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  March 15, 2017

Attorney Fired By Trump Set Dangerous Precedent for Wall Street Prosecutions

Former financial regulator Bill Black says Preet Bharara was the most aggressive federal prosecutor, but was still easy on the elite Wall Street bankers - yet we shouldn't expect Trump to nominate a replacement who's less than ethically challenged
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William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.


KIM BROWN: Welcome to The Real News Network in Baltimore. I'm Kim Brown.

On Saturday, Donald Trump fired Preet Bharara from the position of the United States Attorney, for the Southern District of New York. Bharara's dismissal came in spite of Trump's request in November of last year, to keep him in the position, and also came one day after U.S. Attorney General, Jeff Sessions, requested the resignation of 46 U.S. attorneys.

At the time of his firing, Bharara was leading investigations into New York Governor, Andrew Cuomo, New York City Mayor, Bill de Blasio, and of Fox News. According to the Washington Post, the now former Attorney General had also been asked by various watchdog organizations to investigate whether Trump's dealings with foreign governments violated the Constitution.

Joining us now to discuss this, we're joined by Bill Black. Bill is a Professor of Law and Economics, at the University of Missouri at Kansas City. He's also a former financial regulator. He is the author of the book titled, "The Best Way to Rob a Bank is to Own One". Bill joins us today from Mission, Kansas.

Bill, thank you so much for speaking with us.

BILL BLACK: Thank you.

KIM BROWN: Bill, many media outlets have reported that a lot of these Attorneys General -- several dozens of them -- were fired, or asked to resign shortly after Clinton and Nixon took office, so can you clarify for us whether anything about Trump's firings rise to the level of misconduct.

BILL BLACK: Well, there's nothing per se about the firing of U.S. attorneys that involves misconduct, and that's sort of the point. There is no reason for this to become an issue, except the bungling of Trump again. Where he actually met, as president-elect, with Bharara, and asked him to continue, and then tried to call Bharara the day before Bharara was fired.

So, out of something that wouldn't have been terribly controversial at all, they've managed to create a controversy and, of course, the obvious question is, what did Bharara do beginning in the last month and a half, that led Trump to move from, "Hey, you're somebody I definitely want to have continue." To, "Hey, I want you gone, and I want you gone right away."

So, you know, the U.S. attorney slot is often a place where politically ambitious folks go. You get a lot of name recognition out of it, and then you can run for a statewide office in the state where you have been the U.S. attorney. So, it's not unusual for the new president to clean house of appointees, in particular, when the appointees were from the opposite party.

Again, Trump waited on doing this, and then when he did do it, he did it on virtually no notice. And he didn't have successors in position, so it was done incompetently, but that's not a scandal about misconduct. That's a scandal about... you know, it's no longer scandalous, that he doesn't really know how to run government and doesn't much care, if he caused the government to get into trouble.

Now, Bharara...

KIM BROWN: Well... (audio difficulties) ... Thank you. That's the question I wanted to ask. Is this sort of unusual in the reverse, with Preet Bharara initially refusing to submit his resignation, and in turn, ended up causing his firing by Jeff Sessions and Donald Trump?

BILL BLACK: It's extraordinarily unusual for any U.S. attorney, when they're asked for their resignation, not to tender it. And Bharara has tweeted subsequently –- and the world now is... these angry tweets –- that he now knows what the people felt like at the anti-corruption committee, that... the investigative committee that was created by Governor Cuomo.

Governor Cuomo created this anti-corruption investigative body, and lo and behold, of course, the body did its work too well, and started investigating a number of major political allies of Governor Cuomo, and so Governor Cuomo killed them. You know, wiped them out after eight months. And Bharara, in his tweet, is saying now I know what they feel like, so the argument that he's making, obviously, is that he had a discussion with Trump, Trump asked him to stay on because he was considered to be the most aggressive federal prosecutor in the United States.

And that Trump presumably wanted that, you know, to go after the Clintons, and the Obamas, and other Democrats. So, as you said in the introduction, Bharara is investigating a Democratic governor and Democratic mayor, the top officials in the state, and city of New York. It could make a lot of sense for Trump to have a very aggressive prosecutor stay on.

Again, something must have happened where, whether it came from Trump, or it came from Attorney General Sessions, the argument became, presumably, that he was too close to Schumer. Who was, of course, the Democratic leader, minority leader...

KIM BROWN: Well, Bill, that actually leads me –- I'm sorry to interrupt –- but that leads me to my next question, because, as you mentioned, Senate Minority Leader Schumer decried the firing of Preet Bharara, according to Schumer said, "His relentless drive to root out public corruption, lock up terrorists, take on Wall Street, and stand up for what is right, should serve as a model for all U.S. attorneys across the country. He will be sorely missed."

So Bill, what's your take on Bharara's record, when it comes to Wall Street?

BILL BLACK: Well, first, you need to know that Bharara used to be a Senate aide to Schumer, so there's a personal relationship that affected that quotation. What Schumer has said about Bharara, however, has substantial truth. As I said, he was the most aggressive federal prosecutor. That said, he was non-too aggressive when it came to elite Wall Street bankers.

We have no real prosecutions at all, of any of the bankers who led the three fraud epidemics that hyper-inflated the bubble, drove the financial crisis, and created the great recession. So, not only did he bat zero, zero, zero, he never swung at a pitch. You know, he never even tried to prosecute folks. Of those folks he took on, who were in primarily hedge fund positions, he did get some good convictions in the insider trading.

And it's a credit to him that the Second Circuit -- which is a deplorable place -- reversed a couple of those convictions, because of how friendly they are to elite white-collar criminals. But also in the single most damaging case of insider trading, which is SAC, Bharara never indicted Steven A. Cohen, that's the SAC part of SAC. Even though he indicted, and successfully prosecuted many of Cohen's top aides.

This is a very dangerous precedent, of essentially saying, "As long as you're cute about it, and use a code where you indicate to your subordinates that they're required to give you insider information, but we all agree not to call it insider information, ever –- you know, that's critical -- we just call it information as to which we have unusual confidence." (laughs) And that's almost word for word how they did it.

So, Cohen mandated that his senior people bring him, every year, these opportunities to buy stocks, primarily -- also bonds -- that as to which they were basically a sure thing. Well, how do you know something's a sure thing? Oh, well, nod, nod, wink, wink, it's because you have insider information! So, the refusal to prosecute Cohen was a real gut check and Bharara failed it.

So, again, both stories are true. He is the strongest prosecutor in the federal system, and boy, that's not saying much about the federal system. And it's the old the valley of the blind, the one-eyed man is king –- or woman is queen.

KIM BROWN: Indeed. So, Bill, in terms of protocol, now that these 46 U.S. attorneys have been unceremoniously dismissed from their positions, what are the next steps here to get those positions filled?

Is this going to take a lot of time, and does it appear as though the Trump administration has people on standby, has nominees ready to go?

BILL BLACK: Well, the Trump administration has been exceptionally bad in even nominating people. It's not like it's a hold up because of the Democrats, and simply because Trump hasn't even brought nominees, and of course when he has, he's brought a whole series of lemons. It's a political football, is the answer.

Again, these positions are viewed as great rewards for people that have done nice things for the party, and might make strong candidates in the future, but don't have the name recognition. And so, everybody in the Republican ranks is in with their local senators, and members of Congress, desperately hoping that they'll pass on the word to Trump, and get them appointed.

So, you know, it's going to be folks... it's going to be the usual -- but probably worse than the usual -- the politically ambitious, and in the Trump case, probably not ethically challenged.

KIM BROWN: Indeed. Well, we have been joined by Law and Economics Professor from the University of Missouri at Kansas City, Bill Black. He's also a white-collar criminologist, a former financial regulator and all-around badass.

So, Bill Black, we appreciate you joining us today. Thank you.

BILL BLACK: Okay. Thank you.

KIM BROWN: And thank you for watching The Real News Network.




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