'Fast and Furious' ATF Official Granted Paid Leave to Take 6-Figure Job at JP Morgan

CNS News
Susan Jones

The long-awaited inspector general's report on the Justice Department's botched gun-running scheme is finished, Rep. Darrell Issa (R-Calif.) said on Wednesday.

But along with that news comes more questions: Issa and Sen. Chuck Grassley (R-Iowa) are demanding to know why a top ATF official involved in Operation Fast and Furious remains on paid leave from ATF -- while simultaneously drawing a six-figure salary from J.P. Morgan, a major investment bank.

In a letter to the acting head of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Issa and Grassley asked why the Justice Department would approve such a special arrangement for Bill McMahon.

(Pardon the goofy player)

“Under any reading of the relevant personnel regulations, it appears that ATF management was under no obligation to approve this sort of arrangement,” wrote Issa and Grassley. “Given McMahon’s outsized role in the Fast and Furious scandal, the decision to approve an extended annual leave arrangement in order to attain pension eligibility and facilitate full-time, outside employment while still collecting a full-time salary at ATF raises a host of questions about both the propriety of the arrangement and the judgment of ATF management.” Issa and Grassley say the ATF has made it possible for McMahon to "double dip for nearly half a year by receiving two full-time paychecks -- one from the taxpayer and one from the private sector."  They noted that the treatment of McMahon is "in sharp contrast" to how the ATF has treated whistleblowers such as Special Agent John Dodson, "who is told he must wait until the Inspector General’s report is complete before the agency will even consider his simple request for a statement retracting the false statements made about him by agency leadership.” Issa and Grassley noted that ATF approved the arrangement for McMahom before the Justice Department inspector general finished his report on the failed gun tracking scheme.

 As for the IG report examining Fast and Furious, as well as the Justice Department's knowledge of and response to it, Issa said the report is done: "We know that the IG report is finished, we know that it's at Justice, and we know that we can't see it. We're hoping, though, that they will release it," Issa told Fox News's Greta Van Susteren on Wednesday. Issa said he's "positive" that the IG's report "is going to say the same thing our report has said, which is -- this is somebody (Bill McMahon) who is responsible for and signed documents that he told our committee he didn't see, didn't know about. Now, the only question is -- did he not read them and sign them?" "We're dealing with somebody who should have been fired from ATF," Issa added. According to the final congressional report on Fast and Furious, William McMahon was a supervisor at ATF headquarters who served as a "crucial link" between ATF headquarters and the Phoenix Field Division. "He received a wealth of information about Fast and Furious” -- including the fact that straw purchasers had bought over 900 firearms, many of which ended up in Mexico -- "but did not view it as his role as supervisor to ask questions about events in the field. He has publicly admitted to having failed in his duty to read information presented to him about the case."

The report says McMahon rubber stamped critical documents that came across his desk without reading them. McMahon also "gave false testimony to Congress about signing applications for wiretap intercepts in Fast and Furious," the report says.  Operation Fast and Furious began in the fall of 2009 as part of a plan to track guns illegally purchased in the U.S. to Mexican drug cartels. The ATF lost track of most of the 2,000 weapons that were allowed to "walk" into Mexico, and two of the straw-purchased guns ended up at the scene of a U.S. border agent's murder. (Issa told Fox News that news of McMahon's double-dipping will produce "more outrage for the family of fallen Border Patrol Agent Brian Terry.) According to the final congressional report, "From the outset, the case was marred by missteps, poor judgments, and an inherently reckless strategy." Issa, who chairs the House Oversight and Government Reform Committee, has accused Attorney General Eric Holder and other Justice Department officials of undermining his investigation into Fast and Furious.

Obama Asserts Executive Privilege Over Fast And Furious Fiasco

ZeroHedge
Tyler Durden

If there was any confusion whether Obama is in fact Bush, or maybe even Nixon, this has now been squashed. From Fox:

President Obama has granted an 11th-hour request by Attorney General Eric Holder to exert executive privilege over Fast and Furious documents, a last-minute maneuver that appears unlikely to head off a contempt vote against Holder by Republicans in the House. The House Oversight and Government Reform Committee is expected to forge ahead with its meeting on the contempt resolution anyway.

Holder, whose guilt is implicitly proven by this action, is now likely absolved of everything as the TOTUS has effectively onboarded all of his "balance sheet risk." And why not. The Fed does it for everyone else every day.
As a reminder, from the WSJ:

A showdown Wednesday in the House between Attorney General Eric Holder and Rep. Darrell Issa comes down to this: Who will blink first in a dispute over Justice Department documents Mr. Issa is demanding related to the botched Fast and Furious gun-trafficking probe?

California Republican Mr. Issa is chairman of the House Oversight and Government Reform Committee, and he has called a 10 a.m. meeting of his panel to vote on a resolution to sanction Mr. Holder with contempt of Congress. The two men held a meeting Tuesday that lasted only 20 minutes. And from their accounts, it has become a game of chicken, with each side insisting the other act first to resolve the standoff.

Mr. Holder said Mr. Issa rejected his offer to provide documents because the lawmaker wouldn't agree that they would fulfill the subpoena, effectively ending the contempt threat. Mr. Issa said the attorney general didn't come prepared to provide documents and that the contempt threat can't be removed until the documents are produced.

At issue are Justice Department documents that Mr. Issa and Sen. Charles Grassley (R., Iowa) have sought and that the department resisted turning over in the congressional investigation into Fast and Furious. The department said the documents reflected internal deliberation or were related to continuing criminal investigations and therefore weren't subject to congressional subpoena.

If a majority of the committee votes for contempt Wednesday, the matter then could be taken up by the full House. If the House votes in favor, then a contempt citation could be referred to the U.S. attorney for the District of Columbia, an appointee of President Barack Obama who is in Mr. Holder's chain of command. And then things become legally more uncertain. It isn't clear if Congress can compel an executive-branch official to prosecute the attorney general. In the Bush administration, the House voted to hold White House officials in contempt in a similar documents dispute and the Bush-appointed attorney general ordered the U.S. attorney to disregard it. The matter was eventually settled with the production of documents before a civil-court battle ran its course.

The main issue in Fast and Furious remains the contention by Messrs. Issa and Grassley that the Justice Department is improperly withholding documents. The department has turned over thousands of documents—about 7,000 or 8,000, depending on which side is counting—and says it is being forthcoming. By comparison, the inspector general has had access to about 80,000 documents, including those the department has declined to share with lawmakers.

...

The matter has become a political fight, with little real impact on Mr. Holder, who is expected to serve out his tenure through the end of the current administration in January. Democrats accuse Republicans of using the contempt measure as a political tool against Mr. Holder and the president. Democrats did some of the same against President George W. Bush's attorney general, Alberto Gonzales, who resigned under pressure in a controversy over the firings of U.S. attorneys.

And now back to your regularly scheduled farce of a democratic republic.

Eric Holder warns of ‘constitutional crisis’

Politico
Tim Mack
Josh Gersten

Under threat of a House contempt citation over the botched Fast and Furious gun-walking operation, Attorney General Eric Holder spoke in a conciliatory tone Tuesday about his willingness for “compromises” to avoid what he called “an impending constitutional crisis” over the withholding of documents in response to a congressional subpoena.

“We are prepared to make – I am prepared to make - compromises with regard to the documents that can be made available,” said Holder in a hearing before the Senate Judiciary Committee.

“I want to make it very clear that I am offering – I myself – to sit down with the Speaker, the chairman, with you, whoever, to try and work our way through this in an attempt to avoid a constitutional crisis, and come up with ways, creative ways, in which to make this material available. But I’ve got to have a willing partner. I’ve extended my hand, and I’m waiting to hear back,” he added in response to a question about the subpoenaed documents posed by Sen. Chuck Grassley (R-Iowa.)

Holder’s remarks were his most aggressive public offer yet to wheel and deal with Congress to head off a dramatic contempt showdown — Oversight Committee Chairman Darrell Issa (R-Calif.) has scheduled a vote on the citation for June 20 in his committee.

After using the phrase “constitutional crisis” at least three times, Holder noted two hours into the hearingthat “constitutional conflict” might be a better term.

At issue between Republicans and Democrats are the withholding of Justice Department documents in response to a Congressional subpoena. The DOJ claims that previous administrations have reserved the right to withhold deliberative documents.

“There is a basis for the withholding of these documents… the tradition has always been, by members of the Justice Department, whether they were Republicans or Democrats, to withhold deliberative material,” argued Holder. “We have reached out to Chairman Issa, members of the leadership on the House side, to try to work our way through these issues.”

One possible area of compromise appeared to be the issue of wiretap applications related to Fast and Furious that are confidential because they are under a court-ordered seal.

“Will you seek the court’s permission to release the affidavit so that people can read them… and if there’s any problem with something sensitive, could the judge make a decision to remove any truly sensitive information before release?” asked Grassley.

S.E.C. Is Avoiding Tough Sanctions for Large Banks

New York Times
Edward Wyatt

Meredith B. Cross, the S.E.C.'s corporation finance director, says the purpose behind
offering waivers to Wall Street firms that had settled fraud or lesser charges is to protect investors.

WASHINGTON — Even as the Securities and Exchange Commission has stepped up its investigations of Wall Street in the last decade, the agency has repeatedly allowed the biggest firms to avoid punishments specifically meant to apply to fraud cases.

By granting exemptions to laws and regulations that act as a deterrent to securities fraud, the S.E.C. has let financial giants like JPMorganChase, Goldman Sachs and Bank of America continue to have advantages reserved for the most dependable companies, making it easier for them to raise money from investors, for example, and to avoid liability from lawsuits if their financial forecasts turn out to be wrong.

An analysis by The New York Times of S.E.C. investigations over the last decade found nearly 350 instances where the agency has given big Wall Street institutions and other financial companies a pass on those or other sanctions. Those instances also include waivers permitting firms to underwrite certain stock and bond sales and manage mutual fund portfolios.

 

JPMorganChase, for example, has settled six fraud cases in the last 13 years, including one with a $228 million settlement last summer, but it has obtained at least 22 waivers, in part by arguing that it has “a strong record of compliance with securities laws.” Bank of America and Merrill Lynch, which merged in 2009, have settled 15 fraud cases and received at least 39 waivers. 

Only about a dozen companies — Dell, General Electric and United Rentals among them — have felt the full force of the law after issuing misleading information about their businesses. Citigroup was the only major Wall Street bank among them. In 11 years, it settled six fraud cases and received 25 waivers before it lost most of its privileges in 2010. 

By granting those waivers, the S.E.C. allowed Wall Street firms to have powerful advantages, securities experts and former regulators say. The institutions remained protected under the Private Securities Litigation Reform Act of 1995, which makes it easier to avoid class-action shareholder lawsuits. 

And the companies continue to use rules that let them instantly raise money publicly, without waiting weeks for government approvals. Without the waivers, the companies could not move as quickly as rivals that had not settled fraud charges to sell stocks or bonds when market conditions were most favorable. 

Other waivers allowed Wall Street firms that had settled fraud or lesser charges to continue managing mutual funds and to help small, private companies raise money from investors — two types of business from which they otherwise would be excluded. 

“The ramifications of losing those exemptions are enormous to these firms,” David S. Ruder, a former S.E.C. chairman, said in an interview. Without the waivers, agreeing to settle charges of securities fraud “might have vast repercussions affecting the ability of a firm to continue to stay in business,” he said. 

S.E.C. officials say that they grant the waivers to keep stock and bond markets open to companies with legitimate capital-raising needs. Ensuring such access is as important to its mission as protecting investors, regulators said. 

Gun-smuggling cartel figures possibly were paid FBI informants

Los Angeles Times
Richard A. Serrano

Probe reveals that the U.S. agency running the 'Fast and Furious' anti-gun-trafficking operation didn't know about the alleged FBI informants. Congressional investigators are looking into the matter.

Reporting from Washington—Congressional investigators probing the controversial "Fast and Furious" anti-gun-trafficking operation on the border with Mexico believe at least six Mexican drug cartel figures involved in gun smuggling also were paid FBI informants, officials said Saturday.

The investigators have asked the FBI and the Drug Enforcement Administration for details about the alleged informants, as well as why agents at the Bureau of Alcohol, Tobacco, Firearms and Explosives, which ran the Fast and Furious operation, were not told about them.

Suspected members of the Zeta drug cartel are arrested in Guadalajara.
Weapons also were seized.

 The development raises further doubts about the now-shuttered program, which was created in November 2009 in an effort to track guns across the border and unravel the cartels' gun smuggling networks. The gun tracing largely failed, however, and hundreds of weapons purchased in U.S. shops later were found at crime scenes in Mexico.

The scandal has angered Mexican officials and some members of Congress. Investigators say nearly 2,500 guns were allowed to flow illegally into Mexico under the ATF program, fueling the drug violence ravaging that country and leading to the shooting death of a U.S. border agent.

In a letter to FBI Director Robert S. Mueller III, the investigators asked why U.S. taxpayers' money apparently was paid to Mexican cartel members who have terrorized the border region for years in their efforts to smuggle drugs into this country, and to ship U.S. firearms into Mexico.

"We have learned of the possible involvement of paid FBI informants in Operation Fast and Furious," wrote Rep. Darrel Issa (R-Vista), chairman of the House Committee on Oversight and Government Reform, and Sen. Charles E. Grassley of Iowa, the top Republican on the Senate Judiciary Committee. The two have been the leading congressional critics of the program.

"At least one individual who is allegedly an FBI informant might have been in communication with, and was perhaps even conspiring with, at least one suspect whom ATF was monitoring," they wrote.

The FBI and DEA did not tell the ATF about the alleged informants. The ATF and congressional investigators learned later that those agencies apparently were paying cartel members whom the ATF wanted to arrest.

"Operation Fast and Furious was conceived to get some of the bigger fish down there," said one official close to the congressional investigation, who asked not to be identified because the probe is ongoing. "Then it turned out that some of the ones they were zeroing in on actually, mostly likely were paid informants."