Last year, Attorney General Eric Holder told a Senate panel that he was gravely concerned that it was impossible to hold the largest financial institutions accountable for wrong doing. Why? Apparently some of them had become so large and so interconnected that moving too aggressively to prosecute them wasn’t worth the risk to the economy–and he didn’t like it. Possibly the highest-profile instance of this came this past winter, when federal prosecutors in Manhattan had to drop plans to force JPMorgan Chase to plead guilty for its failure to stop Bernie Madoff. After regulators told them a guilty plea could trigger proceedings that could force Chase out of business, prosecutors opted to strong arm Chase into a deferred-prosecution agreement instead.
Well, earlier today, Holder declared those days are over. In his weekly video address, Holder revealed that his department is working on several important investigations of corporate wrong doing. He declared in no uncertain terms, “There is no such thing as ‘too big to jail.'”
Holder said that these investigations have such a high priority for them that he is personally monitoring their progress, and promised to ensure that the message will be sent that “no individual, no entity that does harm to our economy is ever above the law.” While Holder said that it would be “irresponsible” to consider the prospect that a criminal conviction would result in a financial institution to be stripped of its charter–which usually has the effect of putting it out of business–he did say that this is added incentive for his prosecutors in the criminal division and U. S. Attorneys’ offices to coordinate with financial regulators. “So long as this coordination occurs,” he said, “it is fully possible to criminally sanction companies who have broken the law, no matter what the size.”
We’ve already seen at least two instances of this new attitude. Last week, I mentioned that federal prosecutors have amassed enough evidence to force two major international banks to plead guilty in open court. France’s BNP Paribas is under fire for doing business with countries blacklisted by the United States, while Switzerland’s Credit Suisse is facing charges that it helped create impermissible tax shelters for American citizens. Both investigations have been pursued with tight coordination between federal prosecutors, the Federal Reserve Bank of New York and state regulators. Prosecutors are hoping to force both banks’ parent companies, rather than subsidiaries, to plead guilty. They have received assurances that if such a plea is entered, regulators won’t force the banks out of the United States.
There has been a lot of criticism over the failure to prosecute financial institutions for wrongdoing that potentially contributed to the 2008 financial meltdown. Even if this new course doesn’t result in prosecutions related to that crisis, corporations in all sectors are now on notice–their size is not a shield from accountability.
Darrell Lucus?is a radical lefty Jesus-lover who has been blogging for change for a decade. Follow him on Twitter @DarrellLucus or connect with him on Facebook.
Edited/Published by: WG
