Sometimes, the revolving door spins a little too quickly.
James Cole, Obama’s recent nominee for Deputy Attorney General, has worked as an independent consultant at AIG for the past five years – the company at the center of Department of Justice investigations as recently as two months ago. His firm was paid $20 million to assist with AIG’s legal compliances in that investigation.
If confirmed, Cole could potentially be responsible for deciding if and how future cases of fraud would be pressed against AIG. Just as alarming was the way he handled the now-closed case when he was working for AIG. According to one Republican advisor, “It's like hiring the security firm to guard your bank after it failed to detect the last major bank heist in town."
In the course of his work, Cole was directly responsible for exempting AIG’s financial products division from regulatory oversight, according to the Government Accountability Project. Lo and behold, the financial products division of AIG was the very division that undermined AIG’s financial stability and was cited as the main reason for the $180 million taxpayer bailout.
Shortly after that bailout was negotiated, AIG paid its executives $165 million in retention bonuses, solidifying a company as a crowning symbol of the corruption between Washington and Wall Street. Again, Cole was involved in “legal compliances” during the time of that payout.
Cole was then responsible for closing down any pending inquiries from the DOJ, and cleared AIG from any wrongdoing – under the condition that AIG would pay millions in fines and agree to support Obama’s finance reform package. That package is on the Senate agenda for completion before the August recess, right before Cole would potentially be confirmed.
While the DOJ has closed its inquiry, a Securities and Exchange Commission investigation continues – and could lead to a civil securities fraud case. Again, Cole was responsible for managing the inquiry into financial reporting that was the subject the SEC’s interest, and could be responsible for the management of any future AIG related inquiries if he is confirmed.
"Why, when DOJ claims to want to investigate and ferret out financial fraud, are they are hiring a chief operating officer who failed to ferret out, detect, notice, etc., the irregularities that led to the 2008 collapse and $182 billion bailout of AIG?” asked the Republican adviser.
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