Bombshell: Senator Sherrod Brown Questions Obama Nominee on Too-Big-to-Jail Banks
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Americans learned for the first time on March 6 of this year that the highest law enforcement agent in our country, Attorney General Eric Holder, weighs economic interests when deciding whether to enforce our Nation’s laws against criminal wrongdoers like the too-big-to-fail banks.
The spectacle of warped law enforcement grew worse today during the Senate Banking confirmation hearing of Mary Jo White to head the Securities and Exchange Commission. Under questioning by Senator Sherrod Brown (D-Ohio), White admitted that even the economy of a foreign country – like Japan – is taken into consideration before bringing a criminal indictment in the U.S. Even worse, White was forced to admit that while working for the U.S. Department of Justice as the U.S. Attorney for the Southern District of New York (from 1993 to 2002), she considered it appropriate to speak with Larry Summers (a Treasury Secretary in the Clinton administration) to weigh the economic impact of bringing an indictment.
The line of questioning began with Senator Bob Menendez (D-NJ):
Senator Menendez: Ms. White, I get numerous constituent letters concerning the lack of prosecution of wrongdoers. And, basically, when I see the testimony of the Attorney General before the Judiciary Committee when he was asked in this field at the size of some of these institutions are so large that it does – this is quoting from his testimony – “that it does become difficult for us to prosecute them and 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 the world economy.” The question then is, are these institutions in essence protected against prosecution merely by their size and understand that when in fact they do violate the law that they’ll have an extensive fine and that will be the cost of doing business. Cause if that’s the case then I think it subverts the very nature of the honesty and transparency that we want to see in the marketplace. If the American people and investors believe that entities can do this largely with impunity because they are so big that they cannot be prosecuted then, at the end of the day, then how do I know that the system is not being rigged at a time in which I’m making my investments. So, as the potential Chair of the SEC, give me your thoughts on what you would do in that regard in terms of when you found wrongdoing, assuming you found wrongdoing, what would you do.
White: Assuming you found wrongdoing, I think you proceed quite vigorously against, frankly, anyone that you find evidence of wrongdoing on but certainly financial institutions. At the SEC, which of course doesn’t have the criminal powers, those collateral consequences are not taken into account before charging decisions are made. So that at the SEC there’s no institution too big to charge. On the criminal side, they’re also, in my view from my former life, institutions are not too big to charge either. But Federal prosecutors are instructed by DOJ – Department of Justice policy – they have a long line of factors to consider and one of them is the collateral consequences of a criminal indictment to innocent shareholders, employees, or the public. And, certainly, prosecutors should consider that before proceeding. But that doesn’t necessarily dictate a “no” decision.
When it came time for Senator Brown to question White, the exchange went as follows:
Senator Brown: When you were U.S. Attorney, my understanding is you consulted Bob Rubin and Larry Summers when considering whether to bring charges against financial firms. Is that correct?