Comey Saw It Coming: Why No One Went To Jail For The Housing Crash

Jul 18, 2017

James Comey wasn’t the nation’s embattled former FBI Director in 2002, but the top federal prosecutor in Manhattan. He was giving a speech to a group of fellow attorneys -- men and women with impeccable courtroom records. 

Comey was not impressed.

On this week’s episode of the Criminal Injustice podcast, University of Pittsburgh law professor and host David Harris talks to Pulitzer Prize-winning journalist Jesse Eisinger, who said Comey’s estimation of his colleagues wasn’t a professional discourtesy. Comey was pointing to a widespread perception at the time that the federal government was failing to appropriately prosecute top business executives.

Six years later, millions lost homes, jobs and savings in the 2008 crash, and no one went to jail. 

Their conversation has been edited for length and clarity.

Jesse Eisinger, senior reporter at ProPublica, is the author of "The Chickenshit Club: Why the Department of Justice Fails to Prosecute Executives" published July 11, 2017, by Simon & Schuster.
Credit Courtesy Simon & Schuster

DAVID HARRIS:  Comey used a word we can't repeat on the radio that you reference in the title of your book. He called them something like chickens. What was he trying to get his fellow prosecutors to understand?

JESSE EISINGER: Jim Comey was saying to young prosecutors that their job was not about winning, that they couldn't be focused on just getting their best record that they could get -- taking the low hanging fruit. Their job was about more than that. It was about doing justice. And so he was urging his prosecutors to [try] ambitious cases, righteous cases, and not to worry about winning and certainly not to behave as if winning was the only thing that mattered.

HARRIS: Now in the 1980s with the junk bond and insider trader cases, then late in the 90s and early 2000s with the dot com bust, the Department of Justice prosecutors did go after these kinds of big cases and the people who ran them.

EISINGER: Yes, in the Enron era they prosecuted almost all the top executives from almost all the companies that were involved in big accounting scandals. So we remember Enron with Jeff Skilling and Ken Lay, but they prosecuted top executives from Tyco, WorldCom, Adelphia, Global Crossing -- almost all the significant companies.

HARRIS: And the executives of those big companies, some of them went to jail, didn't they?

EISINGER: Exactly. In fact most of the executives who were tried were tried successfully and they went to prison. Jeff Skilling went to prison and Bernie Ebbers went to prison. 

HARRIS: But after those convictions and the conviction of the Arthur Andersen accounting firm, a backlash comes. Where'd that from? Why?

EISINGER: Well, corporate America fought back, and they fought back in a way that the public couldn't see very easily. ... And what happened was, they succeeded. That lobbying effort succeeded in having the Department of Justice roll back their policy and deprive prosecutors of necessary weapons in the fight against corporate crime. So instead they started to turn to settling with corporations, settling for money. The company pays a big fine and everybody moves on. They don't indict big corporations anymore, and unfortunately they don't go after individuals, especially individuals at the top, the top executives. 

HARRIS: So now we get to 2008, 2009 -- the crash of the housing market, massive frauds are revealed, the worst financial disaster since the Great Depression. And no one gets prosecuted. Why?

EISINGER: Well the Obama administration dithers and they make a series of bad decisions that don't put anybody in charge. They don't assign prosecutors to have sole responsibility for these cases. They divvy them up to various offices around the country, many of which don't have skills to do this, and they instead focus on settlement. Meanwhile some of the star prosecutors have such a winning streak that they don't want to jeopardize that. 

HARRIS: So what needs to happen now to get things right?

EISINGER: Well the Department of Justice's culture needs to be overhauled and changed to give prosecutors the resources, time and pay incentives to investigate very difficult cases against individuals executives at the high levels of corporate America. They just need a whole overhaul of how they approach this area of law. 

Criminal Injustice is an independent podcast recorded and produced in partnership with 90.5 WESA. Find more at criminalinjusticepodcast.com.