"No One is Too big to Jail" - US Attourney General Eric Holder, May 5th, 2014
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"No One is Too big to Jail" - US Attourney General Eric Holder, May 5th, 2014 - Video
Holder: No Such Thing As #39;Too Big To Jail #39;
US Attorney General Eric Holder warned Monday that no financial institution should consider itself "above the law," amid investigations into alleged tax evasion and money laundering by European...
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Holder: No Such Thing As 'Too Big To Jail' - Video
No such thing as 'too big to jail':AG Holder
Attorney General Eric Holder discusses the Department of Justice's belief that no company, no matter how big, is above the law, including the big banks. "No individual or company," he says, "is above the law.
Columbia Law School Professor John Coffee said Holder's words marked a potential retreat from March 2013 Senate Judiciary Committee testimony, in which he said "it does become difficult for us to prosecute" major banks because the action could harm the U.S. or global economy.
"If it's a deferred-prosecution agreement, it would be hard to call it a real turnaround," said Coffee. "If it's an indictment only of a (bank) subsidiary, it's a partial turnaround. But if he indicts the parent (company), that's a significant turnaround."
Coffee predicted Holder's comments about criminal charges could trigger broader bank industry reaction. Referring generally to financial wrongdoing, Coffee said "maybe they'll start saying it's not just the cost of doing business any more."
But Shulman Rogers attorney Jacob Frenkel warned that Holder's comments could have "a destructive effect rather than a deterrent effect."
"I have talked to general counsels who have questioned why they want to remain a corporation domiciled in the United States in such a regulatory-unfriendly environment," said Frenkel, a former federal prosecutor and Securities and Exchange Commission lawyer. "There are long-term ramifications to such messages."
Read MoreHow US plans to use tax law to punish Russian banks
Rather than speaking in broad conceptual terms, Frenkel said Holder should "bring the cases you think are appropriate to bring, and then explain why you have brought them. Regardless of whether they agree, people understand charging violations of law."
Nancy Bush, an independent banking analyst, said Holder's comments heightened focus on a much-discussed financial issue: "Can you criminally indict a bank without disqualifying it as a (trading) counterparty, in which case you may totally screw up liquidity in the banking system?
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Holder's warning sparks caution, criticism
Eric Holder is talking a big game.
The US Department of Justice chief is preparing criminal charges against at least two banks in a move to end too big to jail institutions, the Attorney General said in a video posted Monday on the Justice Web site.
In fact, federal prosecutors are close to obtaining a guilty plea and a settlement of more than $1 billion from one of the banks, Credit Suisse, the Wall Street Journal reported Monday night.
While Holder didnt name names in the video, prosecutors have been clamping down on a Citigroup subsidiary, BNP Paribas, and Credit Suisse, according to people familiar with the investigations.
Justice is looking into Citis Mexican banking unit, Banamex, according to a regulatory filing on Friday.
BNP Paribas, Frances second-largest bank, allegedly did business with blacklisted countries like Sudan, while Credit Suisse is said to have provided illegal tax shelters, one person said.
Prosecutors from Justice, US Attorney Preet Bharara and Manhattan District Attorney Cyrus Vance Jr., are exploring ways to hit Credit Suisse and BNP with criminal charges without putting them out of business, source said.
One way to do so would be to strip them of their ability to use dollars for clearing transactions, according to the source.
The departments punishment would be harsher than when it pursued HSBC for helping Mexican drug cartels launder money and doing business with banned countries like Iran.
HSBC, the largest European bank by assets, paid $1.92 billion in fines instead of pleading guilty.
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Eric Holder: Theres no such thing as too big to jail
U.S. Attorney General Eric Holder said his department is readying criminal cases against banks that show financial institutions arent too big to prosecute.
Holder, in a video message posted today on the departments website, said improved coordination with regulators is creating a relationship that will prove key in the coming weeks and months as prosecutors pursue charges. The government is nearing decisions on whether to charge Credit Suisse Group AG (CSGN) and BNP Paribas SA, (BNP) people familiar with those probes said. Holder didnt specify any banks.
I am personally monitoring the status of these ongoing investigations, he said, speaking generally. I am resolved to seeing them through, and in doing so, I intend to reaffirm the principle that no individual or entity that does harm to our economy is ever above the law.
Holder has faced criticism from lawmakers who said the Justice Department failed to hold bank executives criminally responsible for their roles in the worst financial crisis since the Great Depression. His department also was faulted for resolving cases against banks with settlements letting them escape criminal charges by paying fines, improving controls and promising not to break the law. At least 20 such agreements with financial firms have been entered into during Holders five-year tenure, according to a compliation published by law firm Gibson, Dunn & Crutcher.
The three-minute video, which is part of a weekly series, contrasts with Holders comments from more than a year ago, when he told Congress that criminal charges against a large, interconnected bank -- something that might threaten its existence -- could also damage national or global economies.
That the size of some of these institutions becomes so large that it does become difficult for us to prosecute them, he said in March 2013.
Prosecutors are taking the unusual step of drawing attention to claims before they are filed. Manhattan U.S. Attorney Preet Bharara predicted in a March speech that ``before too long a financial firm would be charged criminally or plead guilty to a felony. He also echoed the message in a post on Twitter Inc.s messaging service.
The Justice Department is weighing charges against Credit Suisse, the largest of 14 Swiss banks under criminal investigation in a U.S. crackdown on offshore tax evasion, according to people familiar with the matter who requested anonymity because they arent authorized to discuss it publicly.
The bank has been negotiating a deferred-prosecution agreement similar to one that UBS AG, (UBSN) the largest Swiss bank, reached with the Justice Department in 2009, a person familiar with the probe has said. The resolution could involve criminal charges against Credit Suisse or a unit, the person said.
BNP Paribas has been the subject of a federal probe into possible violations of sanctions barring business with prohibited countries. BNP Paribas said last week that it may need to pay more than the $1.1 billion it had already set aside for the case. The probe focuses on dealings tied to Iran, Sudan and Cuba, a person with knowledge of the matter said earlier this year.
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Holder Signals Criminal Charges Coming Against Some Banks