WASHINGTON (Reuters) - A Justice Department official insisted on Wednesday that no financial company is too big to jail, in the department’s latest effort to backpedal from statements made in March by Attorney General Eric Holder.
“No institution and no individual is immune from prosecution because of its size,” Mythili Raman, acting assistant attorney general in the Justice Department’s criminal division, said in testimony before a U.S. House of Representatives panel.
The financial services committee’s oversight panel called Wednesday’s hearing in response to Holder’s comments in March, in which he told a Senate committee that it can “become difficult” to prosecute major financial institutions that have been accused of wrongdoing because they are so large that a criminal charge could pose a threat to the economy.
Many lawmakers interpreted the remark to mean that some banks were “too big to jail;” the 2010 Dodd-Frank law was meant to solve the problem of “too big to fail.”
Holder backtracked earlier this month from his comments, but Democrats and Republicans still have asked whether the department has been aggressive enough in pursuing criminal charges in connection with the financial crisis and other matters, such as money laundering.
Many members of the panel on Wednesday said they still had lingering questions about the process that the Justice Department follows when determining whether to charge corporations and individuals.
“Isn’t the attorney general implying that some of these institutions are so large, it is very difficult to make a decision to prosecute them?” asked North Carolina Republican Patrick McHenry, who chaired the hearing.
“I don’t think that is what the attorney general was saying, Mr. Chairman,” Raman said.
She added that the department weighs a number of factors when making prosecution decisions, with “collateral consequences on innocent third parties” being one of them.
She said that no single factor, including collateral consequences, prevents the department from filing criminal charges.
Concerns about the impact of criminal prosecutions on large companies can be traced back to the 2002 indictment and eventual demise of accounting giant Arthur Andersen.
That prosecution led to the loss of about 25,000 jobs and a greater consolidation in the accounting industry. In light of that, the Justice Department stepped up its use of deferred and non-prosecution agreements.
More recently, the department has faced criticism by some for not bringing many criminal cases against banks and high-powered executives in connection with the financial crisis.
Critics also point to the department’s decision last year not to prosecute British financial group HSBC Holdings Plc in a case involving allegations of laundering drug money from Mexico.
The company instead entered into a deferred prosecution agreement and paid $1.92 billion to the U.S.
Several Democrats said on Wednesday that they feared big banks are allowed to buy their way out of trouble by paying fines.
“When we hear that none of the Wall Street culprits have gone to trial, it contributes to this feeling out there that if you have money, you can get off,” said Representative Emanuel Cleaver, a Democrat from Missouri.
“If you rob a convenience store, you will go to jail. If you rob the nation, you just get richer and you pay a fine,” he said.
“I can assure you, Congressman, that our career prosecutors and investigative agents are absolutely tenacious about getting to the bottom of criminal wrongdoing at any entity, including large financial institutions,” Raman replied.
Reporting by Sarah N. Lynch; Editing by Phil Berlowitz