Covington and Burling and the big banks return the favor


While Eric Holder did a lot of good work in the civil rights area while serving as Attorney General in the Obama administration from 2009 to 2015, his performance when it came to prosecuting the big banks that were responsible for the financial collapse was nothing short of scandalous. He was the one who backed the idea that the banks were too big to fail and he refused to criminally prosecute the top executives of those banks for their crimes, allowing the banks to pay fines without admitting guilt and thus allowing the top executives to get huge bonuses instead of going to jail.

Lee Fang reports today that Holder is getting his reward for his loyal services to the banking sector, by going back to the same big law firm that he came from and that has the same big banks as its clients.

The move completes one of the more troubling trips through the revolving door for a cabinet secretary. Holder worked at Covington from 2001 right up to being sworn in as attorney general in Feburary 2009. And Covington literally kept an office empty for him, awaiting his return.

The Covington & Burling client list has included four of the largest banks, including Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo. Lobbying records show that Wells Fargo is still a client of Covington. Covington recently represented Citigroup over a civil lawsuit relating to the bank’s role in Libor manipulation.

Covington was also deeply involved with a company known as MERS, which was later responsible for falsifying mortgage documents on an industrial scale. “Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks,” according to an investigation by Reuters.

The Department of Justice under Holder not only failed to pursue criminal prosecutions of the banks responsible for the mortage meltdown, but in fact de-prioritized investigations of mortgage fraud, making it the “lowest-ranked criminal threat,” according to an inspector general report.

For insiders, the Holder decision to return to Covington was never a mystery. Timothy Hess, the chairman of Covington, told the National Law Journali that Holder’s return to the firm had been “a project” of his ever since Holder left to the join the administration in 2009. When the firm moved to a new building last year, it kept an 11th story corner office reserved for Holder.

Criminal Division Chef Lanny Breuer, Holder’s chief assistant at the Department of Justice and the person who was directly in charge of prosecuting banks and was instrumental in treating the banks so gently and so good at finding reasons why executives should not be prosecuted, earlier left the Justice Department to also join Covington and Burling.

One big, happy family is now reunited, you might say.

Knowing how the revolving door works in Washington, it was not hard to predict where Holder would end up and I did so back in September of last year.

The big banks rule our world and only breaking them up can release us from their stranglehold.

Comments

  1. Jockaira says

    It’s a small mystery to me why the banks didn’t simply cast the “top executives” adrift and let them suffer their venal fate. It would have saved the banks the very costly fines, the bonuses paid to the miscreants, and in the bargain would probably have done wonders for their reputations. It would also have put various scheming persons on notice that such illegal and immoral behaviour would not be tolerated.
    Isn’t that what criminal penalties are for?

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