A bipartisan duo of senators sent a letter to the Department of Justice today to press Attorney General Eric Holder on the lack of prosecutions for employees and executives of the nation’s largest banks in the wake of financial crisis. The letter from Sens. Sherrod Brown (D-OH) and Chuck Grassley (R-IA) questioned Holder about “whether the ‘too big to fail’ status of certain Wall Street megabanks undermines the ability of the federal government to prosecute wrongdoing and impose appropriate penalties.”
“Wall Street megabanks aren’t just too big to fail, they’re increasingly too big to jail,” Brown said in a release. “Already, the nation’s six largest megabanks enjoy what amounts to taxpayer-funded guarantee by virtue of their size, making it harder for regional and community banks to compete. Now, these megabanks may also enjoy some impunity when they violate the law by laundering money or illegally foreclosing on homeowners. Wall Street should pay the full price of its wrongdoing, not pass the costs along to taxpayers.”
“Unfortunately, we’ve seen little willingness to charge these individuals criminally,” Grassley added. “The public deserves an explanation of how the Justice Department arrives at these decisions.”
Last month, Grassley criticized the “get out of jail free card” that has been given to the nation’s largest financial institutions, which have largely avoided serious prosecution since the financial crisis. Prosecutions for financial fraud hit a 20-year low in 2011. Many of the fines the banks have paid are tax-deductible, a problem Brown is currently seeking to remedy.
“Unfortunately, many of the settlements between large financial institutions and the federal government involve penalties that are disproportionately low, both in relation to the profits which resulted from those wrongful actions as well as in relation to the costs imposed upon consumers, investors, and the market,” Grassley and Brown wrote in the letter, adding that the perception that large banks are too big to face real prosecution “undermines the public’s confidence in our institutions and in the principal that the law is applied equally in all cases.”