The Farce Must Go On: Senate Suddenly Furious With Eric Holder For Allowing Banks To Become "Too Big To Jail"

Tyler Durden's picture

Or what happens when Wall Street Muppet A is vewy, vewy angwy with Wall Street Muppet B and desperately needs a ratings boost.

* * *

Straight from the best Senate Wall Street taxpayer bailout money and Fed excess reserves (by way of deficit monetization) can buy:

Sens. Brown, Grassley Press Justice Department On "Too Big To Jail"

Senators Question Whether “Too Big to Fail” Status of Some Wall Street Megabanks Undermines Government’s Ability to Prosecute Large Financial Institutions, Impose Appropriate Penalties

Tuesday, January 29, 2013

WASHINGTON, D.C. – U.S. Sens. Sherrod Brown (D-OH) and Chuck Grassley (R-IA) sent a letter today to U.S. Attorney General Eric Holder questioning 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.  They also requested that the Justice Department disclose the identities of parties with whom prosecutors consult about the appropriate level of penalties for financial institutions.

“Wall Street megabanks aren’t just too big to fail, they’re increasingly too big to jail,” Brown said. “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.”

“The best deterrent to crime is to put people in prison,” Grassley said.  “That includes those at powerful banks and corporations.  Unfortunately, we’ve seen little willingness to charge these individuals criminally.  The public deserves an explanation of how the Justice Department arrives at these decisions.”

Brown, who chairs the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, is the author the Safe, Accountable, Fair & Efficient (SAFE) Banking Act, legislation that would prevent any one financial institution from becoming so large and overleveraged that its collapse could put our economy on the brink of collapse or trigger the need for a federal bailout. He also passed legislation with Sen. David Vitter (R-LA) to requiring the Government Accountability Office to study how banks with assets of $500 billion or more benefit from the belief that the government would not let them fail in a crisis.

As Ranking Member of the Judiciary Committee, Grassley has been critical of the Justice Department’s decisions against holding people criminally accountable in financial cases.  He called the Justice Department’s decision to forego any criminal prosecution of HSBC officials involved in that money laundering scandal inexcusable.  And he has questioned the Justice Department about the number of mortgage fraud cases brought forward, revealing a failure to bring significant criminal cases against any of the major banks or financial institutions that have faced civil actions for various frauds. Grassley is the author of the Fraud Enforcement Recovery Act, signed into law in 2009, that was designed to ramp up the government’s response to the crisis and ensure that prosecutors and investigators had the tools needed to combat fraud.

The full text of the letter from Brown and Grassley to Holder can be found below.

January 29, 2013
The Honorable Eric H. Holder, Jr.   
United States Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530


Dear Attorney General Holder:


The large number of private and government lawsuits since the global financial crisis continues to undermine public confidence in our financial markets.  This confidence can only be restored by demonstrating that there are consistent rules in place that provide accountability for wrongdoing and deter financial predators.


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.


The nature of these settlements has fostered concerns that “too big to fail” Wall Street banks enjoy a favored status, in statute and in enforcement policy.  This perception undermines the public’s confidence in our institutions and in the principal that the law is applied equally in all cases.


On settling with Swiss Bank UBS for Libor manipulation, for example, you said, “[t]he impact on the stability of the financial markets around the world is something we take into consideration.  We reach out to experts outside of the Justice Department to talk about what are the consequences of actions that we might take, what would be the impact of those actions if we want to make particular prosecutive decisions or determinations with regard to a particular institution.”


In an interview with Frontline, outgoing Assistant Attorney General Lanny Breuer defended the Department of Justice’s inability to prosecute large financial institutions by saying, “but in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.”


These statements raise important questions about the Justice Department’s prosecutorial philosophy.  In order to explore the Justice Department’s treatment of potential criminal activity by large financial institutions, please answer the following questions and provide the following information:


1. Has the Justice Department designated certain institutions whose failure could jeopardize the stability of the financial markets and are thus, “too big to jail”?  If so, please name them.


2. Has the Justice Department ever failed to bring a prosecution against an institution due to concern that their failure could jeopardize financial markets?


3. Are there any entities the Justice Department has entered into settlements with, in which the amount of the settlement reflected a concern that markets could be impacted by such a settlement?  If so, for which entities?


4. Please provide the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.


5. Please provide any compensation contracts for these individuals.


6. How did DOJ ensure that these experts provided unconflicted and unbiased advice to DOJ?


Our markets will only function efficiently if participants believe that all laws will be enforced consistently, and that violators will be punished to the fullest extent of the law.  There should not be one set of rules that apply to Wall Street and another set for the rest of us.


Thank you for your cooperation and attention in this matter.  We would appreciate a response by February 8, 2013.  If you have any questions, please do not hesitate to contact Graham Steele for Senator Brown at (202) 224-2315 or Chris Lucas for Ranking Member Grassley at (202) 224-5225.



Sherrod Brown                                                  Charles E. Grassley

Chairman                                                        Ranking Member

Banking Committee,                                          Judiciary Committee

Subcommittee on Financial Institutions

and Consumer Protection


Don't make the muppets angry. You won't like them when they're angry.

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IamtheREALmario's picture

Maybe impeaching Holder is the solution....

... if he will not start prosecuting clear criminals, such as Corzine and go after the banking syndicate with criminal charges.

Holder's duty to the country and its people should not be optional.

NotApplicable's picture

There are no such things as political solutions, only political problems.

Please step away from the Hopium.

IamtheREALmario's picture

Well then maybe Obummer will give up Holder to Congress in a deal which solidifies his control over them.

bunnyswanson's picture

More likely, these politicians do not want history to record them as sitting silent with the banker's dick up their ass while they fleece the entire nation to the point of collapse. 

This moment will be recorded in a 4 sentence paragraph and then they will be vindicated (after all information is erased from internet stating otherwise).


azengrcat's picture

Must be long AAPL and running low on Bollinger.

freon guy's picture

Anonymous threatening the DOJ to make reforms..  Aaron Swartz's father making statements how bankers ruining the country get off scott free.  Coincidence? 

NotApplicable's picture

So... you're saying that CIA psyops are underway in an effort to lockdown the net?


French touche's picture

A.EINSTEIN said : American have never known civilization they are passed directly from barbarism to decadence - I always thought he was wrong but now I'm starting to have serious doubts

Ropingdown's picture

And what did Albert think of the Germans?  Was that decadence they passed to?  Did he even do any good physics after the age of thirty?  Was he a decent husband and father?  Who cares what Albert though, outside of his early excellent papers in Physics?

loveyajimbo's picture

Well, this idiot is the Chairman, yes???  How about some referrals for prosecution??  How about starting with Fast and furious, sue to unseal the dirt and nullify the kenyan dictator's exec order... Blankfein and Abacus, Dimon and the silver manipulation... for starters... but you will have to jail the corrupt Gensler and Schapiro too...

Benjamin Glutton's picture

send the Senators a free subscription to Zero Hedge...better yet let's all pitch in a few bucks and PAY them to read some useful news.

knowless's picture

no see cause, monopolies are totally fine economically tbtf was enouhg to enforce that concept. tbtj is just like, redundant and stuff, psish. what are you even talking about? jeez, shutup.

Atomizer's picture

Let’s start with the basics

CEO of JPMorgan says you don’t need to know how banking works


Now we can move to the $155 million in humanitarian efforts with Syria.


All is so noble until this bit surfaces… LOL

Saudi Arabia Sent Death Row Inmates to Fight in Syria in Lieu of Execution


The MSM must start spinning more gun shootings to avoid the taxpayer money trail exposure.

ziggy59's picture

U.S. 'backed plan to launch chemical weapon attack on Syria and blame it on Assad's regime'
Leaked emails from defense contractor refers to chemical weapons saying 'the idea is approved by Washington'
Obama issued warning to Syrian president Bashar al-Assad last month that use of chemical warfare was 'totally unacceptable'

Room 101's picture

The Senate doing it's rendition of Capt. Renault.

Atomizer's picture

Anyone with a higher IQ can see the Edward Bernays test bed on conforming under peer pressure acceptance. Let’s use Apple iPhone conformance as a recent example.


Captain Kangaroo (Attack of the Ping Pong Balls 10-27-1976)

Elvis Presley (You're So Square) Baby I Don't Care - 1957 < --- All lemming must be hip & jump on board to purchase the latest cool item, or you’re a SQUARE!


Edward Bernays – Century of Self

ebworthen's picture

Imagine if the Founding Fathers had decided to just send a letter to King George asking him to please be nicer in his Kingly duties.

Vendetta's picture

essentially that is what the DoJ has done with the corrupt and fraud ridden financial sector.

giorgioorwell's picture

Eric Holder is alive?

yogibear's picture

 The useless POS only comes in for special appearances. 

Westcoastliberal's picture

What the hell!  It takes a "Frontline" documentary to wake these guys up?  Where were they 5 years ago when all this shit started going down? I want to see (Place) Holder's answers.

kwality's picture

They were at the beginning of the SOL.  They want to whip people up now so that they are demanding that the banks fail, and thus have an excuse for depression to come.   

monad's picture

The Honorable Eric Hachetman Holder, fall guy for hire. Will take blame for food.


smartstrike's picture

I vote for plane accident, but I'll settle for heart attack in a jacuzzi.

ljag's picture

I like the "baby harp seal" approach

Freedumb's picture

The constant harping on about criminal penalties serving as the most effective deterrent is bullshit, and that would be the case even if each individual banking scandal resulted in numerous imprisonments. Though admittedly, criminal penalties would be more effective as a deterrent if more people would actually go to jail. But invariably these criminal penalties have only resulted in a few suckers (a/k/a the fall guys) doing a few years in jail -- suckers who probably didn't really matter to their respective organizations anyway. The real power brokers in financial institutions are more than capable of isolating themselves enough from the daily operations of their firms to make it nearly impossible to establish an evidence trail leading back to them. Though there should be more imprisonments, no doubt.

The real way to deter abusive/fraudulent/criminal activity in the financial sector is (1) imposing penalties which are at the very least equal to whatever the actual damage caused was and preferably more (all these bankers care about is their money, hit them where it hurts), (2) scrapping any notion of refusing to impose any penalty that would jeopardize the ability of the guilty firm's ability to remain a going concern (if they're only not bankrupt because, e.g., they have been financing embargoed countries and defrauding seniors, why the hell would we still give consideration to whether a fine would bankrupt them?) , (3) rolling back the ridiculous "whistleblower" concessions which seem to cut everyone's fines down to a pittance except for the very last institution to fess up, and (4) more funding for regulatory bodies, though I am terrified at what our defunct regulators would do with more money given how incompetent they are, so I say this with reservations.

Absinthe Minded's picture

Another bullshit false flag. Who's insider trading now that they're trying to stir shit up and hide?

Dewey Cheatum Howe's picture

Prison terms even if only at club fed along with permanent ban from working in the industry are far more effective than fines. Monetary fines are an absolute joke when you are in the TBTF club like Goldman Sachs and JP Morgan. Govt. fines them, the Federal Reserve is just going to backstop the money with the printers anyways with net zero effect to the banks. It is a sideways monetization of debt for the Treasury.



AllWorkedUp's picture

"more funding for regulatory bodies, though I am terrified at what our defunct regulators would do with more money given how incompetent they are, so I say this with reservations."

 You're kidding right? More money always works so well, just ask the education system. How about firing the fucks that are working there right now and cutting their budgets. Giving jobs to people intent on prosecuting.

Freedumb's picture

I completely agree that it'd be ridiculous to give the SEC et al more funding in the current state they're in. I guess what I was trying to say was in the context of going up against TBTF banks who, in the face of massive fines, would presumably be willing to spend tens of millions in legal fees burying the regulators in documents, motions and an unending series of expert witness testimony. Regardless of anything you do in trying to fix this system you're going to need to drop a ton of cash on hiring enough lawyers / expert witnesses if you want to do an adequate job litigating against the banks. Fixing our justice system is a whole different can of worms....

And re your comment Dewey, yeah the track record suggests the Fed will just backstop all the TBTF banks in the face of regulatory action so if that is how things will be going forward then I agree fines are pointless. I'm saying that we need more fines that completely put banks out of business though, which many of them should have been given the amounts of money involved in much of the illicit activity that has been continually going on. Wouldn't you agree that signaling a willingness to put banks into bankruptcy via aggressive fines would work as a better deterrent than jailing people?

Tall Tom's picture

Really what can a law deter? Nothing.


When I drive and break the Speed Limit, which I do, I am not thinking about the fine if I am caught. I am thinking about getting to my destination. It does not matter to me if I am driving 10 mph over the limit or 20 mph. I do not even bother to watch my speed. If I am caught I pay the fine as it is a cost of doing business.


I guess that I am psychopathic when it comes to speeding because I do that and have absolutely no remorse.


However if I hurt someone else then I will lose sleep...a lot of sleep. If I were to steal I do not think that I can live with myself. Killing another??? I would rather commit suicide unless it were justified by self defense or in defense of another.


Laws provide PENALTIES for being caught violating them...NOTHING MORE...NOTHING LESS. Laws and penalties do not prevent or deter behavior. They provide PENALTIES...IDEALLY JUST.


These bankers will ruin others and look at it as if they were speeding. They have no remorse. Nothing will prevent it. But we can certainly remove them from society so that they are not able to do it again. That is what will be just.

rsnoble's picture

No, angry muppets aren't good. Just ask Iraq, Libya, Iran, Syria, Afghanistan, Pakistan, numerous fucking places I can't spell or pronounce, China, N korea and now the entire fucking African continent.

These bastards have a one track mind and we are nothing more than an annoyance.  Just ask mr. dumbquestions Mccain.  That fucking POS should've been left in the jungle.

smartstrike's picture

4. Please provide the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.


1. Hank Paulson

        ---tanks are going to roll in the street, so give me $700 billion

2. Angelo Mozilo

       ---the subprime crisis is now over, CFC will make a profit in 3Q 2008; I recommend that you buy CFC stock

3. Bob Fuld, Jr

      ----we got more liquidity, so no worries; our credit lines are vast and untapped

4. Bill Clinton's that Glass-Steagall working out, I told ya don't need it






Cabreado's picture

Brown's been around for a while...
Grassely's been around forever.
Must be slow at the keyboard, eh?

False leadership always behaves the same...

and now, the Self-Serving are in Fear mode.

And most pathetic...
while what they fear most is Exposure,
when in Fear mode, they expose themselves.

GoBadgers's picture

Even if DOJ attempted to go after the bankers, what difference does it make?

Tall Tom's picture

The New Justice. "Really at this point what difference does it make?" --Hillarity Clinton

mt paul's picture

they might as well

have added to the list..

who killed Kennedy 

and who blew up the towers..

Powder's picture

I am sorry, I can't read passed the Honorable Eric H. Holder part without.. puking..  

TNTARG's picture

They've just realized that? How clever!

Vendetta's picture

yep.  Our esteemed 'lawmakers' are "on  top of it" September 2008 wasn't too long ago was it?  They are undoubtedly running the statutute of limitations clock out and looking forward to their payoffs when they slide out of office.

TNTARG's picture

Let's send them some movie. They were so busy!


Crummy's picture

It's a bit like watching twin sisters fight over the same man.

Cosimo de Medici's picture

My buddy at the Post Office steamed open Holder's reply and photocopied it.  Here's the body of the letter:

"I've been bending over backwards investigating, and I take some offense that you imply otherwise.  In fact, I've been investigating myself.  And DAMN, I'm looking good!  The suits?  Brioni.  And don't blame me, they were empty when I got them.  Took a while to get them tailored properly, but that's why the President's term runs four years.  The shirts were more of a problem, but I finally found these Stefano Ricci ones.  Nice, huh?  Like the piping on the collar?  See the "HEH, AG" stitched onto the sleeve?  Bitchin, no?  Truth be known---hey, I'm under oath, right---the most intractable problem has been the hair. You'd think that with a population more than 90% African American, DC would have a stylist who knows how to do a brother's doo, but you'd be mistaken.  I finally found this Vietnamese women in Bailey's Crossroads...well, she wasn't here officially, but a man in my position, and me being an Honorable man and all, I helped push through that Green Card thing and I can tell you we've another proud American on the books.  You guys need a trim?  She does ears and noses, too, and I'm guessing at your age that can be a issue.  Now what's this too big to jail thing?  We need new doors on the cells or something?  Like on airplanes where really fat people can't eat or drink the whole flight because they can't slip in the door of the toilet if the need for the needful arises?  Well, yes, rectumifying that problem has taken a lot of my time.  And we're going to look at that football helmet issue, too, now that the President has made banning football one of his top priorities.  He's got two daughters, you know.  But talking about too big to jail, you ever see some of those offensive lineman?  I'm always kiddin' Michelle that it takes guys like that to make her butt look reasonable.  Oh, she hates that.  So about this bank thing, I'm scheduled for a lunch and massage with my buddy Jamie next week Tuesday.  I'll ask him about it and what should be done.  Guy's got all the answers.  Hey, you like my hair this way?"

Clashfan's picture

Oh yeah, Cosimo, another 911 truth denier who threatens to report ZH posters to DHS.

Atomizer's picture

Commonly, failure in financial growth and a bottle of Milk of Magnesia sits next to a Central Planner lying repeater’s network computer. Deception has caught up. Now their presence being filtered down to MSM is being questioned. Old tricks have been exposed, watching tweaked versions no longer becomes effective.

ZeroAvatar's picture

" set of rules for Wall Street, and ________________ for the Restuvus!"

Acidtest Dummy's picture

"Why do we always come here? I guess we'll never know. It's like some kind of torture -- to have to watch the show." Stadler and Waldorf's song.

NoelConfidence's picture

It's just the Pots again, calling the kettle black.