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Taibbi writes: "Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades?"

Matt Taibbi. (photo: Current TV)
Matt Taibbi. (photo: Current TV)

Obama Puts Fox In Charge of Henhouse

By Matt Taibbi, Rolling Stone

25 January 13


was shocked when I heard that Mary Jo White, a former U.S. Attorney and a partner for the white-shoe Wall Street defense firm Debevoise and Plimpton, had been named the new head of the SEC.

I thought to myself: Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn't they have found someone who isn't a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?

I'll leave it to others to chronicle the other highlights and lowlights of Mary Jo White's career, and focus only on the one incident I know very well: her role in the squelching of then-SEC investigator Gary Aguirre's investigation into an insider trading incident involving future Morgan Stanley CEO John Mack. While representing Morgan Stanley at Debevoise and Plimpton, White played a key role in this inexcusable episode.

As I explained a few years ago in my story, "Why Isn't Wall Street in Jail?": The attorney Aguirre joined the SEC in 2004, and two days into his job was asked to look into reports of suspicious trading activity involving a hedge fund called Pequot Capital, and specifically its megastar trader, Art Samberg. Samberg had made suspiciously prescient trades ahead of the acquisition of a firm called Heller Financial by General Electric, pocketing about $18 million in a period of weeks by buying up Heller shares before the merger, among other things.

"It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalled. "And he wasn't just buying shares - there were some days when he was trying to buy three times as many shares as were being traded that day."

Aguirre did some digging and found that Samberg had been in contact with his old friend John Mack before making those trades. Mack had just stepped down as president of Morgan Stanley and had just flown to Switzerland, where he'd interviewed for a top job at Credit Suisse First Boston, the company that happened to be the investment banker for . . . Heller Financial.

Now, Mack had been on Samberg's case to cut him in on a deal involving a spinoff of Lucent. "Mack is busting my chops" to let him in on the Lucent deal, Samberg told a co-worker.

So when Mack returned from Switzerland, he called Samberg. Samberg, having done no other research on Heller Financial, suddenly decided to buy every Heller share in sight. Then he cut Mack into the Lucent deal, a favor that was worth $10 million to Mack.

Aguirre thought there was clear reason to investigate the matter further and pressed the SEC for permission to interview Mack. Not arrest the man, mind you, or hand him over to the CIA for rendition to Egypt, but merely to interview the guy. He was denied, his boss telling him that Mack had "powerful political connections" (Mack was a fundraising Ranger for President Bush).

But that wasn't all. Morgan Stanley, which by then was thinking of bringing Mack back as CEO, started trying to backdoor Aguirre and scuttle his investigation by going over his head. Who was doing that exactly? Mary Jo White. This is from the piece I mentioned, "Why Isn't Wall Street In Jail?":

It didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street . . .

Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.

It got worse. Not only did the SEC ultimately delay the interview of Mack until after the statute of limitations had expired, and not only did the agency demand an investigation into possible alternative sources for Samberg's tip (what Aguirre jokes was like "O.J.'s search for the real killers"), but the SEC official who had quashed the Mack investigation, Paul Berger, took a lucrative job working for Morgan Stanley's law firm, Debevoise and Plimpton, just nine months after Aguirre was fired.

It later came out that Berger had expressed interest in working for the firm during the exact time that Aguirre was being dismissed and the Mack investigation was being quashed. A Senate investigation later uncovered an email to Berger from another SEC official, Lawrence West, who was also interviewing with Debevoise and Plimpton at the time. This is from the Senate report on the Aguirre affair:

The e-mail was dated September 8, 2005 and addressed to Paul Berger with the subject line, "Debevoise.'' The body of the message read, "Mary Jo [White] just called. I mentioned your interest.''

So Berger was passing notes in class to Mary Jo White about wanting to work for Morgan Stanley's law firm while he was in the middle of quashing an investigation into a major insider trading case involving the C.E.O. of the bank. After the case dies, Berger later gets the multimillion-dollar posting and the circle is closed.

This whole episode highlights everything that's wrong with modern Wall Street. First of all, everybody's buddies with each other - cops and robbers, no adversarial system at all. As Bill Murray would say, it's dogs and cats, living together.

Here, a line investigator gets a good lead, it's quickly taken out of his hands and the whole thing is negotiated at 50,000 feet by friends and former co-workers of the top regulators now working at hotshot firms.

If Barack Obama wanted to send a signal that he's getting tougher on Wall Street, he sure picked a funny way to do it, nominating the woman who helped John Mack get off on the slam-dunkiest insider trading case ever to cross an SEC investigator's desk.

When I contacted Gary today, his take on it was simple. "Obama is not going to clean up financial corruption," he said, "by pinning a sheriff's badge on Wall Street's protector-in-chief." your social media marketing partner


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+133 # barkingcarpet 2013-01-25 16:38
JAIL the legitimate rapist bankers. And, perhaps it just does not matter? Between Fracking, GMO's, Nukes, and the Tarsands environmental devastation, it is likely game over for humans.
It is a shame so few of us stand up and put ourselves on the line to stop any of this nonssense, and humans are going to be swatted by Nature, which cares little about our idiotic machinations.
+11 # mikado12 2013-01-27 09:06
Quoting Barkingcarpet:
Between Fracking, GMO's, Nukes, and the Tarsands environmental devastation, it is likely game over for humans.

"Game over for humans" you say. Unfortunately the rich and the mean will be able to shelter from all the chaos climate change can throw up. Extreme weather is a doddle when you live in climate control house and climate control car, when food is scarce and is polluted. For the rich and the mean (perhaps a tautology) its all been already factored in. Only the 99% will pay the price. Yes you are right game over for humans but not for the sub."So it goes, so it goes"
+2 # Christopher Warren 2013-01-28 13:55
Well they'll still need people that know how to keep things going and will need security to keep the rest of us out and that will be their downfall.
We all have kids, or we all
want to survive.
we all die.
Just to be polite!
after you!
+137 # Trueblue Democrat 2013-01-25 16:49
John (Torquemada) Brennan to CIA.

Jack (Anything for a Buck) Lew to Treasury.

Now Mary Jo (Revolving Door) White to SEC.

Looks like Bush's 4th term is off to a roaring start.
+23 # zornorff 2013-01-25 17:42
Right on!
+14 # LML 2013-01-25 20:39
Couldn't have said it better!
+19 # 666 2013-01-25 22:01
and for all those obamanauts who said he'd be cracking down on wall st in this term (or just that things would be worse under the gop dimwit), was the election good for you? it was good for the gop, good for wall st, good for the mic...
+11 # A_Har 2013-01-26 02:08 will be very entertaining to hear what excuse they have for him on this one--a laugh riot.
+2 # Buddha 2013-01-29 13:29
No excuses. Just the realization that a President Romney wouldn't be doing it any different, he'd just additionally be slashing government investment and spending programs that our citizens need to pay for more tax cuts for himself and his fellow Plutocrats.
+15 # Sweet Pea 2013-01-26 10:46
And whoever told you that government is for the "people" was just telling you what they know you want to hear. This is a government "of" the people, "by" the paid-off politicians, "for" the wealthy.
Our only choice is the lesser of two evils- Unfortunate but true.
+3 # Allen 23 2013-01-28 09:09

The Democratic Party plays an indispensable role in society's political machinery. This doesn't mean it has any power, in terms of controlling the state or setting policy. It means that without the existence of the Dem Party, the US could no longer maintain the pretense that it's a "democracy." If the Dem Party disintegrated, the US would be revealed for what it really is -- a one-party state ruled by a narrow alliance of business interests.

As long as the Dem Party exists, most Americans will believe we have a "democracy" and a "choice" in how we are ruled. They will not despair, and will not revolt, as long as they have this hope for "change within the system." From the system's point of view, this mechanism serves as the ultimate safety valve -- it insures against a despairing populace, thus eliminates the threat of rebellion; yet guarantees that no serious change to the system will be mounted, because the Dems weren't designed to play that role in the first place.
+85 # ghostperson 2013-01-25 17:01
Why break with a proven record of failure: Paulson, Geitner, now White?

Money, power and influence talk--and walk all over Joe Blow and all the Blowettes.

An insurance company insured its elite investors at some point in the past few years that they had nothing to fear because we no longer have an economy but a "plutonomy."

Do we require any further proof than the consistent appointment of Big Money shills to the most powerful positions overseeing our ersatz economy?

Michael Lewis says that it is understandable by Big Money would seek input into reform of the financial sector, what he doesn't understand is why anyone would listen to its denizens.

The cavalry isn't coming, folks. It is business as usual that allows all the brown stuff to roll downhill on ordinary people.
-90 # John Somebody 2013-01-25 17:15
I usually hope that seasoned reporters will not use acronyms, or initialisations , until after having spelled what the initials stand for.
I usually don't associate Taibbi with arrogance, but to present jargon, acronyms, initialisations (such as SEC), as though everyone knows what it all means, is bad journalism, if nothing else.
+60 # CharlieL 2013-01-25 17:56
I won't comment on any other acronyms in Matt's article, but if anybody reading this didn't know what SEC meant, they would have quit reading after the first paragraph, IF they would have started reading at all. It may not be an excuse for an error in journalistic clarity, but really, I mean, REALLY.
+14 # MidwestTom 2013-01-25 20:39
Another well informed voter in out midst I see.
+19 # Merschrod 2013-01-25 18:24
OMG, & IMHO FWIW we do know or we google.
+9 # 666 2013-01-25 22:04
john, whats the problem? your sugar daddy work on wall street? dont like matt dissing on the Quality? speak truth to power. If you don't like it, I suggest you check the fox news blogs...
+14 # A_Har 2013-01-26 02:06
Well, if people don't know what the SEC is considering all the nasty financial news we have had on Wall Street since 2008, it is LONG past time that they learn about it.
0 # Nominae 2013-01-26 04:12
Quoting John Somebody:
I usually hope that seasoned reporters will not use acronyms, or initialisations, until after having spelled what the initials stand for.
I usually don't associate Taibbi with arrogance, but to present jargon, acronyms, initialisations (such as SEC), as though everyone knows what it all means, is bad journalism, if nothing else.

You are correct in that the old "rule" was spelling out any term before introducing the acronym. Now, however, search engines are available for almost instantly looking up any acronym for which the reader may be unfamiliar.
+29 # Rita Walpole Ague 2013-01-26 05:13
Oh, come on, John Somebody, those reading this article know or can figure out any and all acronyms.

Instead of bashing Matt Taibbi needlessly (i.e. why not demand the use of United States of America prior to using USA?), why not instead join with us grateful readers, and congratulate with true gratitude this great, truth outing journalist for his A+, so informative article?
-6 # Virginia 2013-01-25 17:34
Well, she can't claim she couldn't find the "intent" factor like Breuer... A good defense attorney has to understand all aspects of the crime in order to present a winnable argument. If you aren't smart enough to know the subject in-depth, you'll get caught with your pants down and blind-sided by the opposition.

While I'm not thrilled with Mary Jo and I'd rather have seen Spitzer or a good prosecuting attorney, I'm willing to give her a chance because all it will take is one mistake or a lenient decision and she'll be crucified by the other side for being female and soft. I do not expect her to use Kidd gloves and we'll have to wait and see how brutal she intends to be.

Again, the "intent" is deeper than just scratching the surface of the crime - it's spelled out in the patents and who called the shots. Judge Rakoff sent strong messages to the SEC that settlements without admitting their guilt are unacceptable.
+14 # Ray Kondrasuk 2013-01-26 04:57
Spitzer appeared on the Rachel Maddow show last night. They bantered about which White would show up... the one that prosecuted crime syndicate bosses and World Trade Center attackers (first time... basement truck bomb)

...or the one that shielded Wall Street shenanigans?

Which witch with the switch?
+2 # Virginia 2013-01-26 22:55
What is wrong with you thumbs down people? Can you even read and comprehend elementary prose?
0 # Virginia 2013-01-26 23:18
Or is that the number of infiltrated Republicans we have?
0 # flippancy 2013-01-27 12:19
Quoting Virginia:
Or is that the number of infiltrated Republicans we have?

Could be. I don't understand why you got those negs.
+32 # cmp 2013-01-25 17:39
In the 8 presidential election cycles that I have been eligible, I have voted Independent every time.

I have also worked on many Independent presidential campaigns over the last 30 years..

We've had some great~great Candidates but the cultural hegemony seems to be only getting worse within the overall population despite the fact that their frustration levels have universally reached terminal limits.

Certainly, that's at least partly why the Independent Voter Registration (now over 40%) is the number 1 registered voting body in the country.

Short of someone with the pockets of a Perot, are their any idea's out there on how we may build some serious third party campaign noise going into 2016?

We saw how "legitimate" our Democracy was for the Occupier's, Kent State, on & on... But, you folks know, their is nothing that shakes the Aristocracy as much as a good lefty. haha!
+14 # CharlieL 2013-01-25 17:58
This was disappointing. Not surprising, but still disappointing.
+12 # tbcrawford 2013-01-25 18:01
Well, You all demanded a woman...Now we've got one guaranteed to discredit our entire gender...and thus end the debate. If you haven't noticed, the attack is ramping up on everything female!
+12 # Martintfre 2013-01-25 18:05
//Obama Puts Fox In Charge of Henhouse//

I would add one word to that title, "Again"
so it would read 'Again Obama Puts Fox In Charge of Henhouse'

don't act surprised - that is what fascist do.

We saw it with OweBamas vote as senator to bail out the banksters and we saw it as OweBama shepherded funds guaranteed upon the backs of the tax payers to bail out Obama's big buck contributors.
+22 # phrixus 2013-01-25 18:28
Same shit, different day...
+10 # wantrealdemocracy 2013-01-25 21:30
Same shit day after day---and on and on and on. Still voting for a D or an R? You got some of that shit on your face.
+2 # phrixus 2013-01-26 07:53
No, sir. My face is pristine.
+20 # jon 2013-01-25 19:26
Do you recall Hank Paulson working for Bush? Now there was a Fascist duo.

Nothing has happened since then to match how flagrant that team was!
0 # FDRva 2013-01-29 18:36
I recall Obama working for Geithner--an equally fascist duo.

I prefer Glass-Steagall to Obama worship.
+8 # MidwestTom 2013-01-25 20:41
Let's hear it for Democrats protecting their Wall Street masters.
+3 # DPM 2013-01-25 20:54
The latest in a line of Wall Street "toadie" presidents.
How does one get rid of cancers?
+12 # seeuingoa 2013-01-25 21:03
What a nice world !

And on top of all these horror stories
I see that women now are equal with men
on the battlefield.

I thought that women were far too clever
to compete with men in killing, in
unnecessary wars overseas.

And I don´t think that Vagina Warriors
(V W) is what is needed in this world
on the way to a peaceful future.
+5 # hammermann 2013-01-25 21:56
West Virginia reversed? Think you might get some mail on this, but yeah, I think most of the women who want to be in the military are crazy, like half the men. Does it really make you equal to kill?
+9 # Regina 2013-01-26 01:26
Seeu-- Re women in combat: They've been in combat for decades, with all our recent wars. Like Rep. Tammy Duckwirth, to cite just one. The difference now is that they might get ranked and paid commensurately.
-1 # grandma lynn 2013-01-27 08:08
They're running out of acceptable men warriors, so now must turn to women warriors. If the trend continues, we'll see U.S. child-warriors, and dropping out of school will be the door opening to that "career" or "job" as soldiering is now being called.
+11 # nancyw 2013-01-26 01:31
I really don't understand his appointments. This is really getting old. Is this an unconscious way of undermining his status and power as our president? Is there some deep seated self-destructiv e issues here? Is it a black man trying to prove he's not playing favorites? Is this bending over backwards to not be seen as a black man? We want this black man to be black!! And we want him to make good on his promises. What is the problem?!
+4 # grandma lynn 2013-01-27 08:06
What is the significance of Michelle's eye-covering bangs? She/they can't bear to look at the weirdness of his going in a polar opposite way from what he said he'd do? Nothing has been about change, and has been said before, elsewhere, we now enter the fourth Bush-Cheney term: wars, Guantanamo, their energy policy, no environmental care, no labor care, no whistle-blower care, no food-safety care, no, no, no. Just like Bush-Cheney never went into retirement.
+5 # drivensnow 2013-01-26 06:46
Move along people.....noth ing to see here
+10 # bikewriter 2013-01-26 10:49
Clearly, if Wall Street doesn't get cleaned up, very little else of substance is going to change over the next four years, considering how they run this country. This is disappointing news, indeed. I was hoping that, absent another re-election campaign to fund, Obama would distance himself from the root cause of so many of our problems.
0 # Polisage 2013-01-26 11:26
Mary Jo White -- what was her verdict on the Marc Rich pardon?
+21 # Edwina 2013-01-26 12:26
Our current practice of socialism for the rich is not news, but I appreciate Matt Taibbi's continuing investigation and presentation of how it works. Whether we call it socialism for the rich, or oligarchy, or corporate/finan cial-ocracy, it is a system carried on the backs of the poor and middle classes.
+6 # Eric Saunders 2013-01-26 12:47
What about Mary Jo White’s role in concealing for years the indictments of Khalid Sheikh Mohamed and Ali Mohamed, allowing these two terrorists freedom to play key roles in planning 9/11?

See Peter Lance, Triple Cross, 284-85, 317-18, 354-56, 364-65; cf. 466; Peter Dale Scott, The Road to 9/11, 157-58. Taibbi has been a leading denouncer of the 9/11 truth movement. Perhaps he should think again.
0 # seeuingoa 2013-01-29 15:33
Quoting Eric Saunders:
What about Mary Jo White’s role in concealing for years the indictments of Khalid Sheikh Mohamed and Ali Mohamed, allowing these two terrorists freedom to play key roles in planning 9/11?

See Peter Lance, Triple Cross, 284-85, 317-18, 354-56, 364-65; cf. 466; Peter Dale Scott, The Road to 9/11, 157-58. Taibbi has been a leading denouncer of the 9/11 truth movement. Perhaps he should think again.

Yes! please think again !
THAT would be a story for Matt Taibbi.
+8 # ganymede 2013-01-26 15:22
I have not come here to defend Obama, and, yes, this is yet another stupid appointment, yet, Obama is more than the the lesser of two evils. Yes, he is in the pocket of the financial criminals of Wall Street, but, I ask, what do you think would have happened if Romney were President? Remember, there is a growing corp of real Democrats in the Senate and House (Eliz Warren, Alan Grayson and others) who are going to apply more and more pressure, and if we, the unwashed leftists and progressives keep holding Obama's feet and ass to the fire, we will make progress. Being cynical and nihilistic isn't any better than what the rightwing nutjobs are doing to undermine our society.
-4 # cgberling 2013-01-26 17:30
Keep in mind the old saw about "it takes one to know one." Who better to counteract the criminal than one who knows how the criminal mind works. Maybe Obama is smarter than you think. I recall that convicted burglars and the like were the best ones to train the investigators. Think about it!!
+1 # tm7devils 2013-01-26 22:33
Mary Jo gives a whole new meaning to "screwing your way to the top" this case she's screwing 300+ million people...and none of them are satisfied! (Well...a few are)
Talk about a bum fuck...
+3 # mdhome 2013-01-27 14:49
Like George Carlin said. "They own your ass" Bow down to your owners.
+4 # lark3650 2013-01-28 11:30
Another good example of my father's great advice: "Don't listen to what people say; watch what they do."
0 # kitster 2013-01-28 18:21
this is YOUR federal day, yesterday and forever. protect the money at all costs. if you can, speak money to power and you will procure it. our votes elect who we want to have the wealth have coming to them.

in the immortal words of thomas nast...which should be inscribed over the portals of both houses of congress and the white house..."a public office is a public lust."

may i propose a new preamble to our constitution... "thems that have the gold, rules."

all the rest, shut up and eat your crow.
0 # FDRva 2013-01-29 18:28
What a shock!?

Wall Street made Barry Obama President and he returns the favor with bigger-than-Bus h bailouts and bigger than Bush wars.

But at least he is a Wall Street whore 'of color.'
0 # FDRva 2013-01-29 18:51
The great irony in all this is that Bill and Hillary Clinton in their youth were genuine progressives.

Barry Obama was never anything but a self-absorbed Wall Street shill.

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