Target: U.S. Congress
Goal: End legal immunity for bankers charged with criminal activity
In December, 2012, British bank HSBC admitted to laundering money for Mexican drug lords and processing transactions from sanctioned nations such as Iran, Libya and Sudan. While they agreed to pay fines to the Department of Justice surpassing $1.9 billion, no criminal charges were brought against them.
Recently, U.S. Attorney General Eric Holder, explained why: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large.”
His response came during a Senate Banking Committee hearing and confirmed what has been becoming a popular suspicion: the Justice Department believes that banks that are too big to fail are also too big to jail. In essence then, they are above the law, granted an immunity to the consequences of their own actions. It’s no secret that their excessive actions – big bets on high risk operations with big rewards – are what caused the financial crisis nearly five years ago.
However, the collapse of the market didn’t cause those big banks suffer. Even with the fine, HSBC declared some of the biggest banking profits in history for 2012, nearly $18 billion, and doled out bonuses greater than $1 million for at least 200 staff and $3 million for the CEO. Because the bank is too big to fail, its losses were covered, even as executives pocketed their winnings.
Senator Elizabeth Warren pointed out that big banks “are being subsidized by about $83 billion a year by American taxpayers and are still not being held accountable for breaking the law.” And they break the law. In addition to laundering drug money and violating financial sanctions, they’ve been found to be committing routine fraud peddling mortgage securities they knew were worthless, trampling basic property laws, and conspiring to rig the basic measure of interest rates.
The problem is self-sustaining. The Justice Department says banks that are too big to fail because of the impact they would have on the global economy are too big to jail for those same impacts. But if the risk of prosecution is minimal, with potential rewards greatly exceeding potential fines in cases of criminal activity, and if losses are covered with taxpayer dollars, what incentive is there to comply with the law?
In the words of Robert Borosage, President of the Institute for America’s Future, “A nation of laws and markets cannot abide huge private financial institutions that are accountable to neither.”
That the Attorney General, the government’s top law enforcement officer and lawyer, should make the claim he did is a clear call to action. When financial regulations are violated, the Department of Justice needs to prosecute the individual bankers responsible and fit the punishment to the crime. Again, Senator Elizabeth Warren said, “Attorney General Holder’s testimony that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail.”
Urge Congress to end legal and financial immunity to senior bankers.
Dear members of Congress,
It’s been more than five years since the economic collapse of 2008, which was largely caused by the excesses of big banks. Deemed “too big to fail,” it was up to taxpayers to shoulder the burden of keeping these banks afloat, immunizing them from the financial consequences of their own actions. Recently, it has been revealed that many of these banks have engaged in criminal activity, from fraud to money-laundering. In consequence, they were given the financial equivalent of a slap on the wrist.
The Attorney General summed up the problem by boldly claiming that not only are these big banks too big to risk failing, but they are too big to risk jailing, an indefensible and outrageous statement that cannot be accepted. We live in a world of consequences, and those responsible must be held accountable, most especially in cases of egregious crimes. It’s time to end too-big-to-fail/too-big-to-jail and show that no one is above the law.
[Your Name Here]
Photocredit: RMajouji via Wikimedia Commons