On July 6, 2011, Assistant Attorney General of the Antitrust Division Christine Varney announced her resignation, effective August 5, 2011: "Assistant Attorney General Varney Announces Departure from Antitrust Division" (July 6, 2011, Department of Justice). Press reports indicate that she is joining the law firm of Cravath, Swaine & Moore LLP.
Given that Varney started in April 2009, she lasted a tad over two years - an all too typical whirlwind of a job that seems to find itself on the crowded resumes of far too many federal government executives in recent years. A nice stop on the way to another appointment. A chance to have a leisurely cup of coffee and read the paper. Oh my, is it that late already? Perhaps Sarah Palin put it better when she explained why she was leaving the office of Governor?
In "LIBOR: The Antitrust Division's Trojan Horse?" (Street Sweeper, April 25, 2011), I responded to published comments by Forbes blogger Shah Gilani: "Antitrust Criminal Charges Threaten Survival of Big Banks." Gilani informed us that the Antitrust Division was investigating whether as many as 16 major banks colluded from 2006 through 2008 as part of a scheme to manipulate LIBOR.
I responded to Gilani's article with concerns that the Antitrust Division was getting in over its head with far too many ambitious initiatives at a time of dwindling federal funding and staffing constraints. In essence, I believed that Varney's ambitious reach had exceeded the grasp of her division, and that the resulting pressure to open new matters and to prosecute existing cases would result in worsening morale and productivity. Let me quote the relevant portion of my April 2011 article:
The Obama Antitrust Initiative
Shortly after the last presidential election, the Obama Administration announced its much ballyhooed effort to enhance the enforcement efforts of the DOJ's Antitrust Division, which had become moribund under the Bush Administration. The 2009 appointment by Obama of lobbyist, fundraiser, and high-profile corporate lawyer Christine Varney was meant to underscore the administration's purported commitment to revitalizing the nation's antitrust laws.
Varney, whose credentials included heading up the law firm of Hogan & Hartson's Internet practice, a stint as a commissioner on the Federal Trade Commission, and a role in the Clinton administration, promised to follow through on her mandate. As always, there was a lot of tough talk and the attendant appointment of new Antitrust Division management and staff. Whether motivated by the desire to foster competition in our hobbled economy or by personal desires for headlines, the initial flurry of activity from the Antitrust Division was impressive. However, the political landscape is littered with the carcasses of overly ambitious appointees whose reach exceeded their grasp.
Timeo Danaos et dona ferentes
In 2011, the Antitrust Division appears overwhelmed by its Municipal Bond cases, the Google investigation, health care initiatives, the mega-mergers of the private sector, and the contentious status of the New York Stock Exchange's possible acquisition. Moreover, the historic internecine combat among the Antitrust Division, local U.S. Attorneys' offices, and the Federal Trade Commission has exacerbated antitrust enforcement amidst overlapping laws and jurisdictions. In the end, such infighting over turf and headlines is enervating to the respective staffs and does a disservice to taxpayers who lose the economies of scale that prudent mergers of jurisdiction and staffs would otherwise accomplish.The Antitrust Division's financial and manpower resources are straining under the weight of many, perhaps too many, investigations and cases. Within the last year, there have been numerous retirements and resignations (if not demotions) of veteran staff, in part fueled by a mixture of early buyouts, new managerial policies, and workplace disputes. The rumored closure of the Division's Philadelphia and Cleveland field offices have sent shudders through those staffs and further fueled uncertainty in the ranks. Similarly, the Municipal Bond cases appear to have monopolized much of the Division's time and energy. Frankly, from a morale standpoint, this may be an historic nadir for the Antitrust Division and there seems little prospect of improvement.
As such, while it's interesting to read of the Antitrust Division's newly found focus on LIBOR, the reality of things suggests that the Division's rank-and-file is demoralized by bureaucratic micro-management. Additionally, the present political environment is demanding pay freezes, staffing reductions, and a smaller government footprint - all of which raise questions about how the Division intends to accomplish its ambitious agenda. Taking on yet another high-profile case may be the equivalent of opening the Antitrust Division's doors to a destructive Trojan Horse.
Assistant Attorney General Varney has shown a penchant for starting many wars, but it's doubtful that she retains the troop strength and morale necessary to effectively wage all the necessary battles. Of course, with a new presidential election season underway, who knows whether Varney's eye is already on greener pastures - be that a return to her former political/fund raising role on behalf of the Democratic re-election effort, or a return to the more comfortable quarters of private practice.
Not that I'm looking for a pat on the back but, hey, ya gotta give me some credit - no? After all, back in April, I was one of the first to suggest that:
Of course, with a new presidential election season underway, who knows whether Varney's eye is already on greener pastures - be that a return to her former political/fund raising role on behalf of the Democratic re-election effort, or a return to the more comfortable quarters of private practice.
I'd say that a partnership at Cravath, Swaine & Moore LLP is about as close to the "comfortable quarters of private practice" as it gets.
Finally, let me refer you to my closing comments in "The Damnable Politics of Regulation" (Street Sweeper, April 26, 2011):
After some three decades on Wall Street, I've realized that it's rarely the regulatory investigators, examiners, or staff attorneys to blame (sometimes, "yes," but not overwhelmingly so). More often than not, the blame for failed regulation falls squarely in the lap of those in charge because they often set unrealistic agendas and have little feeling for the limits of their staff and budget. Then, after the damage is done, they resign for a cushy job and leave behind the rubble of failed policies and overly ambitious plans - rubble that someone else, always someone else, has to clean up.
Where does all of this leave us? Well, pretty much where we're always left. At the mercy of special interests and victimized by politicians and regulators unable to get out of their own way. Alas, we are forever undone by the politics of regulation.