No bank is ‘too big to jail,’ U.S. Attorney General Holder warns

By Guest Contributor
May 20, 2013

By Stuart Gittleman, Compliance Complete

NEW YORK, May 20 (Thomson Reuters Accelus) - Corruption, cyber threats and transnational organized crime – and the money laundering that greases the wheels of illicit commerce – are high on the list of law enforcement priorities, U.S. Attorney General Eric Holder told the House Judiciary Committee on Wednesday.

The list also includes preventing and combatting violent crime, confronting national security threats, ensuring civil rights, “safeguard[ing] the most vulnerable members of our society” and increasing the vigilance against terrorism, Holder said.

But there will be no letup in enforcing antitrust laws, combating tax fraud schemes, and identifying and thwarting financial and health care-related fraud crimes, Holder added. Fraud detection and enforcement efforts in fiscal year 2012 brought a “record-breaking recovery and return of roughly $4.2 billion,” he said.

The U.S. Department of Justice (“DoJ”) and other federal, state and local law enforcement agencies have filed almost 10,000 financial fraud cases against over 14,000 defendants, including more than 2,900 mortgage fraud defendants, over the last three fiscal years, Holder said.

But critics of the response by the DoJ, the Securities and Exchange Commission and the federal banking regulators to the credit crisis have said the agencies picked low-hanging fruit, going after fraudulent borrowers instead of their enablers, especially the banks that packaged and sold toxic mortgage-backed securities.

Holder rejected criticism of being soft on financial crime by big diversified banks and appeared to walk back remarks by Lanny Breuer, at the time head of the DoJ Criminal Division, that economic impact was a factor in deciding whether to prosecute the largest U.S. banks.

“Let me be very clear: there’s no bank, there’s no institution, there’s no individual that cannot be prosecuted by the [DoJ]. We have had thousands of financially based cases over the last four years,” Holder reportedly said.

Holder also rebuffed critics who say the big money laundering and foreign bribery cases are filed against non-U.S. banks and operating companies, and even then the cases are resolved by avoiding convictions for violating U.S. laws.

“Let me be very, very, very clear: banks are not too big to jail,” he said in response to a question at the hearing.

With statutes of limitations about to run out on much of the pre-crisis conduct, Holder and the DoJ, as well as the regulatory agencies, will have to scramble to bring civil and criminal cases in time.

But Holder said prosecutorial and regulatory resources are tautly stretched, warning that sequestration and budget cuts “will undermine [the DoJ's] ability to deliver justice for millions of Americans, and to keep essential public safety professionals on the job.”

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter: @GRC_Accelus)

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