Who Were the Real Fraud Busters?

Faced with a banking crisis and an epidemic of white-collar crime, the president convened a special meeting of 88 top prosecutors and declared war on fraud, as The Los Angeles Times reported:

“We will not rest until the cheats and the chiselers and the charlatans spend a large chunk of their lives” behind bars, [the president] told the prosecutors, brought in from across the country…

“It is your sacred duty to right these wrongs, to stand up for the vulnerable against the unscrupulous, the guileless against the conniving,” [he] said.

President George H.W. Bush, when he was still vice-president. Photo: David Valdez.

Those ringing words were just the kind of rhetoric you’d expect from President Barack Obama, right?

Except they were made by the decidedly uncharismatic President George H.W. Bush in his kick-off to a campaign against savings & loan fraud in 1990.

The underrated President Bush put the prestige and authority of his presidency behind this campaign.  And he backed up his words with action, as the LA Times reported at the time:

Bush endorsed legislation that would authorize wiretapping in investigations of bank fraud and related offenses; reduce barriers to restitution for victims of financial fraud, and permit lawyers, investigators and accountants from elsewhere in government to be assigned to the Justice Department’s drive against fraud at financial institutions.

Result: nearly 1,100 convictions of savings & loans executives in the years following that disaster.

George W. Bush, whose presidency cannot be underestimated enough, also had a strong record in this area. Though not as hands on as his father was (maybe because of his long family ties to Enron chairman Kenneth Lay), he nonetheless took an aggressive stance when the Enron, WorldCom, and other corporate scandals hit. He supported the Sarbanes-Oxley Act, which gave prosecutors new tools to combat corporate fraud, and his Justice Department went after corporate criminals with guns blazing.

Bush’s attorney general, John Ashcroft, whom liberals loathed, spearheaded a corporate fraud task force that produced, after five years, 1,236 corporate fraud convictions, including 214 CEOs and presidents and 53 chief financial officers.

And President Obama? Well, as I wrote in my column this week, no one from the big Wall Street firms has been successfully prosecuted for their actions during the financial crisis.

The president’s attorney general, Eric Holder, set up a big financial fraud task force and got lots of convictions—against small-fry scamsters, some large Ponzi schemers and some big inside traders. But they’re not connected with the financial crisis per se.

Why not? Well, the cases are very different, but I think it goes deeper, to the Nixon-goes-to-China syndrome.

Both Presidents Bush were solid pro-business Republicans who could claim to be saving capitalists from themselves. President Obama, attacked variously as a Marxist, socialist, what have you, has been concerned about seeming too anti-business, the usual rap against Democrats.

Without clear signals from the top—and I mean real follow-through, not just speeches—the Justice Department has been overly cautious.

The president has stepped up his rhetoric lately as he embraces his inner Roosevelt, calling for harsher penalties for certain kinds of corporate fraud. And the heat is on Justice, so 2012 may produce a couple of high-profile indictments.

But this “liberal” president has a long way to go to catch up with the records of his two Republican predecessors named Bush in going after powerful corporate criminals.

Which recent president do you think did the most to fight corporate fraud? Please take our poll.

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