Election '18

Democrats Put Eric Holder, Best Friend of Wall Street Banks, in Charge of Winning Back Main Street America

Holder was a "double agent" for high finance while serving as America's top cop.

Photo Credit: Image by Shutterstock, Copyright (c) Gregory Reed

The Democratic Party has put a man who favors Wall Street over Main Street in charge of overseeing its plan to retake red state America and a U.S. House majority.

Eric Holder, the former U.S. Attorney General, is the chair of the National Democratic Redistricting Committee, which promises to unfurl “a targeted, state-by-state strategy that ensures Democrats can fight back” when the political maps are drawn for U.S. House and state legislative races for the decade of the 2020s.

But Holder’s tenure at the Justice Department did little to help millions of Americans who lost their homes in the 2008 financial crash, when a speculative bubble fueled by the real estate industry and mortgage banks resulted in waves of foreclosures across the U.S. His prosecutors never put a single bank executive in jail. His touted financial fines ended up becoming corporate tax write-offs. The payments to those who never should have lost their homes amounted to two months rent, if they were received at all.    

In the aftermath of an election where Hillary Clinton, rightly or wrongly, was pilloried for her connections to Wall Street titans, the Democrats have put a much more deeply entwined friend of big banks in charge of winning elections across middle America.

“Holder just completed [a run] as one of history’s great double agents,” wrote Matt Taibbi in Rolling Stone this July. “For six years, while brilliantly disguised as attorney general of the United States, he was actually working deep undercover, DiCaprio in The Departed-style, as the best defense lawyer Wall Street ever had.”

Taibbi’s profile of Holder traces how the banks that were called “too big to fail” as the financial markets collapsed were run by executives who became “too big to jail” under his watch at the Justice Department. Holder is back at his prior law firm, Covington & Burling, one of Washington’s top corporate law firms, where he is a partner.

“Holder denied there was anything weird about returning to one of Wall Street’s favorite defense firms after six years of letting one banker after another skate on monstrous cases of fraud, tax evasion, market manipulation, money laundering, bribery and other offenses,” Taibbi wrote.

Instead, Holder has repeatedly said he will continue public interest work while back in private practice. Indeed, as attorney general, the Department was very aggressive in defending voting rights and civil rights. But, as David Dayen pointed out in a Guardian report that reviewed Holder’s record after he left office, “he was bad on press freedom and transparency.” That refers to the DOJ chasing whistleblowers such as Edward Snowden, who exposed domestic spying by U.S. intelligence agencies.

Dayen, too, writes that Holder was no friend of Main Street when Wall Street called.

“If you want to understand what he did for the perpetrators of a cascade of financial fraud that blew up the nation’s economy in 2008, you only have to read that line from [the website of] his former employer: he helped them ‘get the best deal they can,’” Dayen wrote. “Any prosecutor worth his salt could have gone up the chain of command and implicated top banking executives.”

But Holder didn’t do that. As both Dayen and Taibbi explain, the DOJ under Holder did not want to be seen losing in court. So they cut deals where large banks agreed to legal settlements where big fines would be paid. But no one at the top would go to jail. No admissions of wrongdoing would be made. No details would be publicly released. Punishment was just another cost of doing business.

“He was a revolutionary,” Taibbi wrote. “He institutionalized a radical dualistic approach to criminal justice, essentially creating a system of indulgences wherein the world’s richest companies paid cash for their sins and escaped the sterner punishments the law dictated.”   

Holder had the tools at his disposal. In 2009, Congress passed the Fraud Enforcement and Recovery Act, giving the DOJ $165 million to investigate and prosecute those to blame for the financial crisis. But not one major executive was jailed under his watch.

Taibbi cites the more egregious examples. He’s not talking about convicting and jailing “a pair of Bear Stearns nimrods named Ralph Cioffi and Matthew Tannin, who confided to each other via email that the subprime markets were ‘toast’ but told their clients something very different.” Instead, he’s talking about executives at mortgage lenders whose banks were allowed by the feds to acquire smaller banks. He’s talking about Britain’s HSBC, which admitted to massive money laundering, but under Holder was only fined because of the “collateral consequences” of destabilizing financial markets. And Swiss bank UBS, which was caught manipulating the London benchmark setting global interest rates. “It’s worth noting that Holder, before he became attorney general, represented UBS at Covington & Burling,” Taibbi writes.

The Obama administration touted the billions in settlement fines that Holder’s DOJ brought to the Treasury. They also said the worst capitalist excess was legal—a longtime Washington explanation. Both of those defenses are glib. The banks treated some of the legal settlements as “remedial payments” for tax purposes, which means one-third was a deductible expense. Thus, taxpayers subsidize their penalties. As for the it’s-bad-but-it's-legal defense, Taibbi notes that HSBC’s money laundering activities included illegally helping violent Mexican drug cartels.

“You might remember the Sinaloa cartel for their ISIS-style, unforgettably upsetting torture videos. HSBC washed their cash. They even created special teller windows to make their deposits easier. This is admitted, not alleged,” he wrote. “To reiterate: HSBC laundered money for guys who chop people’s heads off with chainsaws. So we can dispense with the ‘but no one broke any laws’ thing.”

There are more examples, but a larger point emerges: Holder was a federal executive overseeing immense double standards.

“None of us mortals can deduct so much as a speeding ticket, since we wouldn’t want to use the tax code to encourage speeding,” Taibbi said. “So why was it OK for the nation’s top cop to make fraud or money laundering a tax subsidized activity?”  

Perhaps none of us should be surprised. The most successful Washington lawyers and politicians always seem to do what is necessary to keep wealthy clients comfortable, while personally profiting, and justify it under a public service rubric—such as not causing further economic disruption. Though Holder has returned to Covington & Burling, he has said he will be “engaged in the civic life of this country.”

Some of that civic life now includes helping the Democrats try to win state legislative races and House seats in the states Clinton lost to Trump—that were heading in a purple direction before the Republican gerrymander of 2011. These are states like Wisconsin, Michigan, Pennsylvania, North Carolina, Georgia and Ohio.

There are echoes, and they are not faint, in Holder’s relationship to corporate America’s wealthiest players with Clinton’s six-figure speechmaking dalliances for Goldman Sachs and others on Wall Street. This issue here is not what Democratic Party insiders tell other Washington insiders about their plans to take back red states and the House; the issue is whether Holder’s symbolically important position is being filled by a friend of Main Street. Suffice it to say, he’s not exactly Michael Moore or Jon Stewart.

You can be sure Americans who suffered in the aftermath of the 2008 financial meltdown know Holder didn’t have their back. As Dayen wrote, “The National Mortgage Settlement, for example, was touted by Holder’s Justice Department as a $25 billion deal. In reality, banks were able to pay one-quarter of that penalty with other people’s money, lowering principal balances on loans they didn’t even own.”

“As for homeowners, the biggest victims of Wall Street misconduct, they received little relief,” he continued. “Victims who already lost their homes got checks in the National Mortgage Settlement for between $1,500-$2,000, compensating people wrongly foreclosed upon with barely enough money for two month’s rent.”

Dayen noted there were 5 million Americans who lost their homes, most of them in states like Florida, Georgia, Nevada, Michigan, and Arizona. These are all states where the Democrats will need to win congressional and state legislative seats if they and the nation are not going to be subjected to another decade of Republican rule. And the Democrats have put a known friend of Wall Street, not Main Street, in charge of that critical effort.

Steven Rosenfeld covers national political issues for AlterNet. He is the author of several books on elections, most recently Democracy Betrayed: How Superdelegates, Redistricting, Party Insiders, and the Electoral College Rigged the 2016 Election (March 2018, Hot Books).


Sign Up!
Get AlterNet's Daily Newsletter in Your Inbox
+ sign up for additional lists
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Election 2018