Holder Laid the Groundwork for “Too Big to Jail” In 1999

Attorney General Has Been Lobbying for a Get-Out-Of-Jail Card for Big Banks and their Bosses for 14 Years

Everyone knows that Eric Holder – the head of the Department of Not-Much Justice – has said that the big banks are too big to jail.

And many people know that – prior to becoming the Attorney General – Holder was a partner at a big firm which did some despicable things to represent the big banks and MERS.

But Holder’s see-no-evil act actually started more than a decade ago.

Specifically, in 1999, as Deputy Attorney General, Holder wrote a memo arguing against prosecuting large financial service companies:

Prosecutors may consider the collateral consequences of a corporate criminal conviction in determining whether to charge the corporation with a criminal offense.

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One of the factors in determining whether to charge a natural person or a corporation is whether the likely punishment is appropriate given the nature and seriousness of the crime. In the corporate context, prosecutors may take into account the possibly substantial consequences to a corporation’s officers, directors, employees, and shareholders, many of whom may, depending on the size and nature (e.g., publicly vs. closely held) of the corporation and their role in its operations, have played no role in the criminal conduct, have been completely unaware of it, or have been wholly unable to prevent it. Further, prosecutors should also be aware of non-penal sanctions that may accompany a criminal charges, such as potential suspension or debarment from eligibility for government contracts or federal funded programs such as health care. Whether or not such non-penal sanctions are appropriate or required in a particular case is the responsibility of the relevant agency, a decision that will be made based on the applicable statutes, regulations, and policies.

Virtually every conviction of a corporation, like virtually every conviction of an individual, will have an impact on innocent third parties ….

Matt Taibbi points out that – when the Department of Justice subsequently prosecuted accounting giant Arthur Andersen for covering up Enron’s fraudulent schemes – Anderson ran with Holder’s argument, and threatened the DOJ “using their employees as human shields”.

Specifically, Andersen said that – unless the DOJ dropped the prosecution – innocent Andersen employees would lose their jobs.

Andersen was prosecuted and convicted, and some innocent employees – as well as the big time fraudsters – lost their jobs.  Since then, the Justice Department has gotten so gun-shy that we basically haven’t had any criminal indictments against a large financial services company since then.

In the wake of the recent revelations that the big banks manipulate virtually every market in the world, and that HSBC blatantly laundered drug cartel money, Holder has said that we can’t indict big companies because that might harm the U.S. or world economy.

And Matt Taibbi notes that – for the first time –  Holder is now saying that not only can’t we indict the companies, but we can’t even indict any of the individual criminals at the companies.  In other words, Holder is implementing a permanent shield for employees and executives at large institutions.

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  • HS

    Nothing is surprising anymore, except, perhaps, the idiocy of the American public.

  • curri

    It’s rather telling that Ronald Reagan was objectively more of a “progressive”-“leftist” than the gang in the WH now:

    http://www.capitalismwithoutfailure.com/2011/12/bill-black-on-incidence-of-fraud.html

    On the prosecution of fraud following the Savings and Loan Crisis: Our agency filed over 10,000 criminal referrals that resulted in over 1,000 felony convictions. We worked closely with the FBI and the Justice Department, to prioritize cases—creating the top 100 list of the 100 worst institutions which translated into about 600 or 700 executives. We went after the absolute worst frauds.

    On the prosecution of fraud following the current crisis: We now have appointed anti-regulators. The FBI warned in open testimony in the House of Representatives, in September 2004, that there was an epidemic of mortgage fraud, and they predicted that it would cause a financial crisis if it were not contained. It was not contained. Since then we have had zerocriminal referrals. They completely shut down making criminal referrals. Both the Bush Administration and the Obama Administration have not made it a priority to prosecute these elite criminals who caused this devastating injury.

    Also, Reagan was the last POTUS who managed to sometimes resist “free trade” dogma:

    http://www.cato.org/pubs/pas/pa107.html

    Executive Summary

    When President Reagan imposed a 100 percent tariff on selected Japanese electronics in 1987, he and the press gave the impression that this was an act of desperation. Pictured was a long-forbearing president whose patience was exhausted by the recalcitrant and conniving Japanese. After trying for years to elicit some fairness out of them, went the story, the usually good-natured president had finally had enough.

    When newspapers and television networks announced the tariffs, the media reminded the public that such restraints were imposed by a staunch free trader. The less-than-subtle message was that if “Free Trader” Ronald Reagan thought the tariff necessary, then Japan surely deserved it. After more than seven years in office, Ronald Reagan is still widely regarded as a devoted free trader. A typical reference is that of Mark Shields, a Washington Post columnist, to Reagan’s “blind devotion to the doctrine of free trade.”(1)

    If President Reagan has a devotion to free trade, it surely must be blind, because he has been off the mark most of the time. Only short memories and a refusal to believe one’s own eyes would account for the view that President Reagan is a free trader. Calling oneself a free trader is not the same thing as being a free trader. Nor does a free- trade position mean that the president, but not Congress, should have the power to impose trade sanctions. Instead, a president deserves the title of free trader only if his efforts demonstrate an attempt to remove trade barriers at home and prevent the imposition of new ones.

    By this standard, the Reagan administration has failed to promote free trade. Ronald Reagan by his actions has become the most protectionist president since Herbert Hoover, the heavyweight champion of protectionists.

 

 

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