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Will Attorney General’s Resignation Help or Hurt Wall Street?Gonzales Had A Mixed Record In The Eyes Of Many On The Street

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The resignation today of Attorney General Alberto Gonzales has ignited speculation about who might fill the top spot at the Justice Department. On Wall Street some are wondering whether the Gonzales’ resignation might help or hurt investment banks, brokerages and corporate America on a number of pending legal issues.
The Justice Department handles more than just the prosecutions of organized criminals, drug dealers and terrorists. It is also involved in law-enforcement in the finance community and corporate America. Chief among the legal issues that concern Wall Street is so-called ‘scheme-liability,’ where banks may be found guilty for assisting the corporate fraud of their clients. Wall Street is also concerned with other issues of institutional liability, for instance whether to prosecute an entire company or an individual when fraud is alleged by executives and employees. Wall Street firms are generally friendly towards insider trading prosecutions, except perhaps when prosecutors get zealously creative and go after financiers whose acts are not widely thought of as illegal.
Under Gonzales, the Justice Department has had a mixed record on Wall Street issues. Gonzales himself, a former corporate lawyer whose list of clients once included Enron, is viewed as having a generally pro-business outlook. Some critics, who asked not to be named for fear of political or legal retaliation, dispute this.
“He’s pro-successful business,” one critic said. “But if your company is in trouble, his Justice department made no bones about going after you.”
The Department has aggressively prosecuted the folks its lawyers like to call ‘wrong-doers,’ including accountants who helped clients develop aggressive tax-avoidance structures, executives involved in back-dating and a host of others involved in the business scandals of the late nineties and early part of this decade. Since Gonzales ran into trouble following revelations of the firing of several government lawyers, many have seen the department as “rudderless.”
��It’s been an asylum run by inmates,” said one court observer.
There is a widespread view on Wall Street that career government prosecutors tend to be more hostile to business than political appointees with more experience in the private sector. There is a fear that a “rudderless” Justice department will drift into a more aggressive current for prosecuting alleged wrong-doing by corporate executives and Wall Street financiers. The hope on Wall Street is that Gonzales’ replacement will be named quickly and come from a background that displays some sympathy for business.
Several names are being talked about as potential nominees. The Wall Street Journal’s Law Blog has a great rundown of the likely suspects. Whether this will be a boon or a bane for Wall Street firms will likely depend on who President George Bush appoints to replace Gonzales, and how quickly that appointment is made. As the day goes on, we’ll profile some of the leading candidates for the job.
Who Will Be Our Next Attorney General? [WSJ's Law Blog]