U.S. Scrutiny of Banks Could Fall to Business Lobby Lawyer

  • Pick for No. 3 DoJ post was a top Chamber of Commerce counsel
  • Department’s upper ranks filling out as Sessions takes oath

The new U.S. attorney general, Jeff Sessions, spent most of his Senate confirmation hearing answering questions about his civil rights record. The fate of remaining Justice Department probes of banks’ complicity in the financial crisis, though, may fall to a lawyer who spent much of the Obama administration representing the interests of banks and other corporations.

President Donald Trump last week nominated Rachel L. Brand, 43, a onetime senior counsel at the U.S. Chamber of Commerce, to become associate attorney general, the No. 3 job in the Justice Department. The position, which requires Senate confirmation, supervises the civil, antitrust and environmental divisions, among others, making it an important overseer of many of the department’s probes of corporations.

Brand’s work at the nation’s largest business lobby included helping Citigroup Inc. fight off a demand that it admit to wrongdoing as a condition of settling mortgage-related allegations against it.

It’s common for lawyers who specialize in regulatory work to alternate between defending corporations and working for the government. With Sessions taking the oath of office on Thursday, the top ranks of the new Justice Department are beginning to take shape with Brand and two other alumni of the George W. Bush administration in line to become lieutenants to the attorney general.

During the Obama administration, the No. 3 official ran a task force that coordinated investigations of banks over their sale of shoddy mortgage-backed securities, which prosecutors say aggravated the global financial meltdown of 2008. The official recently oversaw the government’s bids to block two health insurance megamergers and played a role in the investigation of Volkswagen AG over its emissions cheating.

Related: Sessions Takes Reins at Justice Ready to Push Trump Agenda

Seven large banks have already settled with the government for a total of $58 billion, and at least two cases remain, including a lawsuit filed against Barclays Plc in December after settlement negotiations broke down.

“There certainly is ample evidence at this point that Trump and the people around him have been listening intently in recent years to the complaints of Wall Street about Washington,” said Samuel Buell, a former federal prosecutor on the Justice Department’s Enron Task Force. “One of those complaints is that the government has been ham-handed” in how it sought settlements over mortgage-backed securities, he said.

Industry complaints that penalties were doled out arbitrarily in earlier cases might help Royal Bank of Scotland Plc, the other bank known to still be a subject of a U.S. mortgage probe, negotiate a lower fine, said Buell, a Duke University School of Law professor. It’s unlikely that prosecutors will walk away from the remaining cases, he said, despite Trump’s pro-business positions and Brand’s history of defending corporate interests.

Enforcement Posts

In addition to Brand, Trump nominated the veteran prosecutor Rod Rosenstein to become deputy attorney general, the department’s No. 2 official, and Steven Engel, a partner at Dechert LLP in Washington, to head the Office of Legal Counsel, which drafts legal opinions about proposed policy measures and vets the president’s executive orders.

Brand and Rosenstein declined to comment. Engel didn’t respond to a message seeking comment.

It’s unclear when the Senate will take up the nominations, which were made just before Trump announced Appeals Court Judge Neil Gorsuch as his pick to fill a seat on the Supreme Court.

“Once we receive the questionnaire and materials for these nominees, I look forward to scheduling their hearings,” Chuck Grassley of Iowa, the Senate Judiciary Committee chairman, said at a committee meeting on Thursday.

Terror Panel

Since 2012, Brand has filled a Republican seat on the Privacy and Civil Liberties Oversight Board, a federal agency that advises the president and other top officials about counterterrorism policy, including the surveillance of Americans. Brand, in 2014, dissented when the panel’s majority concluded that the National Security Agency’s collection of bulk telephone data on Americans was illegal and should be stopped.

Before that, Brand was chief counsel for regulatory litigation at the Chamber of Commerce, where she mounted legal opposition to corporate regulations. In that role, Brand filed a friend-of-the-court brief that cited legal precedent to argue that Citigroup should be allowed to settle Securities and Exchange Commission misconduct allegations involving its mortgage bonds without having to admit wrongdoing. A federal appeals court in New York agreed with that position.

Brand was also involved in a lawsuit that successfully challenged the constitutionality of President Barack Obama’s appointments to the National Labor Relations Board. The U.S. Supreme Court ruled in 2014 that Obama’s use of recess appointments to fill the seats was improper, invalidating hundreds of NLRB decisions.

Dodd-Frank Rebuke

Brand, who is a member of the conservative Federalist Society, participated in a Chamber of Commerce lawsuit challenging an SEC rule called for under the Dodd-Frank Act that required companies to disclose the use of certain minerals from the area around the Democratic Republic of the Congo. In 2014, a federal appeals court in Washington sided with the chamber in ruling that the regulation violated companies’ rights under the First Amendment.

From 2008 to 2011, Brand worked at WilmerHale in Washington, where she lobbied Congress on behalf of T-Mobile US Inc., Google Inc. and the Pharmaceutical Research and Manufacturers of America, the trade group known as PhRMA, according to lobbying records filed with the Senate. During that time she also represented the Alliance for School Choice, an interest group that supports school vouchers as an alternative to public schools. The group was led by Betsy DeVos, now Trump’s education secretary.

During the Bush administration, Brand ran the Justice Department’s Office of Legal Policy, where she crafted the agency’s legislative and regulatory agendas. Brand also shepherded Bush’s Supreme Court nominations of Chief Justice John Roberts and Justice Samuel Alito through the Senate.

Lily Fu Claffee, the chief legal officer and general counsel of the Chamber of Commerce, said she didn’t necessarily think that Brand would side with the group’s views, despite Brand’s work history.

“When she worked here, the chamber was her client so she represented our interests with appropriate diligence,” she said. “If her client the U.S. government calls for going in a direction directly opposed to the Chamber of Commerce, she will do it and she will be a formidable opponent.”

Maryland Prosecutor

Rosenstein, 52, the nominee for deputy attorney general, has been the U.S. attorney for Maryland since 2005. Rosenstein is the only U.S. attorney appointed by Bush who remains in place. Rosenstein’s appointment to run day-to-day operations at the Justice Department was met with relief by many career prosecutors who said they feared Trump might select someone antithetical to their enforcement priorities.

“I never once heard him divulge what he thought about a political issue,” said Jonathan Biran, a former federal prosecutor who worked under Rosenstein for seven years in Maryland. “He was just incredibly disciplined about keeping things nonpolitical, which I think is the way a federal prosecutor ought to be.”

The federal prosecutor’s office in Maryland isn’t as well-known for handling business cases as its nearby counterparts in Washington and Virginia. Yet Rosenstein’s record includes the largest false claims case in the state. In that case, Ranbaxy Laboratories Ltd. agreed in 2013 to pay $500 million to resolve fraud allegations made in a whistle-blower’s lawsuit and federal criminal charges that the company sold adulterated drugs and lied about it to U.S. regulators.

Rosenstein also prosecuted Cheng Yi Liang, a former chemist at the U.S. Food and Drug Administration who was sentenced to five years in prison in 2012 after admitting to participating in a $3.8 million insider-trading scheme.

Leak Case

More recently, Rosenstein brought a case against retired Marine Corps General James Cartwright for leaks about a U.S. effort to sabotage Iran’s nuclear program. Rosenstein was asked by then-Attorney General Eric Holder to lead the probe after congressional Republicans called for a special prosecutor. Cartwright pleaded guilty to lying to the Federal Bureau of Investigation before Obama pardoned him last month.

Rosenstein would get personally involved in some cases and at times seek to handle an appeal or a trial himself, said Biran, now a partner at Biran Kelly LLC in Baltimore.

“He definitely stayed in touch with what was happening at the line level,” Biran said.

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