The notion of too big to jail just got very serious as the nation’s chief attorney agreed with the idea that financial institutions are too large to prosecute.
US Attorney General Eric Holder testified before the Senate Judiciary Committee on Capitol Hill today, and discussed the lack of criminal cases against financial institutions in the aftermath of the financial crisis.
That’s been a point of irritation and frustration for many in Washington and across the country who feel big banks that were partially responsible for the credit and housing bubble yet went unpunished. Instead, they were given billions in federal bailout money because they were deemed too big to fail. And now while their stocks recover the rest of the economy is barely trudging along.
“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 you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” he said. “And I think that is a function of the fact that some of these institutions have become too large.”
In other words, too big to fail has morphed into something more perverse. Not only are big banks bigger than they were during the financial crisis but now the Department of Justice fears bringing criminal charges against them because of the possible repercussions such proceedings would have on the greater economy.
That’s not the first time we’ve heard about the Justice Department’s hesitation to prosecute big financial institutions. Most recently when going after UBS for its role in the global Libor scandal theWall Street Journal reported that officials at the DoJ were “heartened by the lack of a negative reaction in the markets and among regulators around the world to UBS‘s guilty plea. Before the settlement deal, some officials had worried it could destabilize the bank.”
That’s a very scary, very ugly way to run the country. Not only are financial institutions operating under the notion of too big to fail but now there’s room for them to behave as negiligently as possible without fear of a criminal case from the federal government.
It’s no wonder then that big banks hate the idea of breaking up. Just about every big bank CEO that has publically pushed back on the idea of breaking up their bohemoth institutions. Here are some of their reactions to the idea:
It pays to be big and it also keeps you out of court.
No comments:
Post a Comment