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How Power Shifted to Make JPMorgan's Punishment Possible How Power Shifted to Make JPMorgan's Punishment Possible

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White House

How Power Shifted to Make JPMorgan's Punishment Possible

Plus a White House wedding and whispers from Washington's prestige peddlers.

(Spencer Platt/Getty Images)

November 22, 2013

Some wonder whether Mark Leibovich was really spilling the inside story of how Washington works in his putative tell-all, This Town, given that leading roles in his narrative were often the bittiest of bit players. And lo, our suspicions that there's a lot more to say were confirmed recently by none other than Janet Donovan, the would-be Kay Graham of DC's gossip-salon set.

At what could only be called a meta-confab—a gathering of gossip columnists who gossiped about how best to get gossip—Donovan delivered the lowdown on just how low This Town rates with her. "You read Mark Leibovich's book?" Donovan asked. "That was all fairy dust compared to what we know in this room."

No question, the story of power is always the story of people, large and sometimes very small. Happy reading.

 

How Washington Got Tough on Wall Street

One of the spiciest power stories of the week was the historic settlement between the Justice Department and JPMorgan Chase. It was history-making both in size ($13 billion) and in getting, for the first time, some acknowledgement of wrongdoing by a major Wall Street bank. And it marked a dramatic departure from the past. Why and how? California Attorney General Kamala Harris (Justin Sullivan/Getty Images)

The answer is a change in power players, including an attorney general who exerted pressure from way outside Washington: Kamala Harris. Here's the back story.

Jamie Dimon may not have known what hit him. One minute, it seemed, Tim Geithner was smiling at him and Lanny Breuer was looking the other way; the next minute, the chairman of JPMorgan Chase was being nailed to the wall (without a street).

The real story of how Attorney General Eric Holder regained at least a measure of self-respect when it comes to Wall Street is mainly a story of a changing of the guard—how an important roster of power players in Washington changed dramatically. Breuer, Holder's former head of investigations, left several months ago to go back to Covington Burling, whence he and Holder both came, and which has a lot of banking clients. Geithner, chief protector of the banks, left Washington entirely, leaving things to his successor at Treasury, the more neutral Jacob Lew. And that's when things began to change for JPMorgan Chase and the other once-"untouchable" banks.

Next, in a key move, Tony West replaced Tom Perrelli as associate attorney general, the third-highest spot in Justice. Perrelli had been respected—and feared, as a close friend of Obama's from Harvard Law. He'd also done some impressive things way back when in the Clinton Justice Department. But Perrelli seemed out of his depth on financial investigations, having quarterbacked the disastrously inadequate 50-state mortgage-fraud settlement in late 2011. West was now in charge as chief negotiator with JPMorgan.

But the key ingredient—the real secret sauce—came from outside the Beltway. It was a passel of important and influential state attorneys general who were also hopping mad. That's where Kamala Harris came in. Harris, the California attorney general who's seeking to make a name in national politics (along with Maryland Gov. Martin O'Malley, another eager aspirant to national profile-dom, she cochaired the 2012 DNC rules committee), happens to be Tony West's sister-in-law. Publicly peeved at being associated with the first settlement in 2011, she sought to stiffen her bro-in-law's spine, according to people close to her and the deal.

Meanwhile New York Attorney General Eric Schneiderman, who was also once seen as a hero of the get-tough-on-Wall Street set, was looking to restore his credibility after signing the 2011 settlement in exchange for being made vice chairman on Obama's new fraud task force and getting a shout-out at the 2011 State of the Union. In the beginning, Schneiderman never got an office; and for months no one knew how reach the task force. And Schneiderman's once-bright star faded as Benjamin Lawsky, the state financial-service director, became the new progressive hero. Schneiderman badly needed a win, and now he had tougher counterparts in Washington to work with.

So Holder may take the credit, but it was the departures of Breuer, Perrelli, and Geithner, combined with the humiliations suffered by the attorneys general from California, New York, and Delaware (Beau Biden, who also had a say), that really made the difference this week. The result? The world's biggest bank is $13 billion lighter in the wallet.

Power is as power pools.

Pretend Power Garry Trudeau (Frederick M. Brown/Getty Images)

That big splashy event at the Newseum this week was Washington's screening of Garry Trudeau's new show, Alpha House, starring John Goodman and featuring an all-too-brief cameo by Bill Murray as a senator who oversleeps at his own arrest. Fairly funny in its own right, Alpha House is also the latest advance on a genre that dates back at least to The West Wing.

Jonathan Alter, the respected political journalist and author who in keeping with these topsy-turvy times—when faux news delivered by comedians like Jon Stewart trumps "real" news—is one of Alpha House's executive producers. While he insists the show mainly just seeks to entertain, he and Trudeau (they are longtime friends, having made regular sojourns to New Hampshire together every four years) are hoping to rebuild the severed nerve of conversation in Washington. Jonathan Alter (Michael N. Todaro/Getty Images for Amazon Studios)

But what's really going on here is that the lines between pretend and reality are getting blurrier and blurrier. Washington and Hollywood, which have long been poor relations except for one weekend a year (the White House Correspondents Dinner, of course) appear to be merging. Grover Norquist is making cameos in Alpha House, and Hillary Clinton is taking selfies with Meryl Streep.

Alter says that what really distinguishes this show from Veep or House of Cards is that it's the only political show on television that's actually set in real, present-day Washington, and Goodman and the other characters are sort of Forrest Gumped in next to Obama and Mitch McConnell. The other shows, says Alter, "are in a fantasy world." Because Alpha House gets right in Washington's face about today's dysfunctional politics, but with a lot of humor, Alter says he and Trudeau hope it can actually change the conversation a little. "My aspiration for it is that it has a detoxifying effect."

Tail-ender

Getting married in the Rose Garden used to be a pretty big deal. Tricia Nixon and Ed CoxLynda Bird Johnson and Charles Robb, and so forth. Perhaps it's just that we've had a shortage of presidential children of marriageable age in recent years, but it's hard to deny that the currency of the Rose Garden wedding is looking fairly debased these days. That's no disrespect to Pete Souza, the White House photographer, but boy did he get lucky. On Saturday afternoon, Oct. 19, Obama hosted a small wedding ceremony for Souza, who also worked in the Reagan White House, and Patti Lease in the Rose Garden. They were joined by roughly 35 family members and friends. (To preserve our national dignity at least a little, there was no reception at the White House: After the ceremony, the bride and groom hosted a private reception off-campus for friends and family.)

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