OT: Attorney General Eric Holder on 'Too Big to Jail'

[Jeffrey Walton <noloader () gmail com>]

http://www.americanbanker.com/issues/178_45/transcript-attorney-general-eric-holder-on-too-big-to-jail-1057295-1.html

The following is a transcript of Attorney General Eric Holder's
remarks before the Senate Judiciary Committee, in which he discusses
the idea that some banks are 'Too Big to Jail.'

Sen. Chuck Grassley, R-Iowa: In the case of bank prosecution. I'm
concerned we have a mentality of 'too big to jail' in the financial
sector, spreading from fraud cases to terrorist financing to money
laundering cases. I would cite HSBC.

I think we are on a slippery slope and that's background for this
question. I don't have recollection of DOJ prosecuting any
high-profile financial criminal convictions in either companies or
individuals.

Assistant Attorney General Breuer said that one reason that DOJ has
not sought these prosecutions is because it reaches out to 'experts'
to see what effect the prosecution will have on the financial markets.
On Jan. 29, Sen. [Sherrod] Brown and I requested details on who these
so-called 'experts' are. So far we have not received any information.
Maybe you're going to but why have we not yet been provided the names
of experts the DOJ consults as we requested on Jan. 29? We continue to
find out why we aren't having these high-profile cases...

Attorney General Eric Holder: We will endeavor to answer your letter,
Senator. We did not, as I understand it, endeavor to obtain experts
outside of the government in making determinations with regard to
HSBC.

Just putting that aside for a minute though, the concern that you have
raised is one that I, frankly, share. I'm not talking about HSBC here,
that would be inappropriate. But 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.

Again, I'm not talking about HSBC, this is more of a general comment.
I think it has an inhibiting influence, impact on our ability to bring
resolutions that I think would be more appropriate. I think that's
something that we — you all [Congress] — need to consider. The concern
that you raised is actually one that I share.

Grassley: Do you believe that the investment bankers that were
repackaging bad mortgages that were AAA-rated are guilty of fraud or
is it a case of just not being aggressive or effective enough to prove
that they did something fraudulent and criminal?

Holder: We looked at those kinds of cases. I think we have been
appropriately aggressive, these are not always easy cases to make.
When you look at these cases, you see that things were done 'wrong'
then the question is whether or not they were illegal. And I think the
people in our criminal division... I think have been as aggressive as
they could be, brought cases where we think we could have brought
them. I know that in some instances that has not been a satisfying
answer to people, but we have been as aggressive as we could have
been.

Grassley: If you constitutionally can jail the CEO of a major
institution, that is going to send a pretty wide signal to stop a lot
of activity that people think they can get away with.

Holder: You are right, senator. The greatest deterrent effect is not
to prosecute a corporation — although that's important — the greatest
deterrent effect is to prosecute the individuals in the corporations
that are responsible for those decisions. We've done that in the UBS
matter and try to do that whenever we can. But the point that you make
is a good one.
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