Hillary Clinton Advisor Lanny Breuer Kills Bank Cases at DOJ

AUGUST 8, 2013

THE JUSTICE DEPARTMENT’S “WAR” ON WALL STREET: STILL NO CRIMINAL CHARGES

POSTED BY JOHN CASSIDY

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It took them a while, but the Feds are finally going after some of the country’s biggest banks for alleged wrongdoing during the great housing and credit bubble. In the past few days, the Department of Justice has sued Bank of America for willfully understating the risks attached to hundreds of millions of mortgage-backed securities it sold in 2007, and J. P. Morgan Chase has revealed that two different U.S. attorneys’ offices, one in California and one in Philadelphia, are investigating whether it broke securities laws and duped investors with some of the mortgage deals it put together.

But while the new cases are significant and likely to go on for some time, they don’t answer the question of whether anybody on Wall Street will ever end up in court, or face the possibility of prison time, on criminal charges arising from the mortgage mess. My take: there is no need for anyone on Wall Street to lose much sleep, and that includes Brian Moynihan, the chief executive of Bank of America, and Jamie Dimon, the head of J. P. Morgan. About the worst that is likely to happen is that the two big banks will be forced to pay some hefty fines, which, with both making billions of dollars of profit in the latest quarter, they can easily afford.

For years now, critics have accused the Justice Department of going easy on the bankers, whose actions during the housing and credit bubble helped bring about the U.S.’s deepest recession since the nineteen-thirties. The D.O.J.’s response has always been that it didn’t have enough evidence to prove criminal intent on the part of traders, investment bankers, and senior executives at big Wall Street firms, and that, without such evidence, it would likely lose in court if it went ahead with criminal cases.

Despite a recent change of leadership in the Justice Department’s financial-fraud task force, this still appears to be the agency’s position. The new case against Bank of Americais a civil one, of the sort that usually gets settled without any admission of wrongdoing. And, according to the Times, the criminal investigation of J. P. Morgan, which is centered on alleged wrongdoing by mortgage bankers at Washington Mutual, acquired by J. P. Morgan in 2008, is reportedly in its early stages. It could well end up going nowhere. (The U.S. attorney’s office that is conducting the criminal inquiry is also running a civil investigation that seems to have made more progress.)

The lawsuit against Bank of America accuses the bank of cobbling together into securities home loans that didn’t adhere to the company’s own underwriting standards, failing to do proper due diligence into the quality of these loans, and misleading investors about the risks attached to the financial products that the loans were used to create. In unveiling the suit, Attorney General Eric Holder portrayed it as evidence of the Obama Administration’s determination to crack down on Wall Street. “As this action proves, President Obama’s Financial Fraud Enforcement Task Force will continue to take an aggressive approach to combating financial fraud and uncovering abuses in the residential-mortgage-backed securities market,” Holder said. “As we proceed with this case, and pursue a range of additional investigations, we will continue to use every tool, resource, and appropriate authority to ensure stability, accountability, and—above all—justice for those who have been victimized.”

Of course, the big banks, and particularly their mortgage divisions, have been under siege for some time. In 2010 and 2011, Goldman Sachs and Citigroup agreed to pay fines and settle mortgage-related cases brought by the Securities and Exchange Commission. Last October, Eric Schneiderman, New York State’s Attorney General, sued J. P. Morgan for the actions of mortgage bankers at Bear Stearns, which Morgan took over in March, 2008. Also last year, the U.S. Attorney for the Southern District of New York sued Bank of America over fraud against Fannie Mae and Freddie Mac carried out by the mortgage giant Countrywide Financial, which Bank of America acquired in 2008.

What is significant about the new Bank of America case is the direct involvement of the Justice Department, and the fact that it involves actions by employees at the bank itself, rather than at Countrywide. The lawsuit arose out of an investigation by an interagency working group set up last year that is dedicated to rooting out wrongdoing in the market for residential-mortgage-backed securities (known as R.M.B.S.), and which, in turn, comes under the ambit of the Financial Fraud Enforcement Task Force, which dates back to 2009. “This is the R.M.B.S. Working Group’s most recent legal enforcement targeting misconduct in the R.M.B.S. market, but it will not be our last,” Associate Attorney General Tony West said in a statement. “Combating financial fraud is a top priority for the Department of Justice. By filing this lawsuit today, we reaffirm an important principle—that everyone must play by the same set of rules, and no institution is too big or too powerful to escape appropriate enforcement.”

That’s all very laudatory, and the members of the working group, which is chaired by officials from the Justice Department and the S.E.C., and by the attorneys general of New York and Colorado, deserve credit for sticking to their task. But what about holding individuals accountable? A “Frontline” documentary earlier this year, called “The Untouchables,” suggested that in some instances lower level prosecutors had favored bringing criminal charges against individual Wall Street bankers, but top officials, led by Lanny Breuer, the head of the Justice Department’s criminal division, ultimately decided that the cases that had been put together weren’t strong enough. “With respect to Wall Street cases, we looked at those as hard as we looked at any others, and when a case could be brought, we did,” Breuer told “Frontline”’s Martin Smith. “But when we cannot prove beyond a reasonable doubt that there was criminal intent, then we have a constitutional duty not to bring those cases.”

Without looking at the evidence, which is, of course, impossible, it’s hard to judge whether Breuer’s decision-making was sound. But it’s surely fair to infer that many current and former Wall Street bankers were sad to see him resign from the Justice Department earlier this year and return to private practice at Covington & Burling. His old job is currently being filled by Mythili Raman, a longtime lawyer at the Department who previously served as Breuer’s chief of staff and No. 2. So far, Raman seems to be sticking with her former boss’s cautious stance. That could still change, of course. But the statute of limitations in criminal cases of securities fraud is only five years, which means it’s already passed in some cases related to mortgage securitizations carried out at the height of the boom.

And that’s another reasons why folks on Wall Street are still sleeping soundly.

Photograph: Frontline

Dissolve the NSA and FISA

President Obama announced Friday afternoon that his administration would seek changes to the Patriot Act and other aspects of surveillance programs. (photo: Washington Post)

NSA Surveillance Needs More Than Window Dressing Reform

By Leighton Woodhouse, Reader Supported News

10 August 13

esterday, President Obama repeated what has become a familiar routine: after two months of bad press on a controversial issue, he made a grand gesture of conceding that his critics may have a point, even while largely holding to his increasingly untenable position, and announced a series of "reforms" that amount, at the end of the day, to window dressing. It was an even less persuasive version of his performance than his pretense of holding Wall Street accountable for the crimes that led to the economic meltdown.

Obama's declared reforms of the massive and opaque government surveillance programs that have dramatically expanded on his watch are as follows:

• Set up a toothless committee to make non-binding recommendations months in the future, once it's safe to ignore them.
• Hire a privacy officer in the NSA whom few in the agency will take seriously, possibly including the privacy officer him/herself.
• Appoint a privacy advocate to the FISA Court, and pretend that he/she is a reasonable stand-in for a truly adversarial court system.

None of these measures will come close to dealing with the serious Constitutional issues at stake in the continued existence of the government's surveillance regime. Short of scrapping the NSA and the FISA Court altogether, nothing less than an about-face on the administration's position on the public's right to challenge the legal basis of the surveillance programs will even begin to bring government spying into line with the Constitution.

The Catch-22 of "Standing"

Over the last two months, the legal basis for the Obama administration's massive telephony metadata gathering program has been challenged by a spate of lawsuits filed by plaintiffs ranging from the American Civil Liberties Union to a birther attorney in Florida.

For all of their differences, these lawsuits face a common set of tangled procedural obstacles that derive from the secrecy and inaccessibility of the FISA Court system. These obstacles are more than just hindrances to lawyers seeking to test the constitutionality of the government's electronic surveillance regime. If they hold up in court, they could effectively put the surveillance programs beyond the reach of the Constitution.

If, contrary to all indications, the President is serious about securing the Constitutional basis of his telephony metadata collection program, he could begin by addressing the at-times Kafkaesque set of legal conundrums that surrounds the public's right to access the regular court system in a case that involves highly classified evidence.

On July 18, in a letter to a federal judge, the Obama administration responded officially for the first time to one of the new crop of suits (ACLU et. al. v. Clapper) by questioning the plaintiffs' legal standing to sue the government, given their inability to prove that their metadata was not just collected, but specifically reviewed by the National Security Agency:

Plaintiffs cannot meet this essential requirement, even assuming their metadata have been or will be collected, because it is no more than speculation that their metadata have been or ever will be among the very small percentage of the records in the database that are ever reviewed. ...Indeed, the chances that their metadata will be used or reviewed in a query are so speculative that they lack Article III standing to seek the injunctive relief requested in their July 2 letter.

In the letter, the government disputes the ACLU's contention that the "government's dragnet acquisition of Plaintiffs' telephone records" violates the law, arguing that the collection and warehousing of telephony metadata is legal and authorized by both Section 215 of the PATRIOT Act and by FISA court order.

It then goes on to challenge the plaintiffs' legal right to enter into the lawsuit, arguing that the plaintiffs cannot demonstrate, as the law requires, that they were specificallyinjured by the government's actions and thus have cause to seek redress. By itself, the administration argues, the collection of metadata does no immediate harm to the plaintiffs, since the overwhelming odds are that their phone numbers have never been tracked in a query, and merely sit, inert and unreviewed, in a massive database. In order for the plaintiffs to demonstrate that they were specifically harmed by the government's surveillance program, the administration contends, they would have to show that their phone numbers were among the small subset of records actually used in a query by an NSA analyst. Since that evidence is classified, the plaintiffs cannot produce it. Therefore, under the government's theory, they have no standing to sue.

If the court agrees with the government's position, an obvious question arises: how can anyone achieve standing to challenge the surveillance programs' constitutionality? If the standard for filing suit requires that plaintiffs demonstrate that their phone records were not merely collected and warehoused but actively reviewed in an investigation, and the history of whose records were reviewed is one of the government's most closely guarded secrets, then there seems to be simply no way to meet the standard. And if the standard to challenge the surveillance programs is impossible to meet, then the programs reside, in effect, beyond the reach of the Constitution.

"The government is trying to move the goal posts -- shifting the court's inquiry from whether they are collecting the data to whether they are 'reviewing' it," says Cindy Cohn, Legal Director for the Electronic Frontier Foundation, which has been in litigation against the NSA for dragnet surveillance since 2008 and which is party to one of the recently-filed lawsuits. "Your rights are violated when the government gets access to your phone records, regardless of what they do with them afterwards."

In any case, Cohn does not believe that the government is merely warehousing most of the phone records it collects. "I think there's no doubt that the government is doing some scanning of the phone records that includes all of them," she says. "I suspect by 'review' they mean some sort of human review, but again, that's not when the violation occurs. No one seriously thinks that a computer search -- which can result in your prosecution or being subject to further review -- isn't just as violative of your privacy as a human search. And no one seriously thinks that they are just piling up phone records in a computer somewhere and not doing any sort of searches at all on them until some later date."

"Is there anybody who has standing?"

Last October, as The New York Times recently reported, at a hearing before the Supreme Court in Clapper v. Amnesty International, a challenge to the 2008 FISA Amendments Act, the question on standing was put directly to the Obama administration's top litigator by Justice Sonia Sotomayor. "Is there anybody who has standing?" Justice Sotomayor asked.

Solicitor General Donald Verrilli answered in the affirmative: When the government relies on evidence derived from FISA-warranted surveillance in a criminal prosecution, it must disclose to the court the source of that evidence, thereby granting the defendant standing to sue. However, as the Times reported, in practice, U.S. Attorneys have done exactly the opposite, refusing to disclose whether their evidence was derived from surveillance authorized by the 2008 law. By doing so, the Times observed, federal prosecutors "have immunized the surveillance program from challenges under the Fourth Amendment."

In fact, according to a Reuters story this week, the DEA is has gone even further than this, using NSA metadata in non-national security-related criminal investigations and then concealing the provenance of that intelligence, sometimes from the prosecutors themselves, by using "parallel construction" -- essentially, faking the way that they discovered the intel to hide its true origin and make the investigations legally and constitutionally clean. The agency has an entire division set up specifically to launder intelligence. The ordinary criminal justice system is becoming polluted by the constitutional shortcomings of the FISA court system.

Déjà Vu All Over Again

Clapper v. Amnesty International was not the first case in which the Obama administration has argued a theory on standing that effectively immunizes government surveillance. Three years ago, a team of attorneys representing Al-Haramain Oregon, the American branch of an international Islamic charity, was faced with a procedural Catch-22. In 2004, the Bush Administration had designated the charity a terrorist organization, based on classified evidence. In the course of the designation proceedings, however, Al-Haramain's attorneys had received a packet of materials from the Treasury Department that included, inadvertently, a top secret document that seems to have shown that the government's evidence against Al-Haramain had been gathered from a wiretap on the organization and two of its lawyers which had not been authorized by a FISC court order.

The following year, The New York Times exposed the Bush Administration's warrantless wiretapping program, and Al-Haramain sued the government, claiming that its constitutional rights had been violated. The government responded by arguing that Al-Haramain had no legal standing to bring suit, since the evidence to prove that it had been illegally surveilled -- the details of the wiretap -- was classified, and, in accordance with national security interests and the State Secrets Privilege, must be suppressed. In other words, according to the administration's circular reasoning, the plaintiffs could not sue the government for maintaining an illegal program of secret warrantless wiretapping because to do so, they would have to rely on evidence from the wiretap, which was secret.

Swapping the wiretap for the NSA's active review of the plaintiffs' metadata, the same logic is at work in the government's argument against the ACLU's standing to sue today.

In the case of warrantless wiretapping, the courts ultimately rejected the government's argument. In March 2010, a federal judge ruled against the Obama Administration, which had by then inherited the case from its predecessor, declaring Bush's warrantless wiretapping program, which had been shut down three years prior, illegal.

As we now know, the courts' verdict on the legality of warrantless wiretapping did little to persuade federal investigators and intelligence officers to rein in their surveillance practices to bring them into conformity with existing legal standards. Instead, by the time the court issued its final decision, the government had done the converse, transforming legal standards to conform to its surveillance practices. With the passage of the FISA Amendments Act of 2008, the FISC was authorized not only to grant legal protection to domestic spying through the issuance of surveillance warrants, but to make precedent-setting decisions on constitutional questions that radically expanded upon the surveillance capacity of intelligence agencies -- including authorization of the routine collection of telephonic metadata for potentially hundreds of millions of Americans. The government's arguments in defense of those practices today is nearly identical to those that the court rejected three years ago -- but now the Obama administration can invoke all-but-unchallengeable FISC orders as its legal cover.

"The governments is basically trying to reargue things that they have already lost, dressing them up in slightly different clothes," says Cohn. "I suspect they will continue to do so since so far, they have reargued things that they have lost over and over again, as part of a bigger strategy to drag out the litigation. But that doesn't mean they are correct."

Only One Side of the Story

Achieving standing isn't the only obstacle to testing the constitutionality of government surveillance. Just as intractable a problem for the metadata collection program's challengers is the highly restrictive nature of the rules governing access to FISA Court (FISC) proceedings. When a FISC judge issues an order requiring a company like Verizon to turn over its customers' phone records, the only parties entitled to contest that order by requesting a rehearing before the full court are the government and the telecommunications company that was subject to that order. The customers whose metadata is to be collected are not allowed to request a rehearing.

The government, of course, has no interest in challenging court orders that it sought in the first place, while the telecommunications companies have either shown no interest thus far in contesting them, or have failed in their efforts to do so (since the court's proceedings are secret, there is no way of knowing which). Neither party, in any case, clearly shares the privacy interests of the telecomm customers whose metadata has been collected by the government.

Recognizing this, four weeks ago, the Electronic Privacy Information Center filed an extraordinary motion with the Supreme Court requesting a "writ of mandamus." A writ of mandamus is a directive from a higher to a lower court (or corporation, or individual) to take a particular course of action or refrain from taking a particular action. EPIC's motion requests that the Supreme Court intervene outside of the normal appeals process to overturn a FISC court order. The FISC, EPIC argues, went beyond the scope of its statutory authority by compelling Verizon to turn over telephony metadata on millions of Americans. Since the FISC order is "outside the jurisdiction of federal district and circuit courts," EPIC argues, this extraordinary measure represents the only option available to the public to seek redress.

To say that the motion is a long shot is an understatement at best. But the inaccessibility of the FISA Court to the public coupled with the potentially impossible standard to bring suit in the regular court system leaves Americans with nothing but long shots to choose from. Having any options at all, moreover, is at this point the best case scenario, which may not last for long. Should the long shot bids initiated by the ACLU, EPIC and other complainants fail, there will be no way at all to challenge FISA-sanctioned surveillance, or the growing body of secret jurisprudence that is quickly turning the FISC into "almost a parallel Supreme Court." The stake the public has in avoiding that eventuality goes beyond privacy and surveillance: it is a matter of preventing the establishment of a growing arena of governance that is beyond the reach of the Constitution.

Polar Bears Starving - Global Warming

The photo the Koch brothers really don't want you to see

 
 
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This 16-year-old male polar bear died of starvation resulting from the lack of ice on which to hunt seals. Photograph: Ashley Cooper/Global Warming Images

Renowned polar bear expert Dr. Ian Stirling, who has studied the bears for almost 40 years, describes this polar bear found dead in Svalbard as "little more than skin and bones," having perished due to a lack of sea ice on which to hunt seals:

"From his lying position in death the bear appears to simply have starved and died where he dropped," Stirling said. "He had no external suggestion of any remaining fat, having been reduced to little more than skin and bone."

The bear had been examined by scientists from the Norwegian Polar Institute in April in the southern part of Svalbard, an Arctic island archipelago, and appeared healthy. The same bear had been captured in the same area in previous years, suggesting that the discovery of its body, 250km away in northern Svalbard in July, represented an unusual movement away from its normal range. The bear probably followed the fjords inland as it trekked north, meaning it may have walked double or treple that distance

This is what the Koch brothers' business model is producing. The Koch PAC is the largest oil and gas contributor—donating more than even ExxonMobil. Koch Industries sends 90 percent of these contributions to Republicans.

KOCH BROS are the fourth largest lobbyist in the oil and gas industry, funding $67,042,064 to groups denying climate change science since 1997. And emits over 300 million tons of greenhouse gases a year.  
They want to buy the LA Times and Chicago Tribune
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