By Jesse Eisinger
Review by David Wineberg
The dirt under the carpet
Any book that can definitively answer the question of why no executives have gone to jail for the Financial Crisis deserves our attention. And in this case a Pulitzer Prize. The Chickenshit Club is a fast moving, fly on the wall, disheartening look at the deterioration of the Justice Department and the Securities and Exchange Commission, written sympathetically, thoroughly, but mostly - engagingly. It is a book of superheroes.
There are 94 US Attorney offices around the country. They operate on their own, independent of the Justice Department, their dotted line overseers. They fight over cases, work (and fight) with the FBI and the SEC, or work around them, and seem to take their cues from the news. From the 60s to the 90s, they developed into the good guys, fighting the good fight and taking great pride in their accomplishments. They turned up clues, did forensic accounting, and turned (“flipped”) lower level criminals to get the executives. They were saving the country from itself. But the days of young aggressive lawyers nailing an Ivan Boesky or a Michael Milken are gone.
With George W. Bush, Justice deteriorated under Secretary Alberto Gonzalez, who was forced to resign, and the SEC deteriorated under Christopher Cox, whose intent appeared to be to simply let it collapse from inactivity. Budgets were slashed and staffs reduced at the same time as demand for action increased. This is standard procedure for discrediting an institution. The stories of confusion, conflict, lack of direction, leadership or policy are all detailed here. The frustration of the prosecutors is palpable. In the current administration, you can see it real-time at Education, State, and the EPA for example.
The answer to the question is that everything changed. Prosecutors today are actually afraid to file suit, fearing they might lose and have black marks on their CVs. (James Comey famously called them chickenshits.) They have little or even no trial experience any more. Everything is a negotiated fine (never paid by the perpetrators). They have been battered by the collapse of Arthur Andersen, which put a lot of employees on the street, and has given us ridiculous arguments over “too big to fail” and markets that “self-regulate”. They no longer work for the “public good”. They work to get better jobs in big law firms. They want to take their faultless experience in government to make themselves millions from the other side. The revolving door makes this one huge club. This is so far removed from their predecessors as to be unrecognizable. And Eisinger makes this shockingly clear as he proceeds from decade to decade.
What’s great about The Chickenshit Club is that Eisinger has created a huge cast of great characters. You see them giving news conferences or running from courtroom to courtroom, but these federal prosecutors are a different breed of human, and Eisinger profiles them in depth. They spend 16 hour days in crummy offices, scream and yell at each other, swear constantly, and have no fear of taking on the biggest and the wealthiest. Equal treatment under the law actually meant something to them, and they sought out prosecuting positions for the wide-ranging freedom and satisfaction they offered. There are several larger than life heroes here. The most notable is probably (Judge) Jed Rakoff, who began at the SEC and as a judge, had the temerity to refuse settlements between the government and the corporate criminals, because they were superficial, trivial, insufficient, and demonstrated no sense of justice whatsoever. As a result, settlements now avoid approval by the courts.
The final impression is that there is an absolute rainbow of crime constantly glowing over corporate America. Business is inventive, sneaky, and determined to take every underhanded shortcut it can, at the expense of its customers and shareholders. What The Chickenshit Club points out is that now more than ever, we need strong overseers, strong regulations, strong deterrents, and strong justice. Today, we have none of them, and they continue to decline from their low positions.
Editor's note: This advance review has been published with the permission of David Wineberg. Like what you read? Subscribe to the SFRB's free daily email notice so you can be up-to-date on our latest articles. Scroll up this page to the sign-up field on your right.