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Holder: No banks 'too big to jail'

politico.com | May 5, 2014

By Josh Gerstein

Attorney General Eric Holder declared Monday that no banks are too big to be prosecuted if they engage in criminal activity, while another law enforcement official said a pair of cases against major banks may culminate in guilty pleas in the near future.

"There is no such thing as 'too big to jail," Holder declared in a weekly video message. "No individual or company, no matter how large or how profitable, is above the law."

Cases against Swiss bank Credit Suisse for helping Americans evade taxes through secret accounts and against French bank BNP Paribas (for dodging U.S. sanctions against Sudan and Iran) are expected to be resolved in the next couple of weeks, possibly with guilty pleas, said a law enforcement official who asked not to be named.

Moving the cases to prosecution or conclusion may help Holder and the Justice Department rebut criticism that there have been virtually no prosecutions of major banks or top bank officials during the Obama Administration. However, most of that criticism has been aimed at going after those perceived as responsible for the financial meltdown in 2008 and 2009. Neither of the two cases likely to be resolved go directly to the financial crisis.

Justice Department officials have said cases relating directly to the financial crisis have proven hard to make, though there has been occasional grumbling from insiders that officials were not being aggressive enough in going after such wrongdoing. There have been a string of successful prosecutions of high-level investment managers for insider trading, as well as an array of smaller players in the mortgage industry for mortgage fraud.

Holder cause a stir in March of last year when he suggested at a Senate hearing that prosecutors have to be careful about pursuing some large banks because charging them criminally could do serious damage to the financial sector.

"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large," Holder told the Senate Judiciary Committee "I think it has an inhibiting influence, impact on our ability to bring resolutions that I think would be more appropriate."

After the quote drew criticism from liberal activists angry at Wall Street, Holder largely repudiated it. He took a similar tack in Monday's video, promising aggressive enforcement against the financial industry and vowing that an institution's size won't get it off the hook.

"When laws indeed appear to have been broken, and the evidence supports the allegations, a company's size will never be a shield from prosecution or penalty," Holder said. He added that it would be "irresponsible" not to consider the possibility that a prosecuted bank might lose its charter or face other serious consequences. However, he said that simply dictated careful consultation with regulators, not forgoing enforcement altogether.

"Rather than wall off banks from prosecution, the potential for such severe consequences simply means that federal prosecutors conducting these investigations must go the extra mile to coordinate closely with the regulators that oversee these institutions' day-to-day operations," the attorney general said.

Holder did not name either of the two banks believed to be in the firing line at the moment, but he said he was closely following developments in such probes. "I am personally monitoring the status of these ongoing investigations, I am resolved to seeing them through," the attorney general said.

A spokesperson for Credit Suisse declined to comment for this post. BNP Paribas did not respond to a requests for comment.

Jon Prior contributed to this post.

UPDATE (Monday, 12:44 P.M.): This post has been updated with Credit Suisse declining to comment.


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