How Power Shifted to Make JPMorgan’s Punishment Possible

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

People pass a sign for JPMorgan Chase & Co. at it's headquarters in Manhattan on October 2, 2012 in New York City.
National Journal
Michael Hirsh and Ben Terris
Michael Hirsh Ben Terris
Nov. 22, 2013, 7:29 a.m.

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.)

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.)

Marin Cogan and Ron Fournier contributed to this article.
What We're Following See More »
‘PRESUMPTIVE NOMINEE’
Priebus Asks Party to Unite Behind Trump
3 hours ago
THE LATEST
FEELING THE MIDWESTERN BERN
Sanders Upsets Clinton in Indiana
4 hours ago
THE LATEST

Despite trailing Hillary Clinton by a significant margin, Bernie Sanders wasn't going the way of Ted Cruz tonight. The Vermont senator upset Clinton in Indiana, with MSNBC calling the race at 9pm. Sanders appears poised to win by a five- or six-point spread.

Source:
TRUMP IS PRESUMPTIVE NOMINEE
Ted Cruz Bows Out, Effectively Ceding the Contest to Trump
5 hours ago
THE LATEST

And just like that, it's over. Ted Cruz will suspend his presidential campaign after losing badly to Donald Trump in Indiana tonight. "While Cruz had always hedged when asked whether he would quit if he lost Indiana; his campaign had laid a huge bet on the state." John Kasich's campaign has pledged to carry on. “From the beginning, I’ve said that I would continue on as long as there was a viable path to victory,” said Cruz. “Tonight, I’m sorry to say it appears that path has been foreclosed."

Source:
TAKES AT LEAST 45 DELEGATES
Trump Wins Indiana, All but Seals the Nomination
5 hours ago
THE LATEST

The Republican establishment's last remaining hope—a contested convention this summer—may have just ended in Indiana, as Donald Trump won a decisive victory over Ted Cruz. Nothing Cruz seemed to have in his corner seemed to help—not a presumptive VP pick in Carly Fiorina, not a midwestern state where he's done well in the past, and not the state's legions of conservatives. Though Trump "won't secure the 1,237 delegates he needs to formally claim the nomination until June, his Indiana triumph makes it almost impossible to stop him. Following his decisive wins in New York and other East Coast states, the Indiana victory could put Trump within 200 delegates of the magic number he needs to clinch the nomination." Cruz, meanwhile, "now faces the agonizing choice of whether to remain in the race, with his attempt to force the party into a contested convention in tatters, or to bow out and cede the party nomination to his political nemesis." The Associated Press, which called the race at 7pm, predicts Trump will win at least 45 delegates.

Source:
LOTS OF STRINGERS
Inside the AP’s Election Operation
10 hours ago
WHY WE CARE
×