• Too-Big-to-Fail Banks Limit Prosecutor Options, Holder Says - Bloomberg
    http://www.bloomberg.com/news/2013-03-06/too-big-to-fail-banks-limit-prosecutor-options-holder-testifies.html

    The size of the largest financial institutions has made it difficult for the U.S. Justice Department to bring criminal charges when there’s wrongdoing, Attorney General Eric Holder said.

    Criminal charges against a bank — something that could threaten its existence — may also endanger the national or global economies in the case of the largest ones, because of their size and interconnectedness. That has “made it difficult for us to prosecute” some of those institutions, Holder said today at a Senate Judiciary Committee hearing.

    Dean Baker: Big Bank Immunity: When Do We Crack Down on Wall Street?
    http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/big-bank-immunity-when-do-we-crack-down-on-wall-street

    First off, we should not assume that just because the Justice Department says it is concerned about financial instability that this is the real reason that they are not prosecuting a big bank. There is precedent for being less than honest about such issues.

    When Enron was about to collapse in 2002 as its illegal dealings became public, former Treasury Secretary Robert Rubin, who was at the time a top Citigroup executive, called a former aide at Treasury. He asked him to intervene with the bond rating agencies to get them to delay downgrading Enron’s debt. Citigroup owned several hundred million dollars in Enron debt at the time. If Rubin had gotten this delay Citigroup would have been able to dump much of this debt on suckers before the price collapsed.

    The Treasury official refused. When the matter became public, Robert Rubin claimed that he was concerned about instability in financial markets.

    It is entirely possible that the reluctance to prosecute big banks represents the same sort of fear of financial instability as motivated Robert Rubin. In other words, it is a pretext that the Justice Department is using to justify its failure to prosecute powerful friends on Wall Street. In Washington this possibility can never be ruled out.