywide Financial before Mozilo sold the company to Bank of America in 2008."
This followed the newsflash a day earlier about Angelo Mozilo, Founder and Chief Executive Officer of disgraced Countrywide Financial Corporation. There was a buzz about the prospect that finally, at long last, the government would punish one of the kingpins at the center of the mortgage meltdown and financial disaster with catastrophic consequences around the world. The Justice Department had promised a "get tough" policy prior, but had privately informed Wall Street there would be no personal consequences. In emails to several media luminaries, I stated my fears that those who prayed for justice would again be denied.
On August 23, 2014, Pulitzer- Prize winning reporter, Gretchen Morgenson of the New York Times wrote a story entitled, "An Unfinished Chapter at Countrywide...Is Angelo R. Mozilo in the Cross Hairs Again?" She noted that Mr. Mozilo had largely escaped accountability for his outsize role in the mortgage crisis and that, according to recent news reports, Mozilo may finally be prosecuted.
Sadly, this administration has thus far prosecuted none of the architects of the financial crisis, no matter how heinous the crimes. The article notes, "Federal officials are said to be considering a civil action against Angelo Mozilo, former chief of Countrywide Financial." Just a few weeks later, the Washington Post, on September 17, 2014, printed a story written by Danielle Douglas-Gabriel entitled, "DOJ preparing Criminal Charges against Wall- Street Executives." Front and center was a notation about the Bloomberg report of imminent prosecution of Mr. Mozilo. Also appearing, was a series of tough-talking quotes from then-Attorney General Eric Holder noting they hoped to file formal charges in the coming months.
"We are making good progress in these cases, which involve conduct that has undermined the integrity of our markets." Holder said at New York University Law School. Good progress, really? It is now one full year later (and over seven years since Mr. Mozilo was relieved of his post). We have not heard a peep. Mr. Holder continues, " "When it comes to financial fraud, the department recognizes the inherent value of bringing enforcement actions against individuals, as opposed to simply the companies that employ them," Holder said." Despite the growing jurisprudence that seeks to equate corporations with people, corporate misconduct must necessarily be committed by flesh-and-blood human beings."
Why then is it that even though copious evidence has surfaced of apparent criminal violations in foreclosure cases, there have been no prosecutions? Under Holder, the Justice Department hadn't brought any criminal cases against big banks or other companies involved in mortgage servicing. This is despite the ample evidence of reported widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.
In fact, prosecution for financial fraud hit a 20-year low during the Obama administration. While talking about the evils of bankers, Mr. Obama has pushed billions to them. Likewise, while talking about the evils of the big insurance companies, he has generously doled out billions to them. And, if memory serves, Eric Holder is the fellow who told us, under oath, that the fraudsters are "too big to jail."
The rhetoric from AG Holder appears to be nothing more than a smokescreen activated every six months or so to create the illusion of law enforcement. They say one thing and do the other. In 2011, the Justice Department mysteriously dropped a criminal case against Mozilo. As predicted, not a word was heard after the August, 2014 promise of justice.
"It is astonishing that one single company could be responsible for overcharging more than 450,000 homeowners, which is more than 1 percent of all the mortgages in the United States," Jon Leibowitz, then the F.T.C. chairman, told Gretchen Morgenson in 2011. The company's business model was "based on deceit and corruption, and the harm they caused to American consumers is absolutely massive and extraordinary," he added. Still there are zero indictments and no prosecution. Is that fair to the victims of this malfeasance? Here and abroad people are waiting for justice.
Michael G. Winston
Former Managing Director & Enterprise Chief Leadership Officer, Countrywide Financial Corporation
Part II coming shortly in Huffington Post
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