Members of the House Financial Services Oversight and Investigations Subcommittee today questioned a witness from the Department of Justice about how the department decides which financial institutions are “too big to jail” and what information they rely upon to make such decisions.
When Attorney General Eric Holder testified before a Senate committee earlier this year that the Justice Department is having difficulty prosecuting large financial institutions because of “a negative impact on the national economy, perhaps even the world economy,” he implied that the Justice Department has determined such institutions need to be shielded from criminal accountability. The attorney general has also stated that “experts outside the Justice Department” are consulted about the possible impact of prosecuting large financial institutions.
This suggests that the Justice Department considers such institutions as “too big to fail” and that their “too big to fail” status is the deciding factor for non-prosecution.
The subcommittee questioned the Justice Department, the Treasury Department, the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Financial Research and the Financial Stability Oversight Council to determine what outside experts the department consults with when making prosecutorial decisions in cases involving large financial institutions.
“To date, the subcommittee’s investigation has indicated that the Justice Department has not received anymaterial information from outside experts,” said Subcommittee Chairman Patrick McHenry (R-NC). “DOJ has provided nothing material to explain the comments made by the attorney general."
Chairman McHenry added: “Last week, in testimony before the House Judiciary Committee, the attorney general appeared to contradict his earlier remarks to the Senate, stating that ‘there’s no bank, there’s no institution, there’s no individual that cannot be prosecuted by the U.S. Department of Justice.’ However, the attorney general’s contradicting comment does not explain whether the department’s view of the collateral harm of convicting a financial institution has changed, or if the department’s view has not changed, the circumstances in which a party’s criminal conduct is so egregious that prosecution is appropriate even in the face of significant harm to innocent parties.”