Lanny Breuer made the formal announcement Wednesday that he is stepping down as head of the Justice Department’s criminal division, after a week that he surely won’t remember as his favorite in public service. Last Tuesday, PBS’s Frontline made Breuer seem insincere and evasive about Justice’s failure to prosecute bankers involved in mortgage securitization. Then yesterday, a pair of U.S. senators, Chuck Grassley (R-Iowa) and Sherrod Brown (D-Ohio), sent a follow-up letter to Attorney General Eric Holder, demanding information about the Justice Department’s settlements with big banks. In particular, the letter quoted comments by both Holder and Breuer about receiving advice from “experts” on the dire economic consequences of indicting financial institutions. Brown and Grassley asked the Justice Department to disclose the identity (and compensation) of all outside experts who opined on prosecuting banks with more than $1 billion in assets and to explain how it vetted the experts to ensure that they “provided unconflicted and unbiased advice to DOJ.”
Based on a speech Breuer gave to the New York City Bar Association last September, some of the experts who spoke with the Justice Department about what would happen if global corporations faced criminal charges were certainly not unbiased: They were economists brought in by targets to dissuade the department from indicting their clients. Let’s be clear: Listening to arguments from potential defendants is an entirely appropriate exercise of prosecutorial discretion; as Breuer said in his speech, responsible law enforcement demands that prosecutors consider the consequences of their actions. But with Grassley and Brown now pressing the Justice Department on who advised Holder and Breuer to protect jobs and markets by deferring prosecution of big banks, Justice critics could try to turn Breuer’s words against him and his office.
The senators’ letter cites Breuer’s remarks to Frontline, which helpfully posted a transcript of its interview with the assistant AG. “In any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case there’s some huge economic effect, it affects the economy,” Breuer told Frontline. “At the Department of Justice, we’re being aggressive, but we should in fact take into consideration what the experts tell us. That doesn’t mean we won’t go forward, but it has to be a factor.”
Grassley and Brown also quoted Holder’s remarks from the Justice Department’s press conference announcing the resolution of interbank rate-rigging claims against UBS. “We reach out to experts outside of the Justice Department to talk about what are the consequences of actions that we might take, what would be the impact of those actions if we wanted to make a particular (prosecutorial) decision or determination with regard to a particular institution,” Holder said.
You can see why Grassley and Brown wanted to know more about these experts, but I suspect there’s less here than the Holder quote suggests. I asked two knowledgeable critics of the Justice Department’s handling of too-big-to-fail banks whether they’d previously heard anything about Justice relying on outside opinions to guide indictment decisions. Neil Barofsky, the New York University law professor who was inspector general of the Trouble Asset Relief Program until 2011, and Jeffrey Connaughton, the author and former chief of staff to former senator Ted Kaufman (D-Del.), both said they hadn’t, though both applauded Grassley and Brown for pressing for information.