- MATT TAIBBI: Yeah, I mean, I think this is probably the single biggest example of the revolving door that we’ve ever had. And we’ve had some whoppers in our past. I think previously the worst one was probably Louisiana Congressman Billy Tauzin leaving Congress and taking a $2-million-a-year job with PhRMA, right after he helped pass the prescription drug benefit bill. But what Holder just did just blows Tauzin away. I mean, he spent six years essentially guiding all of these Wall Street firms, which many of them are clients of this company that he’s now working for—he guided them all back to profitability. He allowed bankers to escape prosecution. And now he’s going right back to that firm, where he’s going to enjoy a very lucrative partnership, whether he ever works again, you know, for the rest of his life.
JUAN GONZÁLEZ: Well, Holder also sort of became a point person for these, quote, "extrajudicial settlements."
MATT TAIBBI: Right.
JUAN GONZÁLEZ: Could you explain what those are and how they worked?
MATT TAIBBI: Yeah, Holder, in general, pioneered a number of different ways that essentially a lot of these too-big-to-fail companies were allowed to buy their way out of trouble. And one of the most notorious, I think, was that he concluded a number of the biggest settlement deals with banks like JPMorgan Chase in ways that were not reviewed by a judge. Because we did have some instances during this time period where pesky judges—I think one of the most infamous, in the eyes of Wall Street, was Jed Rakoff, who threw out a settlement with Citigroup because he thought it wasn’t harsh enough—well, to fix that problem, Holder just started striking deals and not submitting them for judicial review. So he did a $13 billion settlement with JPMorgan Chase where no judge signed off on the deal. The whole thing was done in secret. He essentially institutionalized the back room. This was just a deal where a bunch of bankers got together with a bunch of Justice Department officials, money changed hands, and that was it. The whole—all of their criminal problems went away. This is a very different way of doing business than what we’ve ever seen before, and it’s very dangerous, I think.
JUAN GONZÁLEZ: And he also took the term "collateral damage" into the financial world out of the military world, didn’t he, as well?
MATT TAIBBI: Right, yeah. He actually predated the collateral damage idea back when he was a lawyer in the Clinton Justice Department. He wrote a memo that—you know, it’s now known as the Holder Memo, where he outlined a policy that is called "collateral consequences," and basically all this says is that if you’re a prosecutor and you’re worried about prosecuting a company that employs a lot of people and you’re concerned that innocent people might suffer as the result of a prosecution, you may pursue noncriminal remedies when you go after this company.
The problem was that when—by the time he became attorney general, the economic landscape was dotted all over with these enormous, too-big-to-fail companies, and there was a real threat that if you prosecuted these firms, that it might cause serious damage to the overall economy. Obviously we saw what happened with Lehman Brothers, for instance. So this became sort of the unofficial policy of the United States. We started taking companies that had done very bad things—you know, HSBC is probably the biggest example, laundering money for drug dealers—and instead of throwing people in jail and extracting huge individual penalties from the guilty parties, we just got the banks to pony up a big fine that shareholders paid, and they got to stay in business.