Why Is Thomas Perrelli Negotiating a Settlement If the Banksters Didn’t Commit Fraudulent Actions?

In his press conference today, Obama said,

Well, first, on the issue of — on the issue of prosecutions on Wall Street, one of the biggest problems about the collapse of Lehman’s and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn’t necessarily illegal, it was just immoral or inappropriate or reckless.


So you know, without commenting on particular prosecutions — obviously, that’s not my job; that’s the attorney general’s job – you know, I think part of people’s frustrations — part of my frustration was a lot of practices that should not have been allowed weren’t necessarily against the law, but they had a huge destructive impact. And that’s why it was important for us to put in place financial rules that protect the American people from reckless decision-making and irresponsible behavior.


The president can’t go around saying prosecute somebody. But as a general principle, if somebody is engaged in fraudulent actions, they need to be prosecuted. If they’ve violated laws on the books, they need to be prosecuted. And that’s the attorney general’s job. And I know that Attorney General Holder, U.S. attorneys all across the country — they take that job very seriously. [my emphasis]

His comments are funny for a number of reasons. Apparently, the President can’t go around saying “prosecute somebody,” but he can go around saying, “assassinate somebody.”

More curiously, though, he insists that if someone has engaged in “fraudulent actions, they need to be prosecuted.”

FHFA has sued 18 banks, a number of them for fraud, most of them in federal court. As part of those suits, it has sued a number of named individuals. DOJ, however, seems to have no interest in all those entities accused of fraud.

More troubling still, mortgage servicers have, in sworn depositions, admitted to fraud of a variety of types.

And yet Associate Attorney General Thomas Perrelli is busy trying to craft a settlement–not a prosecution–with those who engaged in this fraud. (And in the wake of CA’s withdrawal from the settlement talks, the banks are crowing that DOJ is still going to sign such a deal.)

The Administration needs to be asked not just why no big banksters have been prosecuted, but also why in the face of massive fraudulent actions, DOJ is choosing to settle, rather than prosecute.

22 replies
  1. justbetty says:

    Ahh, audacity?? The audacity to tell people that none of this mess involved illegal behavior? Breathtaking. Didn’t a Congressional Committee recommend prosecution of some individuals? I need to check on that.

  2. rugger9 says:

    The banks see that Obama is more pliable than the other AGs turned out to be. However, as I’ve observed before, one of the critical contributors to the failed AG settlement was the chutzpah and unbridled greed of the banks. That hasn’t changed. If Obama thinks that the banks will play nice after blackmailing his DOJ he’s stupider than I thought. The banks won’t support him and will support whoever the GOP trots out [and I still vote for a convention candidate].

    Another aspect is whether the feds actually can intervene on things that are clearly local control based on extensive, centuries old case law, for example the recording process short-circuited by MERS and the fees due to the counties / parishes that were never paid. It’s hard for me to see how the commerce clause can stick its nose into that, since it has never been a federal issue. There are other examples, as well.

  3. rugger9 says:

    Kamala Harris saw the light about the reaction of voters to the craven giveaway of THEIR rights to basic fairness, and I’m surprised that Obama’s political team doesn’t. They still appear to cling to the crazy Republican strategy.

  4. ferd says:

    I was bummed that Obama kept saying — in reply to Wall Street questions — that the American people are merely “frustrated,” and “cynical,” instead of saying we are ‘furious,’ and ‘afraid,’ and many are ‘ruined.’ and ‘desperate.’

    But he did say, finally, that Americans were losing their houses, and kids were dropping out of school because they couldn’t afford loans to stay enrolled. He did show, I think, that he has heartfelt concern about the folks who were harmed even though they “played by the rules.”

    The only thing I keep thinking is that Obama believes that if he doesn’t walk a very fine line here, on Wall Street prosecutions and such, that the Right wing will ignite a reactionary firestorm, jacking racism and thuggery through the roof. I think, I hope, he’s trying to thread the needle here. And I DO think that Occupy Wall Street is putting a little fear into the bad guys so that Obama might be able to say and do a little more to push back against them.

    That’s what I’m clinging to. I do think that Obama gave strong hints, today in the press conf., that his heart is in the right place.

  5. ferd says:

    The world is a political and financial tinder box, right now. Obama is up against many dark forces, but he’s trying hard to be the shepherd.

  6. Mary says:

    Obama’s whitewash doesn’t tie in very well with this story from waaaaaay back in July:

    “Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.

    … the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled ‘an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,’ Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September. ”

    Yeah – I guess you do move an “important step away” from those ol’ aggressive Bush prosecution practices when you just say, “hey, it was all legal, just meansprited.”

  7. Bay State Librul says:

    The Good Shepherd?
    Pour the waters of Baptism on Obama, convert him to the Elizabeth Warren “give-em-hell-there’s-a-war-going-on-in-our-country-for-the- soul-of-America” approach to dealing with Repubs.

  8. earlofhuntingdon says:

    As you say, there shouldn’t be much to settle, since the government and the target companies endlessly repeat that no crimes were committed. Even $8 billion, the low end of the numbers often touted – itself a pittance at least two orders of magnitude too small to repay the damages – seems like a lot to pay for having done nothing wrong. Even paying that amount would have to be justified to shareholders as a good faith business decision that avoided the potential for far greater damages and the cost of defending against government claims.

    More basic to the prosecutorial decision to settle claims – assuming for the moment that that’s what the government is doing here – it is hard to settle a good faith claim that someone has committed felonies when one chooses, as federal and state governments are doing here, not to investigate what those felonies were, what named individuals committed them, why and how, and with what consequent damage to other named individuals and the fabric of society as a whole.

  9. earlofhuntingdon says:

    @ferd: The world is a pretty tough place; it puts up with horrors darker than most things visited upon the US. The world would be just fine if Mr. Obama actually enforced the law without fear or favor, passion or prejudice, against the banksters, the mortgage lenders and servicers, the Wall Street securitizers who earned billions at the expense of threatening the world economy and at the cost of financial hardship for millions of homeowners, bank customers, and pension funds.

    It is a far riskier and more worrisome place when the president chooses not to fulfill his constitutional obligation to enforce the law. It tells the powerful that he can be bought, that justice is not blind but available at a price, which need not be money but often includes vast amounts of it.

    This country was founded, after long bloody battles and hard-bitten political infighting, on the notion that the king’s justice was too personal, too whimsical, too insufficient a foundation for liberty. That’s why we claimed to be founded as a society ruled by laws and not by men.

  10. bell says:

    DOJ is choosing to settle, rather than prosecute because the banks run the usa and give the financial support to elect the politicians that direct the business of gov’t the usa… politicians encouraging the doj to prosecute the banks is like biting the hand that feeds them..

  11. Mauimom says:

    without commenting on particular prosecutions — obviously, that’s not my job; that’s the attorney general’s job

    How about saying someone’s “guilty”? Is that a no-no?

    —-> Bradley Manning

  12. Timbo says:

    The bribes were big enough? That’s why? The fact that the DOJ can’t figure out how to conduct a criminal prosecution here sez a lot about the incompetence and cronyism at the DOJ. No wonder the Republicans can’t quite get an DOJ grilling off the ground…no money in it.

  13. earlofhuntingdon says:

    @Mauimom: Bradley Manning rated, I believe, as number one in the Guardian’s poll on who should receive the Nobel Peace Prize. Let’s hope the committee doesn’t award it again for the promise Mr. Obama holds out as a peacemaker. The people of the Middle East know how well that worked out.

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