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Is the Holder Justice department letting Wall Street off the hook?

Attorney General Holder has come in for constant and largely deserved criticism from conservatives. The complaints cover plenty of territory: the Fast and Furious scandal, including the subsequent stonewalling; the bright idea of holding a trial of the 9/11 mastermind in New York City; the attacks on state laws designed to help with immigration enforcement; the efforts to promote voting fraud by attacking laws designed to prevent it; the decision to go easy on New Black Panther Party members who intimidated voters, etc.

But conservatives aren’t the only ones unhappy with Holder. Leftists complain that he has been lax in going after alleged criminal activity on Wall Street. That case is set forth in the Huffington Post by Richard Eskow. Eskow states: “A growing number of people are privately expressing concern at the Justice Department’s long-standing pattern of inactivity, obfuscation and obstruction.” And he suggests that this pattern may be related to “Holder’s past as a highly-paid lawyer for a top Wall Street firm, Covington & Burling.”

Some conservatives have joined in the criticism of Holder for being soft on Wall Street. Peter Schweizer and Peter Boyer note that four years after the financial meltdown, there has not been a single criminal charge filed by the federal government against any top executive of the elite financial institutions. Moreover, financial-fraud prosecutions by the Department of Justice are at a 20-year low. And according to former financial regulator William Black, “there hasn’t been any serious investigation of any of the large financial entities by the Justice Department, which includes the FBI.”

Like Eskow, Schweizer and Boyer worry about the potential for conflicting interest when the department’s top officials come from lucrative law practices representing the very financial institutions that Justice is supposed to be investigating. They point out that two members of Holder’s team have already returned to Covington & Burling, Holder’s former firm. It’s easy to see the potential for mischief in this sort of revolving door.

The fact that both liberals and conservatives criticize Holder for failing to go after Wall Street does not mean the criticism is valid, however. Holder is correct to point out that the greed and stupidity of Wall Street does not necessarily entail criminal conduct. And the public interest would not be served by Franklin Roosevelt style persecution of bankers.

It is also worth noting that Eskow (the lefty critic of Holder) appears to be animated in part by fear that the lack of prosecutions is “undercutting [Obama’s] ‘Bain Capital’ strategy.” To prosecute bankers (or anyone else) in furtherance of a political strategy would be truly abhorrent.

Nonetheless, it’s difficult to believe that the financial meltdown produced no cases worthy of criminal prosecution. And Schweizer and Boyer point to a 2007 transaction by Goldman Sachs, in which Goldman created an investment, based on mortgage-backed securities, that seemed designed to fail. According to the authors:

Goldman allowed a client who was betting against the mortgage market to help shape the investment instrument, which was called Abacus 2007-AC1; then both Goldman and the client bet against the investment without informing other clients (whose investments were wagers on its success) how the securities included in the portfolio were selected. These uninformed clients lost more than $1 billion on the investment. In 2010, the Securities and Exchange Commission charged Goldman with securities fraud “for making materially misleading statements and omissions” in marketing the investment. The SEC, which conducts only civil litigation, referred the case to Justice for criminal investigation.

Yet to date, there has been no criminal prosecution regarding this bit of shady business. In the meantime, Goldman executives and their families have made large contributions to Obama’s Victory Fund and related entities. Some of these executives were giving to Obama for the first time.

Quite apart from the merits on any particular case, moreover, the apparent lack of serious Justice Department investigations of large financial institutions seems odd. While these institutions shouldn’t be persecuted, neither should they escape Justice Department scrutiny.

But Wall Street appears to be another important precinct in which justice is missing-in-action under the Obama/Holder Justice Department.

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