"Attorney General Says That The Nation’s Biggest Banks Are Too-Big-To-Jail"
Both Democrats and Republicans have raised criticism of the Justice Department’s leniency when it comes to the prosecution of Wall Street banks for their roles in the housing crisis and financial collapse that sparked the Great Recession. But today, Attorney General Eric Holder told the Senate Judiciary Committee that the very size of those banks is what inhibits prosecution, Bloomberg reports:
Criminal charges against a bank — something that could threaten its existence — may also endanger the national or global economies in the case of the largest ones, because of their size and interconnectedness. That has “made it difficult for us to prosecute” some of those institutions, Holder said today at a Senate Judiciary Committee hearing.
“That is a function of the fact that some of these institutions have become too large,” Holder told lawmakers. “It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate.”
The six largest Wall Street banks have grown exponentially in recent decades and now hold assets worth more than 60 percent of the American economy. But despite widespread fraud, discrimination, and other predatory acts during and after the recent crises, the banks have largely escaped prosecution, drawing the ire of both Democratic and Republican senators.
Ohio Sen. Sherrod Brown (D) and Louisiana Sen. David Vitter (R) renewed their calls to break up banks in Senate speeches last week, and Massachusetts Sen. Elizabeth Warren (D) challenged regulators on the lack of prosecutions in a Banking Committee hearing in February. Brown and Iowa Sen. Chuck Grassley (R) wrote a letter to the Justice Dept. alleging that banks have become “too big to jail,” and Grassley has criticized the banks for having a “get out of jail free” card.
Financial prosecutions reached a 20-year low in 2011, as regulators and the Justice Dept. chose instead to settle claims with large banks over mortgage and foreclosure fraud and other scandals. But those settlements have been rife with problems, as banks have found different ways to game the settlements to their advantage.
“The attorney general recognized that in effect, the big banks and their senior executives have a get-out-of-jail-free card,” said Grassley, the top Republican on the panel. “After hearing today’s testimony, big bankers know that if they commit financial crimes, they can expect a passive response from the Justice Department.”