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Marcy Wheeler: Lanny Breuer Admits That Economists Have Convinced Him Not to Indict Corporations

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Yves here. Marcy’s find reads like an account from an alternative reality. Unfortunately, it’s increasingly the one we live in.

By Marcy Wheeler. Cross posted from emptywheel

I’ve become increasingly convinced that DOJ’s head of Criminal Division, Lanny Breuer is the rotting cancer at the heart of a thoroughly discredited DOJ. Which is why I’m not surprised to see this speech he gave at the NYC Bar Association selling the “benefits” of Deferred Prosecution Agreements. (h/t Main Justice) He spends a lot of his speech claiming DPAs result in accountability.

And, over the last decade, DPAs have become a mainstay of white collar criminal law enforcement.

The result has been, unequivocally, far greater accountability for corporate wrongdoing – and a sea change in corporate compliance efforts. Companies now know that avoiding the disaster scenario of an indictment does not mean an escape from accountability. They know that they will be answerable even for conduct that in years past would have resulted in a declination. Companies also realize that if they want to avoid pleading guilty, or to convince us to forego bringing a case altogether, they must prove to us that they are serious about compliance. Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one. They know the difference between actual cooperation with a government investigation and make-believe cooperation. And they know the difference between a rogue employee and a rotten corporation.

[snip]

One of the reasons why deferred prosecution agreements are such a powerful tool is that, in many ways, a DPA has the same punitive, deterrent, and rehabilitative effect as a guilty plea: when a company enters into a DPA with the government, or an NPA for that matter, it almost always must acknowledge wrongdoing, agree to cooperate with the government’s investigation, pay a fine, agree to improve its compliance program, and agree to face prosecution if it fails to satisfy the terms of the agreement. All of these components of DPAs are critical for accountability.

But the real tell is when he confesses that he “sometimes–though … not always” let corporations off because a CEO or an economist scared him with threats of global markets failing if he held a corporation accountable by indicting it.

To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. [my emphasis]

None of this is surprising, of course. It has long been clear that Breuer’s Criminal Division often bows to the scare tactics of Breuer’s once and future client base. (In his speech, he boasts about how well DPAs and NPAs have worked with Morgan Stanley and Barclays, respectively.)

It’s just so embarrassing that he went out in public and made this pathetic attempt to claim it all amounts to accountability.

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64 comments

    1. Susan the other

      Breuer has always seemed so indifferent and impervious, it is a little surprising he would open himself up to criticism like this. I wonder what prompted it. You’d think he’d keep this garbage to himself until after the election.

  1. different clue

    Captured? Or secret agent frontman? And if secret agent frontman, installed by which secret agent frontman controllers above him in the chain of command?

    1. OMF

      Thirty years ago, incompetant conduct like this would have probably put someone under suspicion of being a subversive agent of the Soviet Union. In the modern world, there are unfortunately no such boogeymen to scare governments into running countries properly.

  2. Hugh

    This is the essence of kabuki. Justice, in the person of Breuer, pretends to hold corporations accountable, and their CEOs pretend not to laugh.

    PDAs were also used a lot in the Bush Administration, once again showing the bipartisan nature of kleptocracy. PDAs require a compliance monitor, and this position has been used as a political plum. Like membership on corporate boards, consultancy agreements, and speeches (other examples of elite welfare), it pays well for not much work. And of course, those chosen for these positions are chosen precisely because they can be relied upon not to rock the boat because they have had distinguished careers made up of not rocking the boat.

  3. J Sterling

    “the collateral consequences of an indictment would be devastating for their client”

    The collateral consequences of an indictment are often devastating for a person. If corporations are people, why are they to be treated better than other people because of the collateral consequences? And if corporations aren’t people, why are they to be treated better than people?

    1. Cheyenne

      Breuer’s candor is astonishing. The penalty for crimes committed by “rotten corporations” is to make a “compelling presentation” in “my conference room.”

    2. KWinIA

      Would that be an opening for an equal protection suit? Corporations can get PDA’s but ordinary citizens cannot?

      Speaking of citizens, can we eject or imprison corporations as “illegal” aliens because they have no citizenship or allegience?

      1. RepubAnon

        Corporations are created in the US by a filing with one of the 51 Secretary of State offices (50 states + DC). Thus, it’s easy to spot whether a given corporation is a US corporation, or was created overseas. (Wholly-owned subsidiaries are a separate issue).

        However, it’s telling that the Arthur Anderson indictment had such far-reaching consequences. Remember when there were the “Big 5″ accounting firms until Arthur Anderson was indicted and promptly collapsed?

        From Mr. Breuer’s speech, it appears that there was a definite deterrance effect from the Enron-related Arthur Anderson case: Mr. Breuer is apparently feeling deterred from prosecuting large corporations for criminal behavior.

        The effect of the Arthur Anderson case and its aftermath can also be seen in the behavior of large financial firms. Would robo-signing of foreclosure documents be widely condoned by corporations that thought they might suffer the same fate as Arthur Anderson if discovered?

  4. CB

    Lanny Breuer is doing as he’s been told to do, whatever excuses he’s offering. The really telling thing is that he’s offering the excuses publicly. Obama has said as much in shorter form–and publicly. There is no law, as the word is commonly used, for the 1%, they make it up as suits their occasion.

    1. Lambert Strether

      Failure for whom? Are you still laboring under the delusion that the public good has any influence in Versailles whatever?

      UPDATE Adding, I read the articles in Harper’s. What a great publication.

      1. MontanaMaven

        It was better when Roger Hodge (“The Mendacity of Hope”) was editor. Under him was published the great 2009 piece “Barack Hoover Obama” by Kevin Baker, “Crap Shoot: How Everyone Loses When Politics is a Game” by Garret Keizer, “Infinite Debt” in 2009 by Tom Geoghegan, in February 2008 “The Next Bubble” by Eric Janszen. Just to name a few.

      1. CB

        Thanx. I did a hurried look up and yesterday’s photo doesn’t show all his colors, but the vivid rust color indicated Allen’s. Living jewels. And FEISTY as all get out. Bellicose, actually, all the hummers. Serviced a computer for a woman in Milmay NJ whose feeder was always full because the males drove one another off and none of them had time to feed. Great story in Reader’s Digest, years ago, about a woman who kept an immature male hummer over a winter. She was very torn about releasing him when his kind returned, but she did.

  5. David Lentini

    We’re seeing the Frankenstein’s monster that has been created by Richard Posner’s “Law and Economics” movement. Economic values has replaced morality as the basis for the law. We’re moving into a world where power is its own moral justification.

    Welcome to the Age of Thrasymachus.

    1. Darren Kenworthy

      Or Callicles, perhaps. “Justice is whatever the powerful want it to be”. Plato had so very many of his characters press this argument, with varying degrees of candor. Interesting that over 2,000 years ago the pivot politics revolves around was already articulated.

      1. Darren Kenworthy

        The definition of Justice offered in the first book of “Republic”, “pay back what you owe, to gods and to men”, makes it clear that justice is a matter of debt. The powerful decide who OWES.

  6. indio007

    My eyes are burning this is so disgusting. DO regular people get deferred prosecutions because criminal charges will be devastating to their innocent family?

    and….

    I really wish people would stop using THEIR buzz word “captured” is like “collateral damage”.

    This guy isn’t captured. His committing misprision of felony.

      1. Nathanael

        The *first* people who should have been criminally prosecuted are those who started the criminogenic environment back in the 1980s, but they’re mostly dead.

        The members of the Supreme Court who stole the election in 2000 are probably really the first who should be prosecuted.

        There are a lot of people who should be prosecuted for committing crimes under color of law. Sadly this will have to await a complete change of government.

    1. scraping_by

      “Capture” is the motive; corruption is the motion. It’s the theory behind the practice of crimogenic environments.

      There are apologists who will admit someone’s, say, compounding a felony and claim no idea why they did it. It’s a diversion, but a common one.

      “…once and future client base.” translates to paid work. That work is misprision of felonies. Dirty job, but someone’s got to do it.

  7. Warren Celli

    ‘Forced Complicity Crimeunism’ — societal erosion…

    Lanny Breuer said; “In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling.”

    Lanny Breuer is a sicko butt sucking shill. This is of course the too big to fail argument that allows the sociopathic Xtrevilist few to rape and pillage at will and consolidate power. But worse, it is also at the heart of Forced Complicity Crimeunism that makes us all — the “innocent employees” — complicit in the crimes of the aberrant sociopathic sick few who have taken control of our nation. As the ‘rule of law’ has been co-opted over time, and the control and direction of society has been more and more put in the hands of these sick criminal corporate few, more and more of us, who work for them, must be complicit in their crimes in order to get our own daily needs met. We are ‘forced’ into being complicit with the criminals in order to survive. This has a powerful and very divisive psychological effect on all of us in rationalizing what we do to sustain ourselves. Some of us, by virtue of the work we choose to do, are made more complicit and less moral than others.

    This Forced Complicity Crimeunism — and Lanny Breuer’s cheap deflective rationalization of protecting the “innocent employees” that is the deceptive driving force behind it — should be more fully explained for what it really is. It is a bomb the village to save the village bullsh!t strategy that is instrumental in making us all now complicit in the immoral imperialistic gangster nation that we have become.

    The headline of this article might better read;

    “Lanny Breuer supports crime and makes more innocent employees complicit criminals!”

    The reality is that if we are ever to achieve a just and sustainable global world these sociopathic sick criminal corporations not only should fail, they must fail, and the sooner the better.

    Deception is the strongest political force on the planet.

  8. Bert_S

    Ha! I guess corporations and banks would say something like that in their own defense. So would the Mafia.

    I don’t like these New Speak terms like “intellectually captured” either. In this context, “intellectual” and “captured” seems like such an oxymoron. Homer just says “D’Oh” and we get a chuckle out of it – but this doesn’t seem the same.

    P.S. And what if the Fed really did announce they a willing to create $20T in short term backstop money just before they nationalize a bank. That would surly put world markets at ease and take away the Armageddon argument banks always use on us.

    1. scraping_by

      ‘Intellectual capture’ is shorthand for someone who deliberately runs a public office, asset, or trust for private gain. Because calling it corruption would be ‘extreme’ or ‘populist’, we use abstraction and misdirection to say things everyone knows, but nobody should say.

      Let’s all make nice with the nice people in suits, shall we?

  9. David

    Absolutely pathetic – let’s just waive the law if the accused can scare the prosecutor into thinking they are powerful and influential.

  10. run75441

    Yves:

    Why should we pay $30,000 per year to house this scum? And if we did, we most certainly should start at a level 4 prison prison which is 4 hours out amongst the general population and 20 hours of lock down.

    My point? Give them a minimum 10 years of community service serving those they have fleeced. Close off their avenue of income in banking and investing doing something honest or at least hijacking trucks which is similar anyway.

    I do not have a good solution for these people. I do know that taking away their beamers, mercedes, club memberships, houses, etc and putting them on the same level as many Americans is an eyeopener for them who have never broken a manicured finger nail.

      1. run75441

        Bert:

        If I wasn’t familiar with the prison system already, I might crack a smile and yuck it up with you. Much of it is consenual; but then, there are the child predators who are awfully friendly to the newbies who usually are there for non-violent crimes such as drugs. This is where much of the violence in prison is, other extracting their dominance over others very much the same as what is happening today on Wall Street with us.

        Stripping these people of their money and their rights to ever work again in banking or investments would go alot farther. Except even here the DOJ lacks the will to do so.

        1. Bert_S

          Well, what’s good enough for Martha Stewart is good enough for the rest of them.

          I don’t mean skip a huge personal fine (clawback) and being banned from working in the industry. Do that too. But jail time has been the traditional cure for the rich crook whom may just be able to buy freedom with paying a fine.

          You may be right about the sex. I only know what I see in movies and TV.

          As far as the cost, I just thought of a slogan for OWS.

          Legalize Pot. Jail a Banker.

  11. Norman

    To CB, The hummingbird is a Rufous Hummingbird according to the Cornell Lab of Ornithology, at least that’s how I see it.

  12. Stuart Gittleman

    Bush’s DOJ screwed up the Arthur Andersen trial and rejected retrying the case even though the Supreme Court gave it a road map to do so, so “innocent” employees and managers lost their jobs for no proven reason. This created the meme that the alternative to a deferred or non-prosecution agreement is to let a business walk.
    In this mind set, a mega-fine is better than nothing, even though it’s paid by current shareholders rather than those in control when the felonies were committed.
    In addition to prosecuting the human felons, Breuer could bolster his “we’re tough on corporate crime” stance by strictly monitoring compliance and charging companies if they violate the terms of their agreements.
    The SEC has given the biggest banks waivers for unspecified “good cause shown,” without following up on repeat offenses. I’m holding my breath waiting for the DOJ to do otherwise.

    1. Bert_S

      Fines are useless. It’s like the guv saying they are partners in crime and they get their cut. Crooked mgmt stays in place. Bonuses probably aren’t even affected. Then clueless retail shareholders get nailed. Those are the “innocents”.

      Here is one area I see MMT being quite useful. I haven’t even seen the term “moral hazard” in print for about 3 years now, but imagine how you could scare the crap outta bankers if the DOJ said “We are going to MMT you where the sun don’t shine, for a change!”

      1. Lambert Strether

        That’s exactly it. The banksters are running a shell game, and every so often they slip the cop on the beat a fiver for “protection.” The cop is Lanny, and the fiver is the fines. Just a cost of doing dirty business! (And rubes crowding round the shell game wondering whether to put down any money… Well, those are the people The Bernanke hopes to rope into the game by shilling QE3. “The wealth effect,” donchya know, because all that 401(k) money is just burning a hole in my pocket. If only I could be sure the game was on the up-and-up…..)

  13. Ep3

    “difference between a rogue employee and a rotten corporation”

    Isn’t that how the mafia operated? Tony soprano always isolated himself from is subordinates that did the dirty deed, even tho he was giving the orders.

  14. Billy Bob

    To the extent that tbtf holds any water, it is a direct result of failure of anti-trust enforcement by administrations of both parties over several decades: the rot didn’t set in recently.

      1. Lambert Strether

        I wish I knew a bank that was about the scale of CraigsList: A big web site run by a small staff of professionals. It would be a really boring bank.

        The boring bank would in essence be a giant mattress: A place I could keep my money safely. That is the only business they would be in; no usury. They take a tiny cut to pay for the servers and the staff. That’s it. Now, how I get cash out is an open question; maybe there’s the equivalent of a gift card to top up.

        Let the billionaires gamble with their own money, not mine.

        1. F. Beard

          The boring bank would in essence be a giant mattress: A place I could keep my money safely. Lambert Strether

          Logically, only the monetary sovereign can provide that since it can create money; otherwise we need that curse disguised as a blessing called “government deposit insurance.”

          That is the only business they would be in; no usury. Lambert Strether

          Yep. We need to separate risk-free storage and transaction services from the lending of money and especially credit creation since it creates multiple claims to the same reserves.

          They take a tiny cut to pay for the servers and the staff. That’s it. Now, how I get cash out is an open question; maybe there’s the equivalent of a gift card to top up. LS

          The monetary sovereign (the US Treasury in the case of the US) should provide the service you desire and it should be free up to normal household limits. And it should neither borrow nor lend money nor pay interest.

          Let the billionaires gamble with their own money, not mine. LS

          Not only gambling but driving up your cost of living too and threatening global peace (such as it is).

        2. F. Beard

          And a short time after such a risk-free fiat storage and transaction service is established, then government deposit insurance and the lender of last resort should be abolished.

          Of course the above would cause a massive run on the banks which is why we need a universal bailout till all deposits are 100% backed by reserves.

        3. Bert_S

          I thought I had found that when I went with Everbank, an Internet bank. No brick&mortar – just a website, debit card and credit card if you want. They also have precious metal and forex accounts, tho these are probably not the best deal if you search hard enough for the best ways to do that.

          But then post crash I read they were heavy into FL mortgage loans, so I’m quite happy with my FDIC insurance. Which by the way is supposed to be funded with fees on the banks, even tho Beards remaining libertarian brain cells are forcing him to use the words “government deposit insurance”.

          So I use my debit card and in supermarkets and wal-mart I can get “cash back” up to $100 for pocket change. For those few occasions that you may need a cashier check – the post office does do that. And I can do wire transfers. I haven’t set foot in a brick&mortar bank for almost 10 years now.

          There really is nothing wrong with usury. You just need good underwriting standards. And banks that are backstopped by the Fed and FDIC should never be allowed near the Wall Street casino.

          1. F. Beard

            Which by the way is supposed to be funded with fees on the banks, even tho Beards remaining libertarian brain cells are forcing him to use the words “government deposit insurance”. Bert_S

            U got some dumb on yerself!

            If premiums could cover the risk of insuring bank deposits then the FDIC could be abolished and private insurers could take over. But they can’t because banking is subject to systemic failure. See the 1930s for confirmation.

            If we provide a convenient alternative for risk-free fiat storage and transactions and abolish FDIC, the banking system would collapse. Good riddance!

          2. Bert_S

            The FDIC is the regulator of deposit accounts. So the banks must let them at least see the books on that part of banking operations. They then determine whether the bank is worthy of being in biz and insure the deposits. The “private sector” can’t do that.

            We do have Brinks. You can rent vault space in a non banking company and put whatever you want in the vault. Most people use it for gold, but if fiat trips your trigger, you can do that too.

            If you are going to remake the world from scratch – you have a lot of details to work out.

          3. F. Beard

            The “private sector” can’t do that. Bert_S

            Sure it can or else refuse to insure.

            As for Brinks, what if it is held up? Can Brinks create new fiat to replace what was stolen?

    1. OMF

      Kill the bankers.

      It has now gotten to the stage that the deaths of a few bankers would solve more problems than they would cause.

  15. Conscience of a Conservative

    Lany Breuer is the problem. He doesn’t believe in prosecution, just SEC slaps on the wrist, probably to help out his buddies. History has shown fines which get return a fraction of the ill gotten gains are not a deterrerent, and those same players are free to commit a different crime.

  16. be'emet

    breuer may be on the right track. tackling banks and corporations bring collateral misery. But who runs the shop? Banksters In Orange! what a wonderful prospect, imagine the contagion!

  17. Guy Fawkes

    This, combined with the FHFA saying they will put in jail strategic defaulters…..the “peasants” WILL revolt. And it won’t be the banksters we will be coming after. It will be people like Lanny Breuer, Ed DeMarco and ultimately Obama.

    Obama should be realizing that his DOJs total failure is a reflection on him. I know the man’s not stupid…..or is he?

  18. scraping_by

    “Lanny Breuer is the rotting cancer at the heart of a thoroughly discredited DOJ.”

    Mr. Breuer is the visible pimple, the infection is much deeper. Or higher, in this case.

    If his bosses (Holder, Barry, et. al.) wanted financial crime prosecuted and financial criminals put in prison, he’d do it or they’d find someone who would.

  19. chris9059

    So thanks to Citizens United, corporations have the same free speech rights of real persons but unlike real persons have limited liability and now are apparently immune from prosecution.

    Corporations are now effectively first class cotizens while real people are second class citizens.

  20. John Lenihan

    Breuer has just made a complete fool of himself; currently, there may be little or no effect, but eventually, his garbled rationalizations will bite him back hard!

  21. JCC

    “We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client.”

    No kidding?

  22. JerseyJeffersonian

    In today’s Government/Corporate Revolving Door Society (isn’t it GREAT?), the Feds look out for their future employers, while those same corporate types make sure that they have liberally seeded the crucial Federal agencies with their past and future employees, the logic being that ONLY THEY can truly understand the ocean in which capitalism swims, and regulate, umm, fairly, with an eye toward The Greater Good of Society. And boy, look how it works out for THEM.

    But there is also a subtext running through Mr. Breuer’s little Statement of Lack of Principles. It is that whistle blowers are so-o-o-o 20th Century. They have no hope of ever seeing beneficial changes when there are no discernible lasting consequences that flow from their reports of malfeasance or misfeasance; the hammer blow of individual prosecution and world-shattering penalties on offending officers and corporations is stayed. The whistle blower will be dead in the cross-hairs of retribution after the fake apologies have been rendered. If there is no prosecution, would there even be a reward for the whistle blower to compensate him/her for their loss of job and likely blacklisting? So why not knuckle under and say nothing? You misguided individuals don’t change anything of substance, and ruin your own financial future; why bother?

    Of course, this squares just PERFECTLY with the government’s own attitude toward their own whistle blowers; vide Mr. Assange, or allegedly Bradley Manning, among an ever-growing number of those on their Enemies List. The powerful (and the rich) do not like to lose control of the message, and whistle blower revelations do just that. Intimidation: pour encourager les autres.

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