The Make Change Podcast
Join us for the Make Change podcast, where we talk with today’s smartest thinkers about big ideas in money and finance.
We just hit the nine-year anniversary of the worst week of the Great Recession in 2008, when Lehman Brothers, AIG, Merrill Lynch, and Fannie Mae and Freddy Mac essentially got close to blowing up the world. One of the questions that everybody asks is, how come nobody went to jail for all of that? In order to get a smart, well-researched view on that, I spoke recently to Jesse Eisinger, a Pulitzer Prize-winning journalist and editor for ProPublica, he's been a columnist for The New York Times and for the Wall Street Journal, he's appeared in the Atlantic and the Washington Post. His first book, The Chickenshit Club: The Justice Department and Its Failure to Prosecute White-Collar Criminals, just came out in July.
From the episode:
Michael Taylor: In your telling, we have the beginning of strengthening of the SEC in the 1970s, and maybe peaking during the Enron and Arthur Anderson crises, then a pendulum swing back the other way. From late 2001 onward to today, there's a steady weakening of the ability of the government to [prosecute] white-collar criminal activity.
There's some contemporary characters who have made big appearances in 2017, like James Comey, Preet Bharara, Sally Yates, and even Bob Mueller, in your book. At least Comey and Bharara don't come out in your book as heroes, although some people are looking at them in today's political environment to be heroes. Do you want to comment on their roles?
Jesse Eisinger: The title [of the book] comes from a Jim Comey speech. Before Comey became widely known because of his firing from the FBI at the hands of Donald Trump, 15 years ago he became US attorney in the Southern District of New York, really the premiere office for white collar crime, securities crime. As such it recruits the best of the best, and if you have any doubts about that, just ask them. The prosecutors there will tell you that they're the best.
Comey comes in, gathers everybody together, and he gives a speech, saying 'how many of you guys have never lost a case, never had an acquittal, never had a hung jury?' And a bunch of hands shoot up because these guys are so proud of their skills and records and their trial experience. Comey looks around the room and says, 'me and my buddies have a name for you guys: the chickenshit club.' There's a little shock and the hands go down. What did he mean by that? [He meant] You're not taking on ambitious cases. Your job isn't about winning, your job is about doing justice. And if you are preserving a winning record, you're taking on targets that are too easy, low-hanging fruit. You're beating up on people. You're not doing justice. You're not seeking out the most ambitious cases to do what the government needs to do to preserve an equitable system in this country.
Unfortunately, over the next 15 years, the Justice Department writ large becomes the chickenshit club, and even Jim Comey has periods where he blinks in going after corporations. Then you get to people who have been lionized, like Preet Bharara, who succeeds Comey after a number of intermediary US attorneys in the Southern District, and becomes lionized as a guy who's busting Wall Street—the Sheriff of Wall Street, he's labeled. Actually, I completely disagree with that, I think his reputation is vastly overblown and he didn't do much at all for serious white-collar crime.