“Why does nobody ever go to jail?” asked Mandy Grunwald, a messaging guru for the Hillary Clinton campaign, in an email in 2015 to eight other top campaign officials.
She was responding to a settlement announced by the Department of Justice with several large banks that had manipulated foreign exchange markets. Though the banks pled guilty as institutions, no individual banker was punished.
Grunwald’s email thread petered out with no response to her question, which is not surprising.
A few months later, Clinton campaign manager John Podesta was having an email discussion about why Clinton’s platform on banking reform didn’t really resonate with voters. “People don’t get it,” he said. “It’s not like sending people to jail which people really love.”
There are many reasons why Hillary Clinton lost the election last November, but one significant factor was that Clinton suffered from a perceived closeness with Wall Street — a closeness that consistently worried the campaign.
Clinton Democrats were, of course, not in charge during the aftermath of the financial crisis; the Obama administration was. And what happened to Clinton was not isolated to her, or even to 2016. The reluctance to take on Wall Street has been a hallmark of the modern Democratic Party — and has served as an electoral headwind up and down the ticket.
Democrats are currently debating how to structure themselves as an opposition party. And Tom Perez, a leading candidate for the Democratic National Committee chairmanship, has an established record of not taking on the banks; both at the Department of Justice and the Department of Labor.
Soldier Suicides and Foreclosures
In February 2010, a JP Morgan vice president, Stephanie Mudick, told the House Committee on Veterans’ Affairs on behalf of her bank, “I would like to express to the men and women serving our country, and to the members of this committee, Chase’s deepest regret over the mistakes we made in applying these protections.”
Mudick confirmed allegations that J.P. Morgan had foreclosed on active duty soldiers in violation of the Servicemembers Civil Relief Act (SCRA). The SCRA was first enacted during the Civil War and is designed to cap interest rates and prevent foreclosures for active duty troops. Violations can potentially be charged as misdemeanors, punishable by up to a year in prison.
Both Democrats and Republicans at the hearing lambasted Mudick, with Rep. Bob Filner suggesting the bank was responsible for “homicide” against soldiers who killed themselves after being foreclosed on. “Shouldn’t someone go to jail for that?” he asked. “And who should? Who is responsible? Are you, as the executive VP who was given us from the bank to answer for this stuff, should you go to jail?”
Mudick pledged to find out who at her bank was responsible and would be held accountable. But her performance didn’t impress attorneys defending soldiers against illegal foreclosures. Richard Harpootlian, a foreclosure defense attorney, echoed Filner at the hearing. “Put somebody in jail, then banks will stop doing it,” he said.
The SCRA is rarely used for jail time, and other parts of the government were more well-suited for pursuing criminal charges against bank executives. Yet the foreclosure crisis, with the ensuing mortgage documentation fraud, was also unprecedented. The Office of the Comptroller of the Currency documented 1,622 SCRA violations, including over 1,000 completed foreclosures of active duty troops.
No one ever did get convicted of a crime. And the person who was running the division of the Department of Justice with jurisdiction over the SCRA at the time was Tom Perez. From 2009 to 2013, he was assistant attorney general for civil rights.
Perez himself continually touted his division’s work on the SCRA. But in 2011, Congressmen Brad Miller and Walter Jones wrote to the Justice Department about these violations, noting: “The continued failure to pursue criminal charges in the face of flagrant violations of the criminal law is destroying Americans’ faith in their government and democracy.”
The Justice Department later reached a settlement with banks over these violations, including J.P. Morgan, offering monetary payouts to soldiers. But no individuals were held accountable.
In 2013, Rep. Miller accused bank regulators and the Justice Department of refusing to investigate, saying “They consciously decided not to continue an investigation because what was revealed was so damning.”
One banker who profited through these illegal foreclosures was Steven Mnuchin, whose bank OneWest was caught violating the law. OneWest had 54 documented SCRA violations. Mnuchin is now Donald Trump’s treasury secretary after winning confirmation despite nearly united Senate Democratic opposition based on his profiteering from the foreclosure crisis
Waivers at Labor
Perez left Justice to become secretary of labor in 2013. The Department of Labor has significant bank regulatory authority involving pension funds. Financial institutions found guilty of certain crimes, for instance, are barred from managing pensions unless granted waivers by the Department of Labor.
In 2015, Democratic Rep. Maxine Waters asked Perez to hold off such a waiver for large banks that had pled guilty to conspiring to rig the foreign-exchange markets. But UBS, Barclays, J.P. Morgan, Royal Bank of Scotland Group, and Citigroup received waivers, letting them go right back to managing pension money.
Perez’s track record at the Department of Labor was generally respected by unions, a bulwark of the Democratic Party, although union density overall dropped during the Obama administration. For example, Perez implemented a conflict of interest rule to stop financial advisors from cheating people. He adopted a regulation to help more people earn overtime time. He advocated for a rule for home care workers to aid their bargaining leverage.
But all of that is likely to be overturned, because Democrats lost up and down the ballot in 2016, handicapped in part by their aversion to take on the banks.
Perez’s main competitor for the DNC chair is Rep. Keith Ellison, who serves on the Financial Services Committee. Ellison signed a letter strongly criticizing Perez’s decision to grant the waivers to the big banks that were guilty of market manipulation. He co-sponsored a bill to break up the banks. And in September 2016, after Wells Fargo was found to have committed fraud in opening up millions of false accounts for customers who did not want them, he proposed that bank workers should unionize to fight fraud.
Races for party positions like the Democratic National Committee chairmanship tends not to hinge on issues like financial services policy. The DNC contest is a race where insiders who care about party building, consultants, messaging, and the guts of the Democratic apparatus try to make their voices heard. In this case, however, the clearest difference between Perez’s and Ellison’s approaches may come down to how they approach financial power.
Both Perez and Ellison support pro-labor policies. But Ellison shows that he also wants to oppose concentrated financial power. Perez represents the finance-friendly status quo that has relegated Democrats to minority status.
Top photo: U.S. Department of Labor Secretary Thomas Perez delivers remarks during a public meeting of the Financial Literacy and Education Commission at the United States Treasury on June 29, 2016, in Washington, D.C.
Good to see Obama still blind, taking losing strategy to a whole new level
Democrats are the üarzy of real fascism, so no wonder
Probably a better pick than Keith Ellison.
The Democratic Party won’t survive long with either Perez or Ellison at the head. The people are seeing thru the USA propaganda machine for the first time in modern history. Many Democratic voters are still in their heads in the 70’s or Kennedy era. Now, with Ellison/Perez they will see what the Democratic Party has become. The young will start to get jobs under Trump. Black’s will be trapped in the Democratic Party becoming more and more isolated with more and more rage (mostly against Obama, but unable to articulate) major disappointment like Obama can hurt for 100 years.
I’m not a believer, but an agnostic, but i pray
Democratic leadership continues to feel that Democrats are dumb and will go along with Debbie Wasserman light – which is what Perez is.
Democratic party needs to take responsibility for its misdeeds – which is partly the reason we are in this Trump mess (AhmadiTrump) – and bring a candidate forward that supports real grassroots change. That is not going to happen!
Democrats are the parzy of slavery and fascism. No wonder they see ppl as their property and treat ppl as slaves
Kneecapping a paraplegic seems like overkill.
democrats worship the banks…. play it out.
1- wallstreet banks loan money to big fat corporats to expand
2- banks want to get paid back
3- corporats cut wages and employees for more profits to pay off banks
doesnt matter how far the whore Perez his head up wallstreet’s a$$, logicaly, HE OPPOSES UNIONS.
typical of 2-faced hillary mutts.
“democrats worship the banks”
And Republicans don’t?
When trying to distinguish a person, saying “she has a head, two hands, and two legs” doesn’t really cut it. In fact, repeatedly claiming that these are distinctive features is outright dumb.
isn’t that rather the point?
Thanks for insights and facts. Your voice is much needed.
Let’s assume that Ellison and Perez are the two front runners. What’s the difference between them? I almost wanna say Six Degrees of Seperation. Ellison speaks in party approved soundbites/feel your pain neoliberalism. We need to organize! We need to have a united front! Both true. But if anyone non violently protests in front of any Federal building, they get arrested and charged with a felony. Who wrote this law? Powerful politicians who got sick of Media Benjamin and Code Pink continually f*****g up their hearings and cable news soundbites. Did Ellison vote for these? Nobody’s ever asked him.
Another problem with Ellison? Not all but many Democrats won’t back him because he’s a Muslim. That’s not a crime. But many of these people see this as a liability that the racist neocons will exploit the hell out of. How many times have they pushed the “Ellison Is a Goddamn Anti Semite” hype?
This leaves Perez. Aside from this article, NOBODY ever pushes him on this issue in all of the “Great American Town Hall Debates for DNC Leadership”. Instead, he’s trying to talk past people’s skepticism. Unfortunately, if Perez wins, the party is finished. If Ellison, the racist neocons will push the “He’s a F*****g Muslim!” garbage every chance they get.
Ellison speaks his mind. He has the power to merge differences. He is earnest and humble. Oddly, the AIPAC teevers who should be shipped to israel, wont back him. YES! the flip side of that is that money grubbing greedy pigs will quickly overplay their hand and then, get sacked.
Ellison is a progressive. The Democrat party is not.
ah yes. the old “electability” canard.
stick with that one, it’s served the Dems well.
Yeah, kinda like how Bernie was unelectable because he was a “Socialist”. Most of the people who will be turned off by either “Muslim” or “Socialist” are largely turned off by the mere word “Democrat” in the first place. The DNC elite are some of the smartest dumbasses on the planet.
“Put somebody in jail and they’ll stop doing it.”
Seven years later has become:
“Guillotine some people and they’ll stop doing it.”
Or when it comes to the BANKSTERS, We The People could simply MOVE OUR MONEY OUT: Close your accounts with the Big Banks that got bailouts & are working to DE-regulate (AGAIN) & take us over the cliff (AGAIN). MOVE your money to SMALL, LOCAL Banks or (better yet) CREDIT UNIONS who don’t pull this crap. WE have the POWER to do this—if only we would. Hit ’em where it REALY hurts:MONEY
I doubt Hillary’s e-mail was expected to be answered. It was issued just as she announced her intention to run for President and showed how much she “cared”.
So much so that she kept all her Goldman Sachs speaking fees and gave them
to the Servicemen & Women hurt by the foreclosures. Not.
Your weak argument against Perez demonstrates that Ellison and Perez are both good candidates for the chair.
This purported record is bolstered by two underwhelming examples.
I don’t have much to add here as you do a good job on your own of undermining your argument by saying that “The SCRA is rarely used for jail time” (aka most SCRA enforcement actions do not result in criminal charges) and that “other parts of the government were more well-suited for pursuing criminal charges against bank executives.”
Misleading. When you say “to hold off” it suggests that Waters said to deny waivers when in fact she said the DOL should “hold a public hearing and thoroughly review the waiver requests and any comments it receives.” The DOL had held such a hearing in January 2015 (https://www.dol.gov/opa/media/press/ebsa/ebsa20142115.htm) and then after the letter tentatively rejected waiver applications for Deutsche Bank AG, UBS Global Asset Management and Royal Bank of Scotland Group, which was considered as an unusual step from the DOL (http://www.pionline.com/article/20150907/PRINT/309079981/dol-cracking-down-on-exemptions). RBS was denied the waiver the following year: “Sen. Elizabeth Warren, D-Mass., a critic of such exemptions, praised the decision in a statement. “We’re glad the Department of Labor is protecting our nation’s retirees by denying RBS the ‘stamp of approval’ QPAM status in the wake of RBS’ egregious criminal misconduct.” How convenient that you forgot to include this information. https://www.bloomberg.com/news/articles/2016-10-12/u-s-denies-rbs-permission-to-manage-some-pension-fund-assets
Before he announced his run for DNC chair, Perez was a stalwart defender of civil rights and as the NYT put it, “progressive enough to excite supporters of Senator Bernie Sanders.” But now he has been relegated to “establishment” status and “represents the finance-friendly status quo that has relegated Democrats to minority status”? I for one, am not buying it.
Whoever wins is going to have a seriously uphill battle. In 2018 the GOP will be defending eight seats, while Democrats defend 25, including Independents.
ZOMG, the New York Times called him “Progressive enough”!! What a great endorsement, they aren’t establishment at all!
Keep “not buying it”, the Dems need you to bail while their boat is sinking.
That’s the best rebuttal you can come up with? I can live with that.
There is nothing of substance to rebut. You don’t see a problem with Perez and clearly you’re under the impression that the NYT, cheerleader for the (supposed) elites in this country, is somehow a credible arbiter of who is and who isn’t progressive.
You’re as out of touch as the DNC.
https://theintercept.com/2017/02/09/tom-perez-apologizes-for-telling-the-truth-showing-why-democrats-flaws-urgently-need-attention/
This is why he shouldn’t be the DNC chair. TPP and Globalization was, and is , the main driver in this last election, especially through the Rust Belt. Dems will not win with this guy at the helm who will most certainly be perceived as anti-working class and pro-Wall St.
I know that it is a liberal rite of passage to shudder at the mere mention of the TPP. I also know it is a conservative rite of passage to dream that the loss the manufacturing jobs can be stemmed by pretending globalization and technology enhancements can be reeled back to the glory years that are now long gone. but it’s all an abstraction. People yearn for their cheaply goods at Wal-Mart. I’d rather have the global economy choose the winners and losers than Donald Trump doing so (e.g. transactional interference such as the Carrier ordeal or maybe other tariff threats like the one in Mexico to build the wall!). When the USITC issued their analysis, there were winners and losers, that’s how these trade deals work. https://www.usitc.gov/publications/332/pub4607.pdf
And I have to challenge your claim that TPP/Globalization was the main driver in the last election. It’s not that simple. Though it did show up as No. 6 on 13 different theories of why Trump won! http://www.salon.com/2016/12/26/13-theories-on-why-trump-won-and-how-clinton-lost_partner/
Jobs were NOT the ONLY reason to OPPOSE TPP: the fact, that GOVERNMENT power was FURTHER HANDED OVER to Multi-National Corporations WAS EVEN more KEY. Here’s how that worked: all a corporation had to do was file a challenge in the special “court” (which was to be filled with Corporate Layers “arbitrating” whether or not as the Corporation claimed that “a regulation to protect water, or safe drugs or clean food etc–LIMITED FUTURE PROFITS of the Corporation”. If it ws decided said fuuture profits were at risk, there were but 2 “choices”: REPEQAL the regulation or PAY UP what the Corporation wanted in “future profits”. WIN WIN for Corporations LOSE LOSE for People & Planet.
The Democrats would rather be relegated to permanent minority status, or even dissolve and be absorbed by the Republicans, than allow leftists to take over the party. If the Clintons and their inner circle of suck-ups can’t have the DNC, they will happily burn down the entire house and rule over the ashes. The left really needs to break away from the Democrat Party fully and build up the Green or Progressive Party if it has any hope of mitigating the coming disasters.
(By ‘leftists’ I mean guys like Samuel Ronan, who has been lighting the rhetorical fire under otherwise establishment, milquetoast candidates for DNC chair and getting them to adopt his words however insincerely.)
The Democrats would rather be relegated to permanent minority status, or even dissolve and be absorbed by the Republicans, than allow leftists to take over the party?
i actually wonder much about that. The predictability of corruption and guaranteed financing is impossible for political whores to part with. Yet real left minds – as much as they ride in the wake – seem willing to kiss that off. It looks very 50/50 to me. IF the dems put the fool Perez in, which i believe he has vowed to be their best BWF, and blow 2018, the party is absolutely done for – which would actually be good for 2020. Hard to lose no matter what.
We will succeed in spite of the Democratic Party, not because of it. Nevertheless, the DNC chair election is an important harbinger from an institutional perspective. On another note, love your work, Matt. Your piece in The Atlantic in October (“How Democrats Killed Their Populist Soul” (http://theatln.tc/2e7BzN6)) is exceptional and a must-read to better understand the historical context of how the party of FDR became the collection plate of the Clintons, and Mr. Obama’s sad policy legacy. Enjoyed listening to you on the Katie Halper show in December, too.
Maybe I’m a pessimist but I don’t see any hope for the Dems. They’ll always be a corporate party just like the Reps and America will continue to suffer because of it.
Many so called Democrats are in fact Corpocrats.
But ALL Republicans are, in fact, owned by their corporate and billionaire masters.
With Pelosi retaining and Schumer obtaining the other leadership roles, the corrupt status quo will be maintaining complete control of the Democratic party if Perez wins too.
In other words, the people who lost the presidency to the worst candidate ever, the people who lost control of Congress, the people who lost governorships and lost state legislatures… will be rewarded for utter, complete, and massively damaging failure.
There’s nothing pragmatic about losing or rewarding those responsible, so their own argument is enough to justify showing them the door.
It’s still the economy stupid, and the policies of Wall Street coddling Democrats are to blame.
Perez doesn’t serve the people.
Clark’s criticism of this article is spot on… once elected, Obama became everything voters didn’t want in Hillary. Pretending their policies/staff/supporters are somehow different is nonsense.
JR Tomlin is spot on too… “bank friendly” is a far too tame way of saying corrupted to the bone.
Huge campaign donations and promises of lucrative future employment by Big Money being allowed to dictate policy and subvert the rule of law at the expense of working class Americans has created, for decades now, a situation that requires journalists to push back more forcefully… by stating the unvarnished truth.
The facts are there to back you up, so do it.
A quibble.
Obama was part of the scheming before he was elected to
be the faker in chief.
His 4 years in the Senate of the faking U$A was a graduated
revelation of his oncoming corruption. He lied to give
the impression that he was opposed to the very corruptions
he voted to protect during his faking Senate tenure.
Two major acts revealed his lies.
He was opposed to illegal wiretapping and so he voted to protect
the companies which were involved in the illegality and he
was opposed to corrupt financial scheme and so he RUSHED
to stand with Bush and Cheney (and the rest of the liars)
and push through a corrupt “bailout” which rewarded the
financial criminals and had NO regulations reinstalled.
Obama was the preferred tool and people who identified as
democrats refused to hold him accountable. He is a Rahm
Emanuel fascist in blackface and a smooth liar.
The democratic party is pretty much done. They need to go back to being the “party of the people” and stop chasing the votes of wealthy professionals.
Matt you are eight years too late. Obama received more money from the financial sector than any politician for his run in 2008:
https://www.opensecrets.org/industries/recips.php?ind=F&cycle=2008&recipdetail=A&mem=Y&sortorder=U
1. Obama, Barack (D) $44,314,958
2. McCain, John (R) $31,426,590
3. Clinton, Hillary (D-NY) $21,243,336
“…Clinton suffered from a perceived closeness with Wall Street…”
You’re shitting me. Perceived? From her own campaign website you could follow links to her taxes where it showed she was paid millions for speeches.
That’s reality.
So they’re voting today. If ( and when) they select Puny Perez, I’m gone. I’ve voted Dem for 51 years except when Gloria Steinem urged all good feminists to support Bob the boob grabber Packwood for senate. Was I fooled! But not now. When they announce the vote, I’m calling my local Dem bunch and resigning. I don’t know who I’ll register with–most likely the Socialists, as the Greens are feckless in the extreme–but I am done. And thanks for info on Ronan. I hope he starts a party.
The Democratic Party is unsalvageable. When I registered to vote decades ago, it was already clear that it was beholden to corporate interests and had abandoned service to its traditional base. It’s gotten dramatically worse since then, and has morphed into a party that’s to the right of Republicans under Reagan.
It will never allow reformers into positions of power.
The democratic party has morphed into the junior republican party, their goals are the same – serve corporate America. trump being president is the fault of the democratic party leadership, they rigged our party presidential choice, this has to change.
That’s why Obama supports him!
I would put it a lot more harshly than ‘bank-friendly’. He let criminals go free to stay on good side of Wall Street.
The stench of corruption.
I LAUGHED out loud when I read the ridiculous sentence
which implied that Obama was not a “Clinton democrat.”
and that “Clinton democrats” were not “in charge” of
the lousy, faking party of lying republicans who call themselves
“democrats.”
WTFU!
This article does not even mention Sam Ronan, the only DNC chair candidate bothering to truly call out the corporate corruption of the DNC. Sam Ronan polled among local districts 5 points ahead of Ellison, and 20 points ahead of Tom Perez. You do progressives a disservice in not mentioning him. Very disappointed in this article. http://observer.com/2017/02/dnc-chair-candidate-sam-ronan/
You notice how many liberal-lefties are hoping that the Democratic Frankenstein will somehow revive? All the advice from the Huff Po, Salon, Alternet, Intercept, Truthdig, Moore, etc. etc. etc. to the Democratic big wigs about how to refresh their brand?
No wonder the U.S. left is such a sad state. The pied piper of ‘change’ – Bernie Sanders – who I voted for – is now the most quoted Democrat, yet he has no strategy to actually change anything. Only a minority of actual leftists are now calling for a new party. History has been demanding one for a long time.
Maybe when Ellison is rejected this fantasy will get buried. It has been the fantasy of people who do not actually want change since the DSA and the CP advocated it from the 1950s and 1960s.
I have zero interest in the Democratic Party, and I say this as someone who grew up in a rust belt state, child of public school teachers (and strong supporter of public schools), and someone who’s never voted Republican. Right now the establishment Dems are essentially parroting Ned Flanders’ parents (The Simpsons): “We’ve tried nothing, and we’re all out of ideas!”.
The Democratic Party is at a historical turning point. They can either embrace progressive policies or become irrelevant. The only thing keeping them in existence is that they’re “not Republican”. That strategy finally shit the bed. Time to wrap corporate neoliberals in those soiled sheets and toss them in the dumpster. Anything less is just Trump/Pence 2020.
From Variety, 2/3/17:
Steve Mnuchin Faces Fraud Claim Related to Relativity Media
http://variety.com/2017/biz/news/steve-mnuchin-fraud-claim-relativity-media-1201977781/
Thank you Matt for this piece.
Pathetically, and opportunistically, operatives in the DNC seek to read as validation of their tactics in the popular vote results.
Rather, they ought to understand that millions of voters who correctly saw the alternate as a raging buffoon, ethically compromised and probably criminally liable on a host of fronts… held their noses and said, “for gawd’s sake, not that fucking buffoon!” and pulled the lever for the democrat.
It must be made clear that what Sanders campaigned on was a core complaint against a rigged system that obtained desired outcomes by those controlling the process. …as his own primary experience attests.
Corrupt, regulatory-capture, rigged system. Abetted and championed by servile Democrats…
Ds that must be pushed aside.
Perez is just another Wall Street whore. He fits right in with the rest of the DNC whores, up to and including Clinton and DWS…