OP-ED: Eric Holder didn't send a single banker to jail for the mortgage crisis

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The telling sentence in NPR’s report that US attorney general Eric Holder plans to step down once a successor is confirmed came near the end of the story.

“Friends and former colleagues say Holder has made no decisions about his next professional perch,” NPR writes, “but they say it would be no surprise if he returned to the law firm Covington & Burling, where he spent years representing corporate clients.”

A large chunk of Covington & Burling’s corporate clients are mega-banks like JP Morgan Chase, Wells Fargo, Citigroup and Bank of America. Lanny Breuer, who ran the criminal division for Holder’s Justice Department, already returned to work there.

In March, Covington highlighted in marketing materials their award from the trade publication American Lawyer as “Litigation Department of the Year,” touting the law firm’s work in getting clients accused of financial fraud off with slap-on-the-wrist fines.

Covington, American Lawyer says, helps clients “get the best deal they can.”

Holder has a mixed legacy: excellent on civil and voting rights, bad on press freedom and transparency.

But 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 his former employer: he helped them “get the best deal they can.”

As for homeowners, they received a raw deal, in the form of little or no compensation for some of the greatest consumer abuses in American history.

Before Holder became Attorney General, banks fueled the housing bubble with predatory and at times, allegedly fraudulent practices.

As far back as 2004, the FBI warned of an “epidemic” of mortgage fraud, which they said would have “as much impact as the Savings & Loan crisis.”

They were wrong; it was worse.

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And banks and lenders carried through that fraud to every level of the mortgage process. They committed origination fraud through faulty appraisals and undisclosed trickery.

They committed servicing fraud through illegal fees and unnecessary foreclosures.

They committed securities fraud by failing to inform investors of the poor underwriting on loans they packaged into securities.

They committed mass document fraud when they failed to follow the steps to create mortgage-backed securities, covering up with fabrications and forgeries to prove the standing to foreclose.

By the time the bubble collapsed, the recession hit and Holder took over the Justice Department, Wall Street was a target-rich environment for any federal prosecutor. Physical evidence to an untold number of crimes was available in court filings and county recording offices.

Financial audits revealed large lapses in underwriting standards as early as 2005. Provisions in the Sarbanes-Oxley Act, passed during the last set of financial scandals in 2002, could hold chief executives criminally responsible for misrepresenting their risk management controls to regulators.

Any prosecutor worth his salt could have gone up the chain of command and implicated top banking executives.

In 2009, Congress passed the Fraud Enforcement and Recovery Act, giving $165m to the Justice Department to staff the investigations necessary to bring those accountable for the financial crisis to justice.

Yet, despite the Justice Department’s claims to the contrary, not one major executive has been sent to jail for their role in the crisis.

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