Warner, Corker Ask Holder to Clarify 'Too Big to Jail' Remarks

WASHINGTON — Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn., are asking Attorney General Eric Holder to clarify his surprising remarks last week about whether some institutions are too big to prosecute.

Holder told the Senate Judiciary Committee last week that he has concerns about the size of some institutions and the impact that has on deciding whether to bring criminal charges to court in some cases. Warner and Corker are now requesting more information from the top Justice Department official about his views and the implications for bank prosecutions in the wake of those candid remarks, which sent shockwaves through the financial community.

"We would first like to understand precisely what you meant by this response," the lawmakers wrote in a March 12 letter, citing Holder's remarks. "It is truly the position of the Department of Justice that some financial institutions are large enough that their management is above prosecution in the case of a serious crime?"

Warner and Corker, both members of the Senate Banking Committee, also requested information about "who is providing the DOJ with the economic impact assessment of these prosecutions."

Holder told the Senate Judiciary Committee last week that he is "concerned" about the size of some institutions and the impact that has on deciding whether to bring criminal charges to court in some cases, noting 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."

At a banking panel hearing on Thursday, David Cohen, the Treasury Department's undersecretary for terrorism and financial intelligence, told the panel that Justice previously asked for information about the economic impact of prosecuting HSBC for a host of anti-money laundering violations, but that Treasury declined to help. Regulators and the Justice Department settled the case with HSBC for a record $1.92 billion in December.

The senators added in their letter Tuesday that the Dodd-Frank reform law was supposed to fix the problem of "too big to fail" institutions by providing measures to wind down large firms in times of crisis. If the problem hasn't been adequately addressed, Congress and the White House should do more, they said.

"The intent of the Dodd-Frank reform legislation was to create a regulatory infrastructure that prevents economic damage from the failure of any systemically important institution. If you believe that major impediments to this objective remain or somehow hinder the ability of the Justice Department to pursue criminal prosecutions, we would expect you to clearly articulate your concerns so that we or the appropriate regulators can immediately address them," the letter says. "If the administration believes that the orderly liquidation process is insufficient in some respect, then the administration and Congress should address any necessary changes right away to ensure that no institution is 'too big to jail.'"

For reprint and licensing requests for this article, click here.
Law and regulation
MORE FROM AMERICAN BANKER