By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for .
Attorney General Jeff Sessions asked 46 US Attorneys (USAs) to resign on Friday– including Preet Bharara, US attorney for the Southern District of New York, whom Trump had asked in a previous November 2016 meeting to in his post. Bharara failed to comply with the resignation request, and Sessions fired him on Saturday, as the New York Times reported in .
To those readers coming late to this party, this ain’t no , folks. USAs are political appointees, appointed to serve four year terms, yet as is the case with other political appointees, they serve at the pleasure of the President. This means they can be dismissed at any time, without cause.
In days gone by, it was customary for USAs to serve out their four year terms when a new President took office (although in the first two years of the Reagan administration, ). That’s no longer the case. In fact, in March 1993, Attorney General Janet Reno took a similar action, asking 93 holdover USAs to resign. This was the largest such request to date yet the New York Times account Attorney General Seeks Resignations from Prosecutors only noted laconically:
All 93 United States Attorneys knew they would be asked to step down, since all are Republican holdovers, and 16 have resigned so far. But the process generally takes much longer and had usually been carried out without the involvement of the Attorney General.
Please note the lack of hysteria. (In his earlier incarnation as a USA, Sessions was one of these 93.)
In fact, that 1993 NYT account on Reno’s action continues in a downright sympathetic vein:
Ms. Reno is under pressure to assert her control over appointments at the Justice Department. She was Mr. Clinton’s third choice for Attorney General and arrived after most of the department’s senior positions were already filled by the White House.
Please bear with me as I recap some further recent history. Vox reports in that early in his first term, President George W. Bush approved a similar move, also removing holdover USAs– yet allowing them until June 2001 to clear out. And in May 2009, Politico reported in on the new administration’s plans to take a similar action, and quoted then-Attorney General Eric Holder as saying, “[E]lections matter–it is our intention to have the U.S. Attorneys that are selected by President Obama in place as quickly as they can.”
Anger and Hysteria Ensues
Against this backdrop, I find reports such as these at best baffling, if not downright disingenuous. Take CNN, for instance: , which reports:
The Justice Department announced the firings Friday afternoon, and many prosecutors had not been formally notified or even told before they were fired, according to a law enforcement source. Acting Deputy Attorney General Dana Boente was in the beginning stages of calling each US attorney individually to tell them they had to resign when the DOJ issued a statement.
A law enforcement source charged that “this could not have been handled any worse” because there was little warning. Many prosecutors found out through media reports that they had to resign today.
Really, cry me a river. I can’t believe any of these prosecutors is exactly surprised to be asked to resign.
I’ve read through several media reports, and it seems that while none has been able to make the inconvenient facts of how Trump’s predecessors treated the issue disappear, they can hammer on the “abruptness” of the announcment. From CNN again:
It is common for administrations to ask holdovers to step down, but what is less common is the abruptness of Friday’s announcement. Two sources familiar with the Justice Department tell CNN they were unsure for some time whether such an action would happen and had been looking for some type of announcement — but received radio silence.
“There was not any particular clarity from the Justice Department as to what the future held for the US attorneys” until now, one source said.
Over to the Grey Lady, who in an earlier account, used surprisingly identical language, (I say, order those folks at CNN a thesaurus, please). From Friday’s NYT:
The abrupt nature of the dismissals distinguished Mr. Trump’s mass firing from Mr. Clinton’s, because the prosecutors in 1993 were not summarily told to clear out their offices.
Oh, I see. That makes the Trump action an abomination, and the Clinton dismissals– which up to that date, had not been undertaken on such a scale, nor so rapidly– perfectly understandable.
What does Senator Dianne Feinstein think about the dismissals? According to a :
“I’m surprised to hear that President Trump and Attorney General Sessions have abruptly fired all 46 remaining U.S. attorneys.
I could go on in a similar vein, but I think readers get my point.
The “Sheriff of Wall Street”
Much pearl-clutching has ensued over the decision to include US Attorney for the Southern district of New York Preet Bharara in the dismissals. Trump had met with Bharara in November, and asked him to stay on, and he’d agreed. But something changed between now and then. When Bharara refused to resign after being instructed to do so, he was fired, as the New York Times reported in .
I’ve seen considerable speculation about why Trump changed his mind– ranging from speculation about the deterioration of Trump’s relationship with Senator Chuck Schumer (Bharara is a Schemer protege), to some musings that Bharara might have been pursuing an inquiry into Trump’s alleged (the link includes Harvard Law School constitutional law professor Laurence Tribe’s tweet about this latter claim; he’s a major player in the targeting of Trump’s business conflicts. I’ve discussed why I regard these efforts as a non-starter in these two posts: Law Profs Sue Trump, Alleging Violation of the Emoluments Clause and US Constitution’s Emoluments Clause: a Nothingburger for Trump.) I have no special insights to offer here so I’m not going to attempt any.
What I’d like to address here is Bharara’s over-inflated reputation as the ““– evidently bestowed by those who don’t really have much understanding of Wall Street or finance. (Bharara has also targeted public corruption, but due to space considerations and in the interests of keeping this post focussed, I’ll not discuss those here.)
Bharara’s reputation for taking on The Street is based on his unbeaten reputation in bringing successful insider trading prosecutions. That record was at one point threatened by a US Court of Appeals for the Second Circuit decision, , which overturned one of these convictions, and appeared to place others of these prosecutions in jeopardy. Yet a December 2016 United States Supreme Court decision, , overturned the appellate decision, safeguarded the convictions, leaving his record on insider trading convictions secure. (I posted about that decision in Insider Trading: Supreme Court Decision Enables Securities Law Theater.)
Time magazine has been a major promoter of his reputation, as has been The New Yorker, as part of its downward spiral into hagiography and hysteria. On Saturday, the magazine published, T. Allow me to quote from one of these New Yorker pieces, , here:
Before Bharara became known as the scourge of insider trading—a 2012 Time cover story called him the “top cop” of Wall Street—he gained attention for the cases he did not bring against the financial industry. He took office in 2009, at the height of the mortgage crisis, and the Southern District, along with the Justice Department, in Washington, conducted investigations of the major firms and individuals involved in the financial collapse. No leading executive was prosecuted. Bernie Sanders, the Presidential candidate, says in his stump speech, “It is an outrage that not one major Wall Street executive has gone to jail for causing the near-collapse of the economy. The failure to prosecute the crooks on Wall Street for their illegal and reckless behavior is a clear indictment of our broken criminal-justice system.”
In a conversation in his office, Bharara rejected the critique. Without going into specifics, he said that his team had looked at Wall Street executives and found no evidence of criminal behavior. “It shouldn’t come as a surprise to anyone that the things that we had either been assigned before I got here or had the initiative to look at were looked at really, really carefully and really, really hard by the best people in the office,” he said. “There’s a natural frustration, given how bad the consequences were for the country, that more people didn’t go to prison for it, because it’s clearly true that when you see a bad thing happen, like you see a building go up in flames, you have to wonder if there’s arson. You have to wonder if there’s anybody prosecuting. Now, sometimes it’s not arson, it’s an accident. Sometimes it is arson, and you can’t prove it.”
Amazingly, The New Yorker’s Jeffrey Toobin, lets it go at that that. He doesn’t himself come back at Bharara with any rebuttal, nor does he turn to other lawyers, critics, political figures, or academics who at the time of the financial crisis and subsequently, have spelled out various pathways to prosecution. (As just one example, Yves has written on several occasions, about how the Sarbanes-Oxley Act of 2002 was designed to make it impossible for senior corporate executives to disclaim knowledge of problematic activity to avoid liability. The legislation required companies to put effective internal control procedures in place, and for the CEO and CFO to certify personally the accuracy of financial statements and the adequacy of internal controls. Yet Bharara and the rest of the Department of Justice (DoJ) failed to use this statutory authority.)
Instead, Toobin turns to the widely feared Eric Holder for further exculpation of Bharara’s failure to bring any major Wall Street prosecutions in any area other than insider trading:
Eric Holder, who, as Attorney General, was Bharara’s boss for six years, made a similar point. “Do you honestly think that Preet Bharara and all those hotshots in the U.S. Attorney’s office would not have made those cases if they could?” he said. “Those are career-making cases. Those cases are your ticket. The fight would have been over who got to try them. We just didn’t have the evidence.”
Oh, I see.
Is it any wonder no wonder that seasoned attorneys turned to deriding the DoJ as the Department of Jokes, for its record in pursuing white collar and financial sector crime, as I wrote in The Obamamometer’s Toxic Legacy: The Rule of Lawlessness?
As I’ve written before and will no doubt write again: the Trump administration in many ways terrifies me. This isn’t one of them. These USA dismissals are pretty much now SOP for incoming administrations.
Now, to be sure, it’s unlikely Trump’s going to appoint someone to replace Bharara who’ll be more of a junkyard dog on Wall Street prosecutions. If you believe that a sheriff of Wall Street should focus on insider trading convictions, to the exclusion of more systemic abuses, Bharara’s certainly your man. Yet if you’d hoped for something better, Bharara’s been a major disappointment, and I’m certainly not going to mourn his firing.