James Cole was confirmed by the Senate today to the post of Deputy Attorney General at the Department of Justice (DOJ). With this, the long battle to hold him accountable for his part in what happened at AIG during the financial meltdown of 2008 comes to an ignominious end.
With the help of numerous AIG whistleblowers, GAP fought to prevent Cole from assuming his new role, where he will now help to decide who is prosecuted and who is not.
The Obama administration has picked the wrong guy. Beginning in 2005, Cole served as the Independent Consultant (IC) at AIG for five years, as a result of two deferred prosecution agreements between the corporation, the SEC and the DOJ. The US government decided that AIG needed independent monitoring as a result of an earlier corporate fraud that forced then-CEO, Hank Greenberg, to resign as part of a deal that allowed him to escape prosecution.
As the IC, Cole was supposed to review the adequacy of AIG’s internal controls over financial reporting, and recommend best practices for strengthening legal compliance. For his trouble, he and Bryan Cave (the law firm where Cole is a partner) were reportedly paid over $20 million by AIG.
Despite Cole’s “oversight,” AIG still managed to became a part of the Wall Street scene of asset-pumping wheeling and dealing. The fast maneuvering at AIG then really took off in London at AIG’s Financial Products group, which Cole exempted from SEC oversight, and the rest is history.
When Cole came under serious consideration by the Obama administration for Deputy Attorney General, whistleblowers from AIG informed GAP that Cole’s tendency was to collect a paycheck while looking the other way. The US public is beginning to understand the magnitude of the heist that took place in 2008 and 2009. Essentially, too-big-to-fail banks insured hundreds of billions in deadbeat investments with AIG, a corporation long in the hands of dubious corporate characters with a recidivist history of fraud. The investments went bad, AIG bailed out the banks and the public bailed out AIG. The fraud was not particularly clever or obscure. It was, however, enormous. So enormous, in fact, that our government now tells us we can no longer afford Medicare and Social Security. Thanks to AIG, Goldman Sachs, Deutsche Bank, UBS and others or their ilk, when the rest of us need health care or a pension, the cupboard will be bare.
What happened to the US and the international economy in 2008 and 2009 was not just a financial crisis. It was also a financial crime. The Oscar winning film “Inside Job” tells the story of the role of AIG in that crime. When he accepted the Oscar, the film’s director, Charles Ferguson, pointed out that, to date, no one involved has gone to jail. With Cole at the Justice Department, empowered to decide who’s prosecuted and who isn’t, we can be pretty sure that, in the future, no one’s going to go there, either.
Bea Edwards is International Program Director of the Government Accountability Project, the nation’s leading whistleblower organization.