The departure of Alberto Gonzales, embattled US attorney-general who announced his resignation on Monday, offers the Department of Justice a sorely needed opportunity to take the lead in the area of white collar crime.
The meltdown of the subprime lending market, amid accusations of widespread fraud, has created new challenges for US enforcers this summer, much as the collapse of Enron and WorldCom did in 2002. But Mr Gonzales has been tied up with repeated inquiries into the controversial sackings of nine US attorneys and possible lies to Congress. Five of his top aides have also quit this year, including Paul McNulty, the deputy attorney-general who oversaw the corporate crime area. Some field offices have tried to tackle financial crimes on their own, breaking up several insider trading rings, filing bribery charges against a sitting US congressman and winning the first criminal conviction for stock options backdating. However, there has been no evidence of the kind of co-ordinated response that led to the convictions of top executives at Enron, WorldCom and others.
Mr Gonzales’s replacement has the chance to mend fences with Congress and lead a vital national effort to determine the sources and depth of fraud in the mortgage lending market. For now, investigations are being spearheaded by a new crop of ambitious state attorneys-general who may be more interested in pleasing voters than in fair enforcement.
Several of Mr Gonzales’s possible successors have particular financial expertise. Christopher Cox, the Securities and Exchange Commission chairman, brokered a compromise this spring on punishing companies for backdated stock options, and Larry Thompson, Pepsico’s general counsel, led the Enron crackdown in an earlier stint as deputy attorney-general. No matter whom President George W. Bush eventually picks, the markets would be better served by a DoJ that has come out of its defensive crouch.