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sense either on the majority party on the phone it is a pleasure to welcome
back to the program eliot spitzer
uh... who my uh... like actually saw last night in the uh... film the
untouchables how the o bomb administration protected wall street the
prosecution's on uh... p_b_s_ we have a link to that
film you can watch it online i welcome back to the program elia evelyn
criticality thank you for inviting me
so i'm i'm not sure when you were you sat down with the makers of that film
buttttt really focused uh... specifically on
the failure of the oklahoma administration
to pursue any criminal charges against the top executives involved in the
financial crisis specifically the
tremendous amount of
well uh... you know based upon the films were not so say the word fraud
but um... uh... the about it that the fraud that took place in this
characterization of these mortgage product uh... products
and of course uh... today or last night i guess uh... shortly following the
airing of the film uh... eleni brewer it was leaked that he is up planning to
leave the o bomb administration will have a timetable for this yet though
right
but yene you've seen the film the disc in your sense of it isn't
did the film po properly goal after i mean labor or uh... was the focus of
this film in in many respects he was the head of the criminal division just give
me your sense on
on how
uh... hack your he felt the film was in the fifty feet if it
was really good
getting the nub of what what would the preferable moise i i i think it was a
stupendous piece of uh... television and outdoor sitting there watching it
and uh... today with the white and we had the our kids in a few different
tactic watch this you can take the important lessons from that i think back
home
uh... what what on p_b_s_ frontline
uh... last night as well as inside job charles ferguson's brilliant movie about
the entirety of the cataclysmic
capture both the
range of the conspiracy and the lack of prosecutorial response
and uh... you know watching from one p there's no question ted koppel in with
your own when he drew was developed snellville a brewer to the prosecutor
who should have done much more and yet who was always having hong hedging
articulating reasons not to act rather than to act
now you know i've been a prosecutor i'd made tough decisions and people will
agree with some disagree with something i hate to sort of thing
paint with too broad a brush but when you grow word did not demonstrate the
backbone
over the past couple years in the willingness to bring the charges civil
war criminal
against the entities that wait out the entirety of the best of
that was committed
and you're right people are hesitant to use the work sometimes but it was
brought to you read the stories and you say yes this was fraught
they knowingly marketed products that were bad
what we want uh... it is much more should've been done what really struck
me and and where i think that you can provide a tremendous amount of inside
here is that it is one thing it seems to me and liberal time and time again
whether he was talking to the
to the filmmaker whether he was talking to former senator ted koppel in who who
filled in for for two years for for joe biden essentially and seem to be viola
late one night maybe not the only but certainly the most for
urban pursue were of of uh... of of criminal investigations of what took
place
which seemed to release it wouldn't really struck me was that
labor or was making the argument that we don't have enough we don't have enough
uh... to to bring it charges but
what was clear from that film uh... more so than i think that laid out anyway
that there was no investigation
i mean they're that's what you're going to come
did that what they needed to do with it in in the documentary there was
referencing over and over again to the clayton documents
clean was a company that did due diligence for the banks
clayton reported back to the bank that the loans that they were making were bad
the question and i said this uh... in the docking intricate
the question i became a what did the banks do with that information
if they were told by their own
due diligence company these loans are bad and you're still security ultimately
people off the chain of new that did not react to it
the committing fraud that or their negligent
there are multiple layers of and that maybe we will hear is the code
be used at that point to say what you did was wrong stop it
and envy it does not appear that the
just justice department ever tried to track that information in this
it's hard work its will boris advocate animal film he started the bottom and
work your way up
you follow the information trail
it doesn't seem that that was done and as a consequence of the senior
executives than you'd be they'd take it halfway up the chain were permitted
to simply shrugged a shorter books would be a mistake
and uh... that's not the way the system should work for from your perspective as
as someone who was the
accused prosecutors
not not a fellow who obviously on the state level but
do you make that determination as to whether or not you're going to uh...
seek an indictment whether or not you're going to bring any type of charges
prior to actually doing the investigation and that's what what
releases stuck with me was that
there was no attempt a mean we saw on in that film but you know half a dozen
uh... a whistle blowers their uh... now of course uh... boating who was uh...
with the uh... who was basically the internal
um...
move mechanism that uh... city uh... citigroup for determining the value of
those loans and he was sending messages up top the uh... the the chain of
command indeed getting no response
their there did not seem to be
even
issuance to bring you to the point of saying whether or not we could prove
this beyond a reasonable doubt that's what i thought i'd found so shocking is
that well you can make that argument retcode
we we we we don't know which certainty the scope of investigation but i share
your frustration and i think
what what happened time and time again was that those who did the investigation
the attack at calvin
referring faxed over to the justice department at senator levin referring
fax over to the justice department
you had filling two leaders who who who produced the f_d_i_c_ the financial
crisis inquiry commission document which is a stupendous piece of work
referring the faxed over to the justice department in time and time again
justice with encountering attended sale well gee we don't think we can make the
case
and uh... that that is what has led to this enormous frustration that that your
articulating that i've articulated
prosecutors who might trust of events said yes we are of the same view
you know it appears that the end of the lead he would always be quoted said well
we have to consider the collateral consequence of what would happen if we
bring a case against the big bank
and there'd be shareholders were innocent worker twelve that's true
but wait a minute
he's now beginning into such a murky territories xd
the failure to ever bring a case it's it's the too big to fail to build too
big to manage to big to indict
type award or now living in
which doesn't bode well for the stability of our financial system and
what's stunning is that he made those comments that you're referring to
not in relation to the financial crisis per se
but into the case of uh... hsbc which was found to have been wandering
literally
of
enzyme of dollars of drug money i mean so boom says that the failure to invite
hsbc your senior individual teenagers bc about that might be wondering is
opt-out horrendous horrendous error on the justice department spark they've
been excoriated editorials across the board your college in particular
really took them to task for this
and money-laundering it dedicated that there is if you're that big somebody you
can blunder
hundreds of millions billions of dollars
of drug money and nobody is held accountable you pay a little bit of a
fight and then you move on
sending the wrong a vestige and it is unfortunately
seems to be symptomatic of what what he was up til i get milk twenty even guard
known for many years i don't want to sort of attack on a personal level
before his judgments are certainly not ones that that i think
comport with what
uh... the judge jet judgment coming out of the justice department repetitively
that's part of what was
who knows how much f_b_i_
time energy money
prosecutor roger clemens
right and you know i couldn't find
uh... case to be brought against wall street
right i mean not to mention enough not to mention uh... people like harry
schwarz not to mention uh...
whether you're talking about uh... like the way you're talking about
whistleblowers on and on and on
but the no one of things that struck me in the film is that uh... as short of
the short
clip uh...
va attorney ed general holder
his name seemed to have never come up and unduly your sense
of what the likelihood is his that lanny breuer had the ability essentially to
stifle these investigations or too small walk them or to not even engage in them
uh... distinct from what his boss uh... attorney general holder would have would
have had a thing to say in that regard
you know i i can't
speak to the dynamic between lennon and treat her older i know that
here when i get return on the state of new york
and i had uh... individuals where the heads of the major divisions any
decision relating to make a case like that would be
broccoli and we would
in discuss it and we would make uh... decision i guess uh... ultimately i
would make a decision is to help
and so i'm hard pressed to believe that attorney general ordered
thousand awaited
significant
determinations of this order of magnitude he showed you got it with a
tornado it's posted o uh... be exercise management and also decisionmaking
authority with respect to major
structural decisions within the office and these are those decisions and so
again we don't know we don't know what led him to eric's
spoke about but i'm hard-pressed believed that a recorder was into paldon
many of these decisions do you think that it would have been i mean
you know again this is the area speculation and and and and obviously
you you you're not there in but i mean
uh... is this something that uh... that that would've started do you think with
the just a general policy of like we can do this
um... verses eleni brewer taking up
you know i meet you know again with from from what we saw in that film anything
from what he has seemed to attest to there was no
he made a very liberal made a very poor argument that he had done
and it had to do diligence as to whether or not there was enough proof here to
bring those cases and then he was
he was asked when blake how come you didn't talk to any of these
whistleblowers in perry he basically said
i'm sure that we must have
um... and
the which which seem to be pretty weak sauce uh... friendly it's also
trucking needed after being asked the question
he didn't have his folks at the department go back in
validate
verify whether they did or didn't
and then get back to the producers of the movie in sync
here we get unki x we spoke to someone so in other we get our due diligence of
a wet that hanging out there
we waited with uncertainty which is not got anti-tank said this repeatedly the
pet whistleblowers are the critical link making these cases you need the inside
voices
you rarely find those best anti-abortion by simply pick up the phone and cold
calling into the bank saying gee tell us what's going on the trouble in criminal
somebody will bring it to you need to handle those
whistleblowers
we with very carefully unique to to nurture them
that's what we need the mutual fund cases of that there is that uh...
tens of billions of dollars on back consumers and change that industry
all began with one whistleblower walked into my office and said here's what's
going on extent that's how you make his case
and did you know i think this earth
carrying on the theme of the film one of things it became clear is that
in the absence of or maybe not necessarily because of the absence of of
any type of
uh... federal prosecutions we've seen uh... a growing number
of civil cases being brought by essentially the clients who were didn't
out of
uh... buying these
crappy packages of scary times more images
of the latest uh... jesse eyes and uh... i xander at uh... pro publica
has a story about uh... this is a large suit against mark morgan stanley
which is it seems to be sort of the the perfect example of what we were uh...
what we were watching that film of that uh... bachlorette edit but also a replay
of what all did it go and couple years ago the abacus cases where they
taken bad debt dump it into a studio that market
without telling the noted that the purchasers
that some of our determination has been made that this that is not good
and uh... withholding that information
he is not a way to markets go to work
betting against a very product you're you're marketing is not good business
practices and
the other thing that bothers me about the justice department they've never saw
remedies
that will fix the problem
simply having of the company pay farid doesn't do anything we need to do it
happened change the way to do business
and that is within the advent of the good prosecutor with in the end of the
court that is the creativity that they need to what he was an exercise in the
haven't done it
and
isn't the issue of the fact that the they were betting against these uh...
uh... these trenches is the trenches of of
of securities
isn't the point that that he is sort of at least uh... uh... prime aphasia
evidence
that they knew these things were bad
i mean everything to me that that's the point writing because they the they it
isn't it it is
again it goes to the heart of the conflict that exists within too many of
these entities where
you're correct that they know their marketing bad stuff
anther today
picking a short position not simply to hedge as baby would have us believe the
because they believe the president with that
and uh... when you market something in your shorting it
it goes back to the same sorts of uh... duplicity that underway
what i call the analyst cases the we made back in two thousand and two which
restructured all wall street's analytical work where they were
selling stocks to the public known they were not not good because they're
getting the fees on the underwriting
yet at the same sort of stuff it was going on here
and ended in terms of of a bank that knowingly uh...
that knowingly and issues these bad loans and not just the services but the
uh... you know we we heard from bowdoin in the film
uh... that it's a group they were looking and he was looking at like a
sixty persons and failure rates on these loans about which
wheat and he said this this completely is inkatha contradiction to are alone
stated policies about what uh... my uh... you know what what constitutes a
good loan
are their criminal liability suit for banks in the because presumably
these alone and uh... issuing standards
are not simply just eat you know with a business practices much is it is also
uh... because they're federally insured in some instances because the the
federal government uh... functions as a backs out
are there are there
had their criminal or or civil i mean i i i presume there civil uh...
of liabilities of the criminal liability is that they know in the week
break up their own policies absolutely it'd be great if the policy
that what they did do it would be misrepresenting republican the moment
make false statement like that you have all sorts of possibilities in terms of
remedies and liability
but again this goes back to your your yours and your your your fundamental
point which is that when he certainly didn't give us the sense
that d
investigations had been done in the creative thinking have been brought to
bear to figure out what could be going to stop you there
sanction what had happened or stop it prospectively and that that that is what
justice is supposed to do
and that's why i think there is
sent an average the permeated uh... the documentary
uh... the world there was if there's two other things i wanted to talk about
there was a story that uh... that came out the other day and didn't get much
play
of but that
uh... a member of the federal reserve i think coming out of maybe it was out of
saint louis
uh...
basically
charge or a it was written and said it was jeffrey lacquer
uh... about five years ago i guess or as an august two thousand seven
uh... he had an exchange we don't find out what the uh... with the the the fed
minutes target with these for for five years
i can exchange it with uh... then head of the new york said tim geithner
uh... as to
the bank's new
uh... as to the fed's plans to cut rates
uh... are you familiar with this story
start let's saudi interchange as reported
uh... in the disagreement between ended that your honor that somebody would that
be
meeting and then what can garner said about his own statements in
conversations with the thank share
he was can go to be a day
um...
e obviously conductor who was then the president of the new york fed
should not
have been disclosing to anybody what was going to happen with discount rates or
any other interest rates
place this week running right signaled then that would be a problem
that's basically front-running is not a named
this is let you know it would to give the bag opportunity to exhaust thousand
different
thing portfolio where you could do it without a different things with that
information that that's market printed information that nobody at the head of
time
became of if you've got your course denied vicki communicated and soviet the
factual disagreement there
i think what it goes to is the question whether kim died his relationship with
the banks was closer than it should have been in terms of information flow
uh... and i've
long felt that ultimately again it will never tell his integrity his
desire to do what he believed to be right but i always thought he was
uh... to willing to accept the banks
argument
with respect to both the structure of the banking system and also what led to
the
crisis of await
uh... yet the tissue but whether i can pass the information is you know factual
disagreement that
maybe you will or will not be
uh... resolved on the road
yahoo my guess would be not
process justices tata just based upon what we've seen
uh... president obama announced a a guess it was uh... to uh... today will
or will announce said today
that uh... he's playing to nominate mary jo white she was uh... a former u_s_
uh... attorney for the southern district of manhattan which dealt a lot with
uh... wall street
to be the um... the head of the s_e_c_ give me your sense of uh... of that
appointment if it if it turns out to be the case
good there merry go
uh... him
nos will all be as run of the u_s_ trade offs in southern district ii dirt or
whatever to a great periods of time
our senior partner that wasn't clinton which is uh... big a law firm here in
the city
people will say how can she represented some of the major institutions of the
past couple of years the answer is yes
quickly becomes too mary jo's she is tough as nails will do what is right
evacuee good about her
from moving into that position that may be too late
to resuscitate
the types of cases that we would have wanted to see broad after two thousand
eight but haven't had that mary jo is as good a point that you can get in um...
he to head the r_t_c_ out on them for a very happy what do you read into that
and they do you think to a certain extent there is a uh... there's been
there is a there's a slight sort of changing perspective in the obon the
administration or
war is this uh...
sort of a you know like you say a little bit uh... maybe a little bit too little
too late to really deal with the the the
the
the real source of the problem but this is the sort of
i don't know putting uh... um...
a band-aid on the wound a little bit later i don't you know i don't want to
be a little kinder to the membership in daytona wounded it it it may be a target
uh... but maybe the bundy property defied bigger suffocated terms of the
case is there a way to o eight
but you know but i think
they had a choice whether they were going to put somebody who was from wall
street others' names were good people but they were from wall street and day
there they would have perhaps brought aka a greater in-depth knowledge of how
you know some of those acronym type investments functioned on the street and
that might help in terms of drafting directly if he has to work
uh... to to push out the door where they had they went for a prosecutor and i
think that speaks to their desire in the post of r_t_c_ cases brought and i think
that's good and i saw mum i think it is uh... slight shift away from pure
regulator to prosecutor as the model mary jo can be both and will be both but
i think it it speaks well to their desire to uh...
be the needle in the right direction
uh... so so contemplating that sort of that that that mitigation on some level
at least in terms of of where they could have gone ami do you think that there is
a etc
i mean uh...
what what what's really through troublesome in in many respects to
seeing something like that for that film again is sort of opened up a old wounds
from the may not battled uh... but first is this period there seems to have been
to say the massive failure of you know i elected to two books like uh... chris
hayes is twilight of the elites ended sort of
that ease expanding the the nature of this conversation on some level
that there is a uh... of a fundamental failure
by are uh... elites whether they're financially it's over
are governmental elites
to uh... to to scurvy accesses and to deal with
the issues of accountability because to the extent that we saw i mean if you
track from where you go from the savings and loans uh... through the uh... my
uh... the the eighty-seven problems we had with love
or with mortgages as well
you start to see a and lack of accountability and a slow sort of
degradation of the
the the ethics in norms that are supposed to sri guide these things
workbook i think that is
the history of the past twenty years
and it it is problematic it is
uh... corrosive
and it is any
touched many of our institutions public and private
it is something that we have to try to push back against and it it it speaks to
a deeper issue way beyond wall street but uh... i i think uh... that's why
issues when we have to think about it at a deeper level as well
and there were what do you think it was an important what could spoken stands at
this time in some respects
i don't
i wish i did you get right i think that
keeper to wall street for a minute i think that prosecutions and
civil cases but civil and criminal cases they'd actually restore some sense of
accountability is part of our
e social infrastructure
uh... would help and that is what we should aspire to in the such painful
times but it it is important is there any type of all i can and when when you
start to see the serbs these these specific uh... civil uh... actions that
are being taken by these clients
uh... relative to the banks uh... the
suppose it there uh... fraud or malfeasance in in in repackaging stuff
they knew was blue is was crappy and
uh... not just selling it but also blood at betting against that
history and the book
the there one thing that would cannot be addressed in those uh... in those type
of actions is the broader implications of what happened
in other words will you know certain clients may be able to be made whole
or partially hole
but society as a as at-large um... those people who lost their jobs those people
lost their pensions of those people whose uh... the cities that went uh...
that there had to could make of budget cuts
all as a result of this there doesn't seem to be around it
well that's why i just need to be more creative i mean to you
you want to compensate those were direct victims through financial uh...
competent restitution but what is more important this saying we will put in
place a structural reforms to this won't happen again that's going to get
somebody back a job that was boss but at least it says prospectively we're not
going to what you do this again because were to take the business model that led
to it
want to do something beyond simply
say you may five billion dollars in profits where party one billion dollars
we think our club that i'm still coming out ahead
which is too often what happens bright glad that you look at the broader
business structure and the finds in the funds in the context of of how much
money they're making to what you have to do is change remedies that are more
creative
stop sort of behavior from the current once again at once uh... things refer to
the north well i don't know uh... the any sense of where that may come from
and then as you know we we've talked in the past about uh...
vis state agee state seemed to mahler try to mean that was part of this uh...
that i guess uh... round two of a uh... financial uh...
friday commission which seems to have been
and seems to exist almost in some respects melted away and they may be you
know more than i do in that respect the work but look at it meet some cases i
think we have to wait to talk a little bit more
awful
bs twelfth uh...
uh... of their well-being and uh... and uh... love to talk to you again when
those happen uh... procreate their you talking to us today how it's better
they're going to put together so if you think you provided
likes it