Credit Suisse, the Swiss banking power, has agreed to pay roughly $2.6 billion in penalties after agreeing to a plea deal with the federal government and admitting it helped U.S. citizens dodge taxes.
{mosads}Under the deal, Credit Suisse pleaded guilty to one count of conspiracy to aid tax evasion, becoming the largest bank to plead to criminal charges in two decades.
At a news conference, Attorney General Eric Holder said Credit Suisse, Switzerland’s second largest bank, “engaged in an extensive and wide-ranging conspiracy” that allowed U.S. taxpayers to use illegal offshore accounts to hide assets and income from the IRS.
That conspiracy, Holder added, took place over a decadeslong span, and even over a century in one case.
More broadly, Justice Department and IRS officials cast the agreement as a sign that the federal government was willing to take a hard line against global banking powers, following criticism that the Obama administration has let the financial sector off too lightly after the 2008 fiscal crisis.
Holder and other administration officials said Monday that Credit Suisse’s harsh penalty was a product of its extensive efforts to both assist tax dodgers and to avoid responsibility for those actions after the Justice Department launched its investigation.
Justice officials say that Credit Suisse watched as critical evidence and documents were destroyed after being told of the federal investigation in 2010, and also undertook what Holder called “a shamefully inadequate internal inquiry.”
For that, Holder said the bank was paying a steep price, absorbing the “full weight of the federal government and its investigative efforts.”
“When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here,” the attorney general said.
The plea announcement came months after Sen. Carl Levin (D-Mich.) released a report that found that Credit Suisse helped some 22,000 wealthy Americans stash up to $12 billion out of the federal government’s sights. At the time, Levin said the Justice Department’s investigation had a “lack of determination.”
The Justice and Treasury departments will get $1.8 billion of Credit Suisse’s financial penalty, with the rest going to the Federal Reserve and New York state.
Justice officials added that they expect to take further actions in the coming months, as the Obama administration ramps up its effort to battle offshore tax evasion, and noted that the department has already indicted eight Credit Suisse officials since launching their investigation.
The announced penalties against Credit Suisse also come after Holder has pushed back on the idea that some large banks are “too big to jail,” after previously suggesting that might be the case.
Holder also brushed aside any suggestion that the Justice Department wouldn’t have taken such a hard-line approach against an American bank.
“Financial institutions will not be treated differently on the basis of their nationalities,” Holder said. “No bank is too big to jail. That notion is simply inconsistent with how this department has conducted itself.”
At the same time, Justice and IRS officials said that Credit Suisse would not have to turn over the names of account holders as part of the plea agreement.
UBS, the largest Swiss bank, did have to turn over some names when it struck a deferred prosecution agreement in 2009, but also was slapped with a smaller $780 million fine.
James Cole, the deputy attorney general, said Credit Suisse would hand over other information about the accounts that would point the government toward other accounts and taxpayers evading their bill to the IRS.
But Levin said it was “a mystery to me why the U.S. government didn’t require as part of the agreement that the bank cough up some of the names of the U.S. clients with secret Swiss bank accounts.”
“This leaves their identities undisclosed, with no accountability for taxes owed,” the Michigan Democrat added.
“The changes Credit Suisse has agreed to make to its practices are long overdue and welcome but must be carefully monitored.”
— This post was updated at 8:33 p.m.