Wells Fargo, Freddie, Bank of America, and UBS at DOJ

As a number of people have noted, Reuters has an important story on a potential conflict of interest at DOJ: Covington and Burling, where Eric Holder and Lanny Breuer worked before coming to DOJ in 2009, wrote key memos leading to the creation and title transfer abuses of MERS.

A particular concern by those pressing for an investigation is Covington’s involvement with Virginia-based MERS Corp, which runs a vast computerized registry of mortgages. Little known before the mortgage crisis hit, MERS, which stands for Mortgage Electronic Registration Systems, has been at the center of complaints about false or erroneous mortgage documents.

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. It was meant to speed up registration and transfers of mortgages. By 2010, MERS claimed to own about half of all mortgages in the U.S. — roughly 60 million loans.

But evidence in numerous state and federal court cases around the country has shown that MERS authorized thousands of bank employees to sign their names as MERS officials. The banks allegedly drew up fake mortgage assignments, making it appear falsely that they had standing to file foreclosures, and then had their own employees sign the documents as MERS “vice presidents” or “assistant secretaries.”

Covington in 2004 also wrote a crucial opinion letter commissioned by MERS, providing legal justification for its electronic registry. MERS spokeswoman Karmela Lejarde declined to comment on Covington legal work done for MERS.

In the two years before they joined the Administration, Holder did over $5,000 of legal work for Bank of America and UBS. Breuer did over $5,000 of legal work for Freddie Mac and Wells Fargo.

That of course doesn’t reveal whether they were involved in the key 2004 letter–but it shows they did some kind of work for the most corrupt banks during the financial crash.

But Cynthia Kouril explains why the normal 2-year disclosure rules on this issue aren’t enough.

If DOJ were to bring criminal charges against the big banks for all the mortgage fraud, it would be really tough to do so without attacking MERS and the status of the alleged transfers made within MERS. A conclusive finding that MERS is and always was the dumbest idea on earth and that any L1 law student should have been able to see that, will destroy the law firm.

Even if Holder and Breuer are not planning to return to Covington after their stint in public service, their pensions are presumable tied to the viability of the firm.

That is, whoever signed off on the legal justification for MERS is a shitty lawyer. And for DOJ to go after the banks, a key part of that argument would require arguing that their former firm is a shitty lawyer. They may have big reasons not to want to do that.

Update: Recall that during the fight over Cheney’s interview report, Breuer did not disclose that he had helped Jon Kiriakou avoid testifying about who ordered him to investigate the Joe Wilson trip at the CIA. While temporally, he complied with his ethical guidelines, it was still the kind of thing he should have disclosed.

15 replies
  1. emptywheel says:

    For UBS, Holder successfully defeated a claim that a branch in Prince George’s County, headed by an African American, was an attempt to segregate banking.

  2. Peterr says:

    . . . whoever signed off on the legal justification for MERS is a shitty lawyer.

    In other news, Generalissimo Francisco Franco is still dead.

    I’m struck by the “over $5000” amounts of work that Holder and Breuer did for the banks. For lawyers of their stature, what would they charge for their hourly rate — $250/hr? 500/hr? 1000/hr? When you factor their rates in, these disclosure forms are next to worthless in terms of trying to discern the amount of work someone like these two did for their clients. All they tell us is that Holder and Breuer did more than one or two days of work for these banks.

    I’d sure like something a bit more specific than that.

  3. bittersweet says:

    @emptywheel: Marcy, remember when President Obama said that their had been no prosecutions because the banks had not done anything illegal? Remember how stunned we all were? Well, now it seems as though he know about this justification letter all along! I would really like to see this “justification” letter! I would really like BMAZ to interpret it for us. A justification for turning over 236 years of State property law must be cleverly written. (Almost as clever as a justification of non-torturous torture!)

  4. emptywheel says:

    @Peterr: Holder’s confirmation questionnaire explains his work w/UBS, which is where I got the above description (though I note he doesn’t call Colombia’s terrorist AUC terrorists).

    I haven’t been able to find Breuer’s though–it’s supposed to be in the hearing volume but it’s not.

  5. emptywheel says:

    @bittersweet: Good point–this would sort of function as an OLC memo, if only because the people NOW running DOJ wrote the authorization (if they did so).

  6. Peterr says:


    I wasn’t complaining about you, but about the design of Schedule D, Part II of the disclosure forms you linked to.

    Schedule A requires that individuals provide information about the value of their assets and the income from those assets, but allows for a certain amount of privacy by having people mark a particular range: less than $1000, $1001-15000, $15001-50000, etc.

    On Schedule D, Part II, all you get is a list of people who paid you more than $5000. For lawyers like these, you get no indication if the person providing the info worked for each client equally, or did one day of work for firm A, 10 days of work for firm B, and 354 days of work for firm C.

    Inquiring minds would like to know a bit more, but the form does not allow for that.

    If I were a suspicious sort of person, I’d call this a feature and not a bug. After all, lawyers helped design these forms, right?

  7. PeasantParty says:

    S ugar
    H oney
    I ced
    T ea!

    This has to be why they all agreed that those big banksters could turn themselves in if they felt like it, otherwise it is okay to be a criminal.

  8. PeasantParty says:



    Though prosecutors are touting the recent arrests as part of their “continuing efforts to ensure fair play on Wall Street,” a November report found that federal prosecution of financial crimes was on track to fall to a 20-year low. The report compiled Justice Department data obtained through a Freedom of Information Act request and found that 2011’s low level of prosecutions is the continuation of a trend spanning more than a decade.

    One explanation for the drop in prosecutions could be a boost in deferred prosecution agreements, which allow companies to voluntarily report their own misconduct and sidestep harsher punishments in court. The Justice Department and the Securities and Exchange Commission have adopted deferred prosecution agreements in 2008, according to The New York Times.

    The lack of prosecutions in the wake of the financial crisis has stoked anger among critics including the Occupy Wall Street movement. Government officials haven’t successfully prosecuted a single Wall Street executive or financial firm for their role in the meltdown

  9. Twilight of the Bombs says:

    Federal-State Meeting Planned to Rally for Foreclosure Accord

    US Housing and Urban Development Secretary Shaun Donovan and a Justice Department official are set to meet with state attorneys general next week to rally support for a proposed settlement with banks over foreclosure practices.


    Call Your Attorney General Today to Oppose Big Obama Push to Get Mortgage Settlement Deal Done

    The latest bit of corrupt behavior is that the Obama administration has a full court press on to push the heinous “multi-state” settlement deal over the line. It appears the President wants a talking point, ideally for the State of the Union address or as shortly thereafter as possible.

    So this time is different: the administration is putting far more pressure on the dissident and skeptical Democratic attorneys general.


  10. Gitcheegumee says:

    Well, I tell ya that Sourcewatch has some pretty interesting info on Covington and Burling….especially their involvement with Philip Morris and the Texas tobacco settlements.(Elena Kagan,SCOTUS) was involved in some of these settlements,IIRC,just prior to her SCOTUS nomination and appointment not long ago.)

    Phil Gramm was from Texas,right,and wife Wendy on board of Enron..Gramm went on to be a consultant(?) for UBS after leaving the US government and passing Gramm Leach Bliely act that deregulated Wall Street.

    And who else does this Sourcewatch piece on C&B mention but Mitt Romney’s acquisition partner(whom I posted on earlier last week)- the Texas firm TPG,whom Covington and Burling reps also.



    Collaborative directory of people, organizations and issues shaping the public agenda. Catalogs PR firms, activist groups and government agencies, along with …

  11. Gitcheegumee says:


    Supreme Court Unleashes Corporate Campaign Cash In Citizen’s …

    Jan 21, 2010 … Tobacco executives reportedly asked Solicitor General Elena Kagan to drop an appeal of a lower-court ruling that the … is considering a deal, although possibly one including a multibillion-dollar settlement from tobacco firms.

    emptywheel.firedoglake.com/…/supreme-court-unleashes-corporate- campaign-cash-in-citizens-united-decision/

    Obama, the Spending Freeze, and the Joe the Plumberization of the …

    Jan 26, 2010… secretly with Solicitor General Elena Kagan in an effort to avoid the government’s … dollars from the industry as part of a possible negotiated settlement of the suit, … And wouldn’t it be ironic if big Tobacco money would help …

    firedoglake.com/…/obama-the-spending-freeze-and-the-joe-the- plumberization-of-the-democratic-party/

    Lanny Davis’s Rent-a-Wisdom | Emptywheel

    Jan 20, 2010 … Tobacco executives reportedly asked Solicitor General Elena Kagan to drop an appeal of a lower-court ruling that the … is considering a deal, although possibly one including a multibillion-dollar settlement from tobacco firms.


    NOTE: Wow, that last link is two years to the day!!

  12. Gitcheegumee says:

    Fraud and folly: The untold story of General Electric’s subprime …

    http://www.iwatchnews.org › … › The Great Mortgage Cover-Up

    Jan 6, 2012 – General Electric Co. dove into the subprime business in 2004, lending blue-chip respectability to the growing market for risky home loans by …

    Fraud and folly: The untold story of General Electric’s subprime …

    Jan 8, 2012 – For General Electric Co., hawking subprime mortgages was a long way from making light bulbs and jet engines. That didn’t stop the industrial .

    VERRY interesting …don’t recall seeing this before.

  13. Gitcheegumee says:

    From four days ago,same time frame of Reuters story (linked in thread):

    The Daily Docket: FDIC Says BofA Owes Colonial $900M

    Wall Street Journal (blog)‎ – 4 days ago

    … Corp. says Bank of America Corp. owes the failed Colonial Bank $900 million. … The Daily Docket: FDIC Says BofA Owes Colonial $900M …

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