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Holder Laid the Groundwork for “Too Big to Jail” In 1999

George Washington's picture




 

Everyone knows that Eric Holder – the head of the Department of Not-Much Justice – has said that the big banks are too big to jail.

And many people know that – prior to becoming the Attorney General – Holder was a partner at a big firm which did some despicable things to represent the big banks and MERS.

But Holder’s see-no-evil act actually started more than a decade ago.

Specifically, in 1999, as Deputy Attorney General, Holder wrote a memo arguing against prosecuting large financial service companies:

Prosecutors may consider the collateral consequences of a corporate criminal conviction in determining whether to charge the corporation with a criminal offense.

 

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One of the factors in determining whether to charge a natural person or a corporation is whether the likely punishment is appropriate given the nature and seriousness of the crime. In the corporate context, prosecutors may take into account the possibly substantial consequences to a corporation’s officers, directors, employees, and shareholders, many of whom may, depending on the size and nature (e.g., publicly vs. closely held) of the corporation and their role in its operations, have played no role in the criminal conduct, have been completely unaware of it, or have been wholly unable to prevent it. Further, prosecutors should also be aware of non-penal sanctions that may accompany a criminal charges, such as potential suspension or debarment from eligibility for government contracts or federal funded programs such as health care. Whether or not such non-penal sanctions are appropriate or required in a particular case is the responsibility of the relevant agency, a decision that will be made based on the applicable statutes, regulations, and policies.

 

Virtually every conviction of a corporation, like virtually every conviction of an individual, will have an impact on innocent third parties ….

Matt Taibbi points out that – when the Department of Justice subsequently prosecuted accounting giant Arthur Andersen for covering up Enron’s fraudulent schemes – Anderson ran with Holder’s argument, and threatened the DOJ “using their employees as human shields”.

Specifically, Andersen said that – unless the DOJ dropped the prosecution – innocent Andersen employees would lose their jobs.

Andersen was prosecuted and convicted, and some innocent employees – as well as the big time fraudsters – lost their jobs.  Since then, the Justice Department has gotten so gun-shy that we basically haven’t had any criminal indictments against a large financial services company since then.

In the wake of the recent revelations that the big banks manipulate virtually every market in the world, and that HSBC blatantly laundered drug cartel money, Holder has said that we can’t indict big companies because that might harm the U.S. or world economy.

And Matt Taibbi notes that – for the first time -  Holder is now saying that not only can’t we indict the companies, but we can’t even indict any of the individual criminals at the companies.  In other words, Holder is implementing a permanent shield for employees and executives at large institutions.

The Big Banks and Commodities Future Trading Commission Conspired to Hide Speculation from Congress

One of our favorite topics is the many ways that big banks manipulate prices.

Last night, Rolling Stone financial writer Matt Taibbi gave some very interesting details about how the big banks have gamed commodities prices.

For 60 to 70 years, the regulations preventing speculators from betting on commodities worked pretty well.  Only commodity producers or buyers – you know, the people who are supposed set prices – could hedge their bets.

But in the early 1990s, the big financial companies starting applying to the Commodity Futures Trading Commission (CFTC) for “exemptions” … so that they could speculate on commodities.

Specifically, they asked to be artificially treated as real commodity producers or consumers – even though they weren’t producing or buying commodities – so that they could “hedge” bets (in name only) on products they didn’t even possess.  (Sound familiar?)

In 1991, the CFTC issuing exemption letters.  The first letter was written to J. Aron, a subsidiary of … Goldman Sachs.

Pretty soon, every major bank in the U.S. was given an exemption.

Congress didn’t know about the exemptions.  Indeed, the House Agricultural Commission – which oversees the CFTC – didn’t even find out about the exemptions until 6 years later … in 1997.

When a congressman on the Agricultural Commission asked the CFTC for a sample of one of the exemption letters, the CFTC official said he had to ask Goldman Sachs whether or not the CFTC could show a copy to Congress.  In other words, the banks were already running D.C. by the 90s.

Commodities speculation has exploded since the exemption letters were issues.

For example, in 2003, there was only $29 billion in speculative activity in the commodities markets.  By 2007-2008, there was over $300 billion in commodities speculation.

Icelandic Parliament: Big Icelandic Banks Were Public Banks … Which Were Privatized FOR FREE Shortly Before They Tanked

Birgitta Jonsdottir is a member of the Icelandic parliament. She knows a good deal about the financial crisis.  Indeed, before being elected to parliament, she made a documentary about the collapse of Iceland’s economy as an investigative journalist.

Last night, Jonsdottir (pronounced “yont-Daughter”) disclosed a stunning fact in a speech I attended:

All our banks were actually public.  They were privatized a few years prior to the financial crisis.

Jonsdottir explained that Iceland’s banks grew to 5-7 times the size of the country’s GDP during the county’s brief bubble after privatization.

And the Icelandic parliament – in a fact-finding report – later found that the bankers never paid anything to “buy” the banks from the government or the people.   In other words, sweetheart deals and corruption meant that a handful of people looted the banks without paying a penny.

America is analogous.  The prosperity which our ancestors worked so hard to build – and the very vision of prosperity of the Founding Fathers – has been looted.

Jonsdottir says that it wasn’t just the bankers who were corrupt … it was also the Icelandic politicians, media, academia … all of the people in a position of power.

She points out that - as bad as things are in America - they were as bad in Iceland.  And yet they took the bulls by the horn and turned things around.

 

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Mon, 06/03/2013 - 20:35 | 3622045 sodbuster
sodbuster's picture

This is the way all of our gov is run. In all the Depts, whether USDA, defense, health and human services, Dept of Transportation, Dept of energy, all of the Secs and under secretarys are hand picked from the industries they are suppose to oversee. The people and industries that are supposed to be regulated, are the ones doing the regulating. The new health care won't be any different.

Tue, 06/04/2013 - 01:18 | 3622714 dunce
dunce's picture

Picked from their industry? Are we going to put a MD in charge of the IRS.

Tue, 06/04/2013 - 01:51 | 3622743 sodbuster
sodbuster's picture

No- the people that will run the the new health care will be hand-picked from drug companies, health ins companies, and companies that do billions in health and surgical equipment. The decisions made will not be in the interest of the consumer, patient, or taxpayer- the decisions made will be to make the medical companies even more money. Every dept in the government has been captured by big business. And now they have Holder running the Dept of No Justice. It's good to be the King. Or at least a Noble.

Mon, 06/03/2013 - 20:59 | 3622118 Richard Chesler
Richard Chesler's picture

Same as Tom Hagen but without any morals or principles.

Mon, 06/03/2013 - 19:01 | 3621814 robnume
robnume's picture

Memo to Holder: Jump, Fucker, jump!!!

cc: Feral Reserve, CONgress, Thief in Chief, CTFC, SEC, IRS, FDA, etc.

Tue, 06/04/2013 - 10:26 | 3623414 Boris Alatovkrap
Boris Alatovkrap's picture

"Feral Reserve"...

Is typo, or concatenation? Is make Boris first read "Fecal Reserve" and Boris laugh so hard spit morning vodka from left nostril (right nostril is congested with influenza virus). Boris is to use "Fecal Reserve" in future for good laughing!

Mon, 06/03/2013 - 17:50 | 3621597 LetThemEatRand
LetThemEatRand's picture

If we didn't have the highest incarceration (of regular individuals) rate in the World by a mile, this seeming rule against criminal charges against large corporations and their officers because innocent people may be harmed -- as if family members of people sent to prison for drugs etc are not harmed by their loved ones going to jail -- would be slightly less infuriating.  Is there a stronger phrase for "double standard?"  When the police refuse to arrest a criminal because the criminal has connections to the police, isn't that itself a crime?  Like violating your oath to enforce the law?

Mon, 06/03/2013 - 22:06 | 3622362 MyBrothersKeeper
MyBrothersKeeper's picture

By their logic, nobody would go to jail.  When Holder says "damage to the economy" what he really means is "disruption of the flow of money to he and his constituencies".  Can't have that can now can we?  Take it another step, which is there is very little restitution to the inncoent people that got scammed.  Instead of the fines going back to shareholders etc it goes to the government to waste and funnel back to the same people who committed the crimes

Tue, 06/04/2013 - 10:24 | 3623406 Boris Alatovkrap
Boris Alatovkrap's picture

You  are most funny! Logic is not component of AG Policy or any political organ! People is go to jail because 1) no connection to political super class, 2) embarrassment to political super class, or 3) as public policy to warn serf not get too squawky. Incarceration is 2,000 year old business, only maybe little older than oldest profession.

... but what is Boris know!?

Mon, 06/03/2013 - 19:51 | 3621947 Totentänzerlied
Totentänzerlied's picture

The law won't save you, because it is whatever they say it is, subject to change without notice or publication.

Mon, 06/03/2013 - 21:38 | 3622257 LetThemEatRand
LetThemEatRand's picture

That would be the fundamental problem.  Money has truly taken over.  Democracy is a sham when you have two parties funded by big money who have managed to convince the sheep that they are the only viable options.

Mon, 06/03/2013 - 22:12 | 3622383 nmewn
nmewn's picture

Democracy.

Find for me, in the BoR, DoI or the Constitution, this word democracy.

Mon, 06/03/2013 - 22:55 | 3622489 Freddie
Freddie's picture

You know the guy if a f**king libtard because these ignorant idiots always scream Democracy.   Like the union dude crying on camera because Gov Walker in WS was not recalled or won election -  "Democracy died tonight." 

http://www.youtube.com/watch?v=hiHsHLDYJIc

Tue, 06/04/2013 - 07:03 | 3622904 Cloud9.5
Cloud9.5's picture

The left always yearns for the dictatorship of the majority.

Tue, 06/04/2013 - 10:20 | 3623389 Boris Alatovkrap
Boris Alatovkrap's picture

What are to expecting!? Majority of Amerika is having more interest in whether Kim Kardashian is real breasts (is not) or Brittany Spears is break down again and shave head (is).

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