Nurturing The Swamp... Making It More Dangerous And Powerful

Feeling vaguely sickened by the parade of Wall Street predators Trump has recruited as a cabinet? Did you expect something different? Trump is a man who will be in violation of the Constitution immediately upon taking office since his business empire has a steady flow of money coming if from a myriad of foreign sources, many of which are connected to foreign governments or from individuals connected to foreign governments. That concern is discussed in the video above by Norman Eisen, a co-founder of Citizens for Responsibility and Ethics in Washington and the former U.S. Ambassador to the Czech Republic, and Richard Painter, George W. Bush's former Counsel and chief ethics lawyer, and it's very much worth watching.Right now I'm more concerned with the parade of shady characters he's populating the highest reaches of government with, most of whom seem as unscrupulous and predatory as he has proven to be himself. Yesterday Michael Arria, writing for AlterNet, pointed out the irony of much of this trash coming into government precisely because Obama never prosecuted the crooks behind the financial crash that Bush left us with on his way out the door-- a financial crash that left much America staggering but further enriched the Wall Street bandits Trump is bringing into government-- the foxes who will be in charge of the hen houses. "Goldman Sachs," he wrote, "one of the major symbols of the crash, has enjoyed a mammoth influence on Washington for years, but its footprint is poised to grow even larger if a couple of notable Trump nominees are confirmed. Gary Cohn, the longtime COO of the finance company, will become director of the National Economic Council; Goldman partner Steven Mnuchin might become secretary of the treasury and former Goldman investment banker Steve Bannon has already become Trump's chief strategist and senior counselor."

While many chalk up President Obama's lack of action to business-as-usual in Washington, United States history features notable crackdowns after vast financial scandals. After the crash of 1929, the head of the New York Stock Exchange went to jail and the savings-and-loan scandals of the 1980s produced over 1,000 prosecutions. The reasons behind inaction certainly transcend Obama (who received more money from Goldman Sachs during his first presidential campaign than any other donor) and point to a deep, systemic problem. After spending a year talking to the players involved, Jesse Eisenger wrote about the lack of convictions for the New York Times Magazine in 2014:
Many assume that the federal authorities simply lacked the guts to go after powerful Wall Street bankers, but that obscures a far more complicated dynamic. During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms.

The numbers certainly add up. According to a report on the Justice Department's own data, white-collar prosecutions are at a 20-year low. “The decline in federal white-collar crime prosecutions does not necessarily indicate there has been a decline in white-collar crime,” the report's authors point out, “Rather, it may reflect shifting enforcement policies by each of the administrations and the various agencies.”Those shifting enforcement policies (the "critical changes" as Eisenger called them) are exacerbated by the revolving door between the financial industry and those taxed with policing it. In his 2011 Rolling Stone piece, "Why Isn't Wall Street in Jail?" Matt Taibbi shares a story from SEC investigator Gary Aguirre:

Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country's leading lawyers who represent Wall Street, as well as some of the government's top cops from both the SEC and the Justice Department.Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats.

Perhaps the best symbol of Aguirre's insight could be found with the former Attorney General himself. After leaving the Justice Department, Eric Holder rejoined his old law firm, Covington & Burling, which welcomes a number of clients Holder declined to prosecute.Would someone like Steve Mnuchin even be available to nominate if Obama had made any kind of effort to change this culture? In a comprehensive New Republic profile on Mnuchin, David Dayen goes beyond some of the more well-known Mnuchin controversies (his career with Goldman Sachs, his connection to the Bernie Madoff scandal and his suspicious departure from a Hollywood production company that tanked) and zeroes in on Mnuchin's time as chairman of OneWest Bank, a noted foreclosure machine that regularly dispossessed the homes of senior citizens and people of color.In a Nation piece that also details foreclosure frauds of Trump's secretary of commerce pick Wilbur Ross, Dayen explains how Mnuchin's bank purchased predatory lender IndyMac, along with its thousands of failing mortgages. Mnuchin cut a deal with the FDIC to protect the bank from losses, so the FDIC lost $13 billion on the foreclosed homes while OneWest turned $3 billion in profit. As Dayen describes it: 

What that meant for homeowners was they were rubble to be plowed so Mnuchin could profit. Borrowers got few options to modify loans, as OneWest dashed to foreclosure. The bank pursued all of the tricks of the era-- servicer-driven defaults (where servicing companies tell homeowners they must miss payments to get help, and when they do, they move to foreclose), dual tracking (when servicers negotiate modifications and pursue foreclosures at the same time), and more. Activists ended up on this guy’s lawn demanding that the foreclosures stop.

Politico recently reported that OneWest once foreclosed on the house of a 90-year-old Florida woman, Ossie Lofton, because of a 27-cent error. Lofton had taken out a reverse mortgage and a subsidiary of OneWest sent the woman a bill for $423.30. Lofton mailed the bank $423 and then a separate check for 3 cents, not realizing the actual difference was 30 cents. Donald Trump's treasury secretary nominee and his partners then filed for foreclosure on Lofton's house in 2014-- because of the missing 27 cents.Trump's appointment of Gary Cohn will not require Senate approval, despite the fact he'll be the chief strategist in developing economic policy, and this is probably a good thing for the president-elect. A Senate confirmation would mean lawmakers would be allowed to bring up the two years leading up to the financial crash when Cohn was co-president of Goldman Sachs.In 2009, McClatchy's Greg Gordon reported on those years and demonstrated how the "Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting."To avoid a conflict of interest, Cohn will have to sell his shares at Goldman Sachs. Bloomberg reports that they're worth about $210 million and that he'll be able to defer any capital gains taxes from the sale.In April of this year the Justice Department announced that Goldman Sachs would pay out over $5 billion in a settlement connected to its sale of residential mortgage backed securities, echoing Eisenger's point about the department looking to reach settlements rather than prison sentences. "This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail," declared the statement.It seems evident that Goldman Sachs will be able to bounce back from this punishment.

In a post at Slate yesterday, Jamelle Bouie wrote about an easily-detected pattern in the Trumpanzee Cabinet choices. "To run the government," he wrote, "he has picked men and women who disdain the missions of their assigned agencies, oppose public goods, or conflate their own interests with that of the public. It’s less a team for governing the country than a mechanism for dismantling its key institutions. And as a cadre of tycoons, billionaires, and generals, Trump’s executive branch is a rebuke to the idea that government needs expertise in governing." And it is one conflicted assemblage of knaves, miscreants, reprobates... and even a mass murderer (who isn't even one of the generals). This is the least populist Cabinet in history despite Trump's empty campaign verbiage. Bouie called it "an ungovernment brought forth by reactionary hostility to the idea of the public, a throwback to the industrial oligarchy that eventually brought American democracy to its knees... Far from 'draining the swamp' of malign influence from billionaires and lobbyists, Trump has placed them in even greater positions of power and influence... a slap in the face to those voters who see Trump as a friend to their concerns, who believe they’ve been harmed by a government that privileges the wealthy over ordinary Americans."

For Treasury, Trump has Steven Mnuchin, an investment banker who made billions off of the housing crisis. For the Department of Labor, he has Andrew Puzder, a fast-food CEO who disdains the minimum wage and backs increased automation in low-wage fields. Robots “never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,” he once said. For the Department of Education, he has Betsy DeVos, a billionaire “school choice” supporter who gives millions to vouchers and evangelizes charter schools and private instruction. For the Department of Energy, he has former Texas Gov. Rick Perry, who infamously wants to dismantle the agency-- when he can remember its name. For Health and Human Services, he has Georgia Rep. Tom Price, who opposes the Affordable Care Act and wants deep cuts in Medicare and Medicaid.For the Environmental Protection Agency, he has Scott Pruitt, who describes himself as a “leading advocate” against the agency; and for the Department of Justice, he has Alabama Sen. Jeff Sessions, who opposes the Voting Rights Act and supports a rollback of federal protection for LGBT victims of hate crimes. For the Department of State, he has Rex Tillerson, CEO of Exxon Mobil, whose interests and wealth are tangled in a web of global relationships, including a close partnership with Russian President Vladimir Putin.