Firing Preet Bharara is part of a broader strategy to reduce enforcement of anti-corruption and other laws. Firing prosecutors, appointing officials with Wall Street backgrounds and assaulting banking regulation are all closely connected.
The Trump administration is continuing on its path of swiftly and brazenly casting aside ethical and anti-corruption shackles that have sought to constrain abuse by US business.
Wall Street in particular has cause for rejoicing. One can hear the Dom Perignon corks popping.
President Donald Trump, advised by Attorney-General Jeff Sessions and a slew of top officials who all have past connections to Goldman Sachs, is sending a clear message to business: “You no longer have to worry about government enforcement actions - we’re not interested.”
Several days ago, the US Justice Department fired Preet Bharara, the US Attorney for the Southern District of New York.
Since taking office in 2009, Bharara has even-handedly prosecuted top New York State Democratic Party and Republican politicians, launched major insider-trading and corruption investigations into financial firms and other prominent enterprises.
According to New York magazine, a major beneficiary of Bharara’s dismissal is Trump’s friend and media promoter, Rupert Murdoch, chairperson of the Fox media empire.
Bharara has been leading a major probe of Fox which, reports New York “is looking at a number of potential crimes, including whether Fox News executives broke laws by allegedly obtaining journalists’ phone records or committed mail and wire fraud by hiding financial settlements paid to women who accused Roger Ailes (the former Fox head of news) of sexual harassment.”
Trump is an avid viewer of Fox news and has given it more interviews than any other television network.
He personally intervened a few months ago to help Roger Ailes resolve sexual harassment litigation.
Now, according to The New York Post, one of the possible replacements for Bharara who is being considered by the White House is Marc Mukasey, who just happens to be Ailes’s lawyer.
Firing Bharara appears to be part of a much broader strategy to reduce enforcement of anti-corruption and other laws and regulations that constrain the activities of financial firms.
Don’t forget, over the last eight years the world’s largest banks have paid $321billion (R4.19trillion) in fines for all manner of violations, including $42bn alone for illegitimate transactions last year, according to a study by the Boston Consulting Group.
Reduce SEC staff
Overwhelmingly, the cases brought against the banks have been by US authorities, including the Securities and Exchange Commission (SEC).
President Trump’s nominee to head the SEC now is Walter “Jay” Clayton, a prominent New York lawyer who has built his career representing such major current and former banks as Lehman Brothers, JP Morgan Chase and Goldman, Sachs.
He is widely expected to sharply reduce SEC enforcement staff.
Meanwhile, the chief architects of revising and watering down the Dodd-Frank Financial Reform Act, which has sought to increase Wall Street regulation since the financial crisis, are Trump’s national economic policy adviser Gary Cohn, the former chief operating officer at Goldman Sachs, and new Treasury Secretary Steven Mnuchin.
And the White House has just announced that it is going to nominate James Donovan as Deputy Treasury Secretary - Donovan also works for Goldman Sachs as an investment executive.
Stressing the importance of reducing banking regulation, President Trump told a White House meeting with bank chief executives recently that: “We expect to be cutting a lot out of Dodd-Frank, because frankly, I have so many people, friends of mine that had nice businesses, they can’t borrow money.”
In fact, the US banking system, despite all the fines it has paid, has not been healthier in years.
Bank profits are up, their capital base is strong and thanks to years of easy monetary policies by the US Federal Reserve Board the banks are also awash with liquidity.
Trump has famously said that his friends cannot get loans in this lending environment.
Of course, he has not given the names of his friends. If any exist, they must be real duds.
The firing of prosecutors, the appointment of top officials with extraordinary Wall Street backgrounds and the assault on banking regulation are all closely connected.
They are components of a policy that ignores unethical American business behaviour and hurls aside people and rules that assiduously combined to ensure that we do not see a rerun of the 2008 financial crisis.
Frank Vogl is co-founder of Transparency International and author of Waging War on Corruption: Inside the Movement Fighting the Abuse of Power. This article initially appeared on The Globalist. Follow The Globalist on Twitter.