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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geotrader's picture

At what point should any of that letter be taken seriously?

andrewp111's picture

Not as long as Obama is in the White House. He loves big banksters.

Heffer's picture

The United States is a nation of laws: badly written and randomly enforced. 
Frank Zappa 

Read more at 

Ghordius's picture

Laws live from how much citizens care about them

From Germany With Love's picture

The EU doesn't care one bit. Cyprus not systemically relevant? Pffffftt! The spice must flow.

Ghordius's picture

good article, thanks. Had to laugh about "im Vergleich zu Griechenland ist Zypern eine Pommesbude". I find the Cyprus situation partly disgusting and partly understandable. The ECB position is more understandable than the EU one - and the EU one is strongly flavoured from the Russian requests for protection of their interests there

to be frank I think the German Cabinet's position is very disingenuos - who is the biggest friend of Russia in the EU? But it's an election year, and so imho they have to save face and play the "the EU and the ECB forced us" card, which I find even more disgusting

how practical for our european governments to have this card, eh? until they overplay it, like the British Cabinet did for years and years

MarcusLCrassus's picture

Institute the death penalty for crimes committed by bankers and we will see these banking crimes vanish almost overnight. 


Problem solved. 

Ghordius's picture

doesn't solve the problem if they are not prosecuted. Too Big To Fail seems to be Too Big To Prosecute

From Germany With Love's picture

I dont care about the all the Blankfeins, Jains, whoever. The CxOs are secondary. I want disownership through nationalization of failed too-big-to-fail banks. Because...

It's not the managers who matter, it is the people on whose behalf they try to create profit which matter.

Ghordius's picture

+1 add (after nationalization) a break up into units that are both manageable and small enough to fail, a later privatization and size/scope limits on them and you got me as an ally

onthesquare's picture

 immunity for the rich

not a new story

ReeferMac's picture


Aide No. 1: "Someone called and said there was a kerfuffle on PBS last week? Something w/ the big-banks and prosecution of crimes? Did you catch that?"


Senator MoneyBags: "Get that fucking Holder on the line, I don't have time for this shit, its playoff season!"

earnyermoney's picture



Cynical faux outrage from fascists on the blue and red teams just as the statute of limitations on these crimes is about to pass.

Dewey Cheatum Howe's picture

If nothing else, if they passed laws lifting statute of limitations on these types of crimes would placate the more moderate justice seekers. They punt everything else do that would at least leave open the false possibility of hope.

SKY85hawk's picture

Perhaps not.   While most criminal offenses have a statute of limitations, which require a prosecutor to file charges within a specified period of time, fraud related crimes are sometimes treated differently because the nature of a fraud is for the crime to go undetected. As a result, many jurisdictions and some Federal statutes provide that the statute of limitations in some fraud cases does not begin to start running until the fraud is discovered. In theory, that could mean that a person who has committed mortgage fraud, bank fraud or real estate fraud could remain criminally liable for years into the future and that the statute of limitations would only begin to run when the auditors or investigators discovered the fraudulent activity.

Also, moving out-of-State could similarly toll the statute of limitations, in effect stopping the clock and allowing State prosecutors all the time in the world to bring criminal charges against you while you remain out of the State where the fraud related crime occurred.