The HSBC money laundering settlement is a classic example of this. The LIBOR scandal is probably another great example.
Regulators don’t want to rile the economy by enforcing the law and holding criminals accountable.
Got to keep everything calm. If we just act like nothing’s wrong then the public will go right along for the most part. We have to keep those animal spirits up at all cost.
In the long run of course this tack is suicide for any society.
(From The Office of Senator Sherrod Brown)
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?