Prosecutors May Finally Go After Criminal Mega-Banks

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Logo of the Swiss bank Credit Suisse towering on its HQs in Zuerich, Switzerland, November 1997. (APM Photo/Michele Limina)

Logo of the Swiss bank Credit Suisse towering on its HQs in Zürich, Switzerland, November 1997. (APM Photo/Michele Limina)

The biggest banks pose a challenge for prosecutors. They are so entangled in the larger economy that there is a risk that punishing their misdeeds can create a ripple effect that damages the entire economy. In now notorious testimony before the Senate Judiciary Committee last year, Attorney General Eric Holder claimed, “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.”

But not holding them accountable for their misdeeds only encourages their officers to engage in more fraud, market-fixing and misrepresentation. Failure to prosecute creates a huge amount of systemic risk.

So far, to the frustration of most Americans, no criminal charges have been filed against the biggest banks since the 2008 crash. But in today’s New York Times, Ben Protess and Jessica Silver-Greenberg report that this dynamic might be changing:

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.

In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fueled a public outcry over the perception that Wall Street giants are “too big to jail.”

Addressing those concerns, prosecutors in Washington and New York have met with regulators about how to criminally punish banks without putting them out of business and damaging the economy, interviews with lawyers and records reviewed by The New York Times show.

The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France’s largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.

In the talks with BNP, which has a huge investment bank in New York, prosecutors in Manhattan and Washington have outlined plans to extract a criminal guilty plea from the bank’s parent company, according to the lawyers, who were not authorized to speak publicly. If BNP is unable to negotiate a lesser punishment — the bank has enlisted the support of high-ranking French officials to pressure prosecutors — the case could counter congressional criticism that arose after the British bank HSBC escaped similar charges two years ago.

Such criminal cases hinge on the cooperation of regulators, some who warned that charging HSBC could have prompted the revocation of the bank’s charter, the corporate equivalent of the death penalty. Federal guidelines require prosecutors to weigh the broader economic consequences of charging corporations.

Read the rest of the story at The New York Times

And also see  “The Rise of Corporate Impunity,” Jesse Eisinger’s story for ProPublica and The New York Times Magazine on the only Wall Street executive who’s been prosecuted as a result of the financial crisis.

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  • Anonymous

    Why worry about the damage that might occur? If they are not punished for the damage that they have already done the message is that it is okay to do it again. Punish them and if we take a hit so be it, don’t punish them and they will repeat 2008 over again. The only lesson they have learned is if they screw up the tax payers will get the bill.

  • destroyideas

    Better to disrupt the economy now because it will only get worse.

  • dhal9000

    Matt Taibbi’s book “The Divide” is a real eye opener on this topic, and he points out a very straightforward solution. If A bank is “too big to fail”, part of the settlement must be to break up the bank so they won’t have the idea that they are immune in the future. And although there may be systemic risk and collateral consequences to convicting the bank of a crime, the same can not be said for individual bankers. I don’t believe that corporations are people, so I don’t care if “the bank” is convicted, but I definitely want the people who committed fraud to go to prison.

  • Anonymous

    the CEO’s and other officers who got bonuses after this whole thing blew up should be fined those same amounts. That would be a start.

  • YolandaRThomas1

    The Revolving Door ~ Wall Street Lawyer to Federal Prosecutors/Regulators ~ Needs to Stop! You’ve lost Credibility! You can’t effectively Prosecute Wall Street, then Get Jobs on Wall Street. The huge Wall Street Penalties Settlements with No CEOs/Executive Staff going to Prison is a slap in the face to America. Attorney General Eric Holder is responsible for writing these settlement positions during his Wall Street days and this is the major problem – hypocritical conflict of interest. If none of the Wall Street goes to prison, what is the incentive to Stop Corruption and Ponzi Schemes of being predators on Average Citizens? Wall Street Crooks almost caused a World Wide Depression with their Corruption increasing their own personal wealth then tried to blame Average Citizens. Rich People walked away with millions/billions in these Ponzi Schemes and left average citizens holding the debt. “Bernie Madoff is the only one in Prison, because he screwed Rich People with the known help of Wall Street not Average Citizens

  • Anonymous

    If Holder would go after corporate crooks instead of whistle blowers and pot smokers, it would be great. I’ll believe it when I see it.

  • Anonymous

    And jailed.

  • Anonymous

    Right on!!!!

  • Political Atheist aka Javaman

    BFD. Until I see bank of America in the headlines, this is nothing more that fluff.

  • Ken Matheny

    Sorry, just more BS & smoke screens

  • Anonymous

    Left to their own devices, banks will always and without exception, defer to their own interests. Too big to fail is double speak for we fear the banks. Last I heard, governments were supposed to be in control. Too many insiders in government that represent the bank’s interests and not enough representing the citizens. In any convictions we always bare the brunt regardless of the size of the illegal activity. If a person is jailed, his/her family suffers and their is a cost to tax payers in that we pay for the jail, the food and the lost revenue he/she would have incurred. The way I see it, we are not looking for punishment as much as change. I’m sure serious and innovative people can come up with solutions that would serve the public and avoid a similar fiasco in the future. It just takes some guts.

  • Anonymous

    Do it anyway. The economy already sucks, thanks to “too-big-to-fail” banks, corporations, and Wall St.

  • rg9rts

    Give me a break …they can’t even do American banks. When was the last time a banker did time for what they did in manipulating the markets.

  • SKing

    Allowing these mismanaged banks to go under and/or putting them out of business would actually cause the American economy to prosper. Their major share holders are NOT American!!! The majority of their labor is out-sourced overseas!!! They have been taking bail outs, and these are NOT “loans” in the usual sense of the word, in that the American tax payers benefit nothing from giving these big banks this money. Had the bail out money gone to the American citizens, no one would need to be homeless, no one would need to be impoverished. But, leaders elected to give $trillions to a very few banks, which in turn used that money to increase their holdings rather than to help solve the problem they started, namely the collapse of the economy. They have been found “guilty” of SEC violations/defrauding investors & insurance companies, document forgery (FBI investigation), mis-handling (at best) millions of mortgages, over-charging fees on credit cards/bank accounts, manipulating interest rates, manipulating foreign currency exchange rates, … it goes on and on, and our leaders allow it (for the most part), our courts simply slap wrists with gag orders so that the people can’t even see the temporary welts, and the sheeple turn a blind eye until one day it effects them personally, which it eventually will for every middle class (or lower) American. I cannot even believe the lies I have heard, the cut&pasted documents I have seen, the harassment I have experienced, the abuse and violation of my rights I have endured and the number of times I have attempted to do the right thing (or actually offer to take a loss in order to settle things more quickly) and been ignored – and that is in my one case alone. Tens of millions of us are in legal disputes with these banks with the same damn complaints over and over again, but our leaders will not prosecute on our behalves. We are forced to fund our own civil suits, and most of us cannot withstand the YEARS of legal fees (not to mention time, energy and emotional distress) it takes to finally get before a jury. We come together by the thousands and file class action complaints, only to have our claims thrown out by judges who feel that the banks have already been punished via the National MOrtgage Settlement, etc. Really? Well, here’s the deal on that settlement – those banks were told to pay people damage money in relatively small amounts, the smallest being $300 to all homeowners who had mortgages with them at the time and had not had a problem in the servicing of the mortgage. Well, for example, Citi decided to just write checks for $300 to all of their mortgaged homeowners and call it good, even though they owed, lets say me for example, “$19,800 per the National Mortgage Settlement. When I got the $300 check, I complained to the National Mortgage Settlement manager, and guess what I was told? “There is no policing clause in the NMS, so if you didn’t get what is owed you, you can sue the bank in civil court.” I’m sorry, but you cannot tell me that our leaders couldn’t see that coming. Our leaders have failed us to date. We need laws with enforcement clauses! We need legal action taken NOW against all of these banks! We need our class action complaints taken seriously, because WE HAVE BEEN DAMAGED in many ways! We need our civil actions taken seriously, including our complaints for damages surrounding emotional distress (How would you feel if you were making your house payments and were foreclosed on anyway? How would you feel if you didn’t know if you were going to be able to stay in your home while you waited for a trial date for 6 or more years? During which time your children grew up while you were too stressed out and too financially drained from paying legal fees to provide the living environment all children deserve? YES, there is emotional distress in wrongful foreclosures, and post traumatic stress disorder for the whole family!), and our complaints for harassment (How would you like to received automated phone calls 2 to 7 times daily, 24-7, with conflicting information every time you spoke to the representative on the other end, most of the time someone who barely speaks English who is in a foreign country and has no idea that you just spoke to another representative 5 minutes earlier? How would you like to receive threats of eviction every 30 days for years, while you are making your house payments? How would you like to receive conflicting payment demands, often on the same day, conflicting and confusing information, with 800 #s to call that go to no-where? How would you like people showing up at your door every 30 days -often looking like homeless persons or gang members (because they might be – the banks often use “back to work” programs which represent folks who are recently out of de-tox or prison, paying them $10 to $25 to come to your door and tell you that you are in foreclosure)? We have legitimate complaints for harassment!) After almost 6 years waiting to get before a jury (because the banks like to change attorneys, lose paperwork and do other things to get continuances, etc.,) I am moving my family out of the U.S. to saner pastures. Meanwhile, I continue my legal action against my mortgage servicer, and I fully support in spirit (not financially and not in person) the People’s Revolution. I hope that after my family has left this country, that the PR will do what is necessary to rid this once-fine-Country of the liars and thieves that call themselves bankers, and their attorneys and political friends too. After all, we use our military to “liberate” less fortunate people all the time around the world. It is about time that someone uses any measure necessary to liberate the people of the U.S. This country is no longer the land of the free. We are enslaved to corporations and corrupt government & courts. 2 decades ago I was proud to be an American. Today I am just ashamed of what this country has become. Please, leaders, elected officials, judges, attorneys – get some back bone, find your moral compass (or at least an ethical compass), do what is right: punish these banks, put them out of the misery of the people, and provide the foundation for a new and better America.

  • DrTeeth

    Should they decide to go badass and take on an American bank or two, watch out middle management!

  • Mark Dandeneau

    I can tell you how to do it. You take all the major banks and you take all their assets. You take all the assets of the criminal managers. You give every family in America $1 million dollars with the stipulation that they must buy a new car and a new home. You take the 200 or 300 trillion or so that you have left and earmark it for environmental restoration. Banks will be needed and they will be built. You will never convince me that if we eliminate known criminals from the financial system we will be worse off.

  • JonThomas

    Ty, that made me actually lol.

  • Pamela B

    You don’t have to have failed banks to imprison their Boards of Directors or their CEOs. If these people thought they’d go to jail, they’d be more careful how they act.

  • nick quinlan

    Wow, going after one of Frances largest banks, im impressed. When they drag JP Morgans CEO and upper management into court, also many other banksters heads, then I will be impressed. Im not gong to hold my breath

  • nick quinlan

    Problem is, Wall Street OWNS the gov

  • nick quinlan

    Yeah, they are going after the criminal janitors and window washers at those American firms too. Heads are gonna roll, they will have this stinking pile of putridity cleaned up in no time. Faith restored!

  • nick quinlan

    To quote Paul Craig Roberts, ” wall Street is nothing but a looting machine, it serves no other purpose. I am surprised the citizens have not burned it to the ground”. JP Morgan was complicit in 1913 in enacting the Federal Reserve bank, in collusion with british and other European banks, that have robbed and enslaved this country for over 100 years.

  • Wade

    Fiat justitia ruat caelum.

    (Latin for “Let justice be done though the heavens fall.”)

  • Philip Cohen

    “Federal guidelines require prosecutors to weigh the broader economic consequences of [criminally] charging corporations.”

    This must be the case with eBay also; yet, apparently, the DOJ won’t even tell eBay
    to desist from their demonstrable, ongoing, criminal activities …

    eBay Inc, where the incompetent mingle with the malevolent and the criminal …

  • Anonymous

    What utter nonsense. Putting criminal bankers in jail would not affect the economy ONE IOTA. Their assets could easily be seized as penalties to be put to good use. A banker sitting in a jail cell is great dis-incentive to do crime and would ENHANCE the economy. NO ONE can ever prove that letting bankers do jail time can hurt the economy in any way whatsoever. This is one stupid argument.

  • Anonymous

    How on earth would a banker sitting in jail disrupt the economy????????????

  • Jerry Squarey

    What about American Banks and Financial Institutions? What about some Justice for the people affected? I’m not interested in what is done about foreign companies.
    How can a company plead guilty? Is the company somehow a living breathing entity capable of cognitive thought procesess? If I was pulled over for speeding and I told the Patrolman my vehicle is guilty and will be paying the fine, is that the same concept?
    I think whoever is in charge of these corrupt institutions is responsible, Simple as that.