Congressional Democrats say Attorney General Eric Holder has a long way to go before proving to them that the nations’ largest banks aren’t “too big to jail.”
Holder plugged this week’s guilty plea from Credit Suisse on a conspiracy to aid tax evasion charge as evidence that not even the world’s largest banks are above the law.
{mosads}Democrats who had previously criticized Holder and the Justice Department as soft on Wall Street called the Credit Suisse plea and the $2.6 billion fine that went with it a good first step.
But they said they would need to see other global banking powers receive that sort of aggressive treatment — and even more bankers go to jail — before they believe Holder is taking a hard enough line against the financial sector.
Sen. Carl Levin (D-Mich.), who lit into the Justice Department’s investigation into Credit Suisse at a February hearing, called the plea “proof that we will put a heck of a lot of pressure on you to make you accountable if you aid and abet tax evasion.”
But Levin added, “the Justice Department, I don’t think, can make the argument that banks or powerful people are too big to jail until they prove it.”
Some Republicans have sounded a similar note: “Maybe we’ll see some top individuals held criminally liable at some point, but not today,” Sen. Chuck Grassley (Iowa), another critic of the administration’s handling of the banks, said after Monday’s plea announcement.
Populist critics of President Obama and administration officials like Holder have long maintained that the White House went too easy on the financial sector following the 2008 crisis that crippled the economy.
Holder gave those critics additional ammunition last year, when he suggested that prosecuting the largest banks could rattle financial markets and damage the global economy.
Aides to the attorney general quickly said those comments, made at a congressional hearing, had been misconstrued.
But Holder addressed the controversy head-on this month when he said in a video posted on the Justice Department’s website that “there is no such thing as too big to jail,” before pointing to the Credit Suisse plea on Monday to bolster that claim.
“No bank is too big to jail,” Holder told reporters in announcing the plea. “That notion is simply inconsistent with how this department has conducted itself.”
Holder added that he believes Credit Suisse has changed the way it does business and that the information obtained as part of the plea agreement will help the Justice Department in its fight against tax evasion.
Justice officials have said two Credit Suisse bankers have already pleaded guilty for their efforts in helping U.S. taxpayers hide assets from the government; they face sentencing in August. Six other Credit Suisse bankers are under indictment.
Still, skeptics of the plea openly wonder how much of a warning the Credit Suisse deal actually is to Wall Street.
Critics of the deal have noted that a Swiss bank — and not an American one — is the financial institution that was made into an example and that Credit Suisse had little to do with the 2008 financial crisis.
Plus, they question whether the guilty plea and the $2.6 billion fine will be much of a drag on Credit Suisse’s bottom line. Standard & Poor’s, for instance, this week said that the bank would keep its “A” credit rating, though Moody’s did lower its outlook from stable to negative.
“I wish reality was anywhere near close to Eric Holder’s public relations campaign,” said Dennis Kelleher, head of Better Markets, a Wall Street reform group. “It’s all just part of a PR campaign to look tough without actually being tough. Ultimately, it will fool no one.”
The Progressive Change Campaign Committee added that the “Elizabeth Warren wing of the Democratic Party” would campaign this midterm year for Wall Street bankers to be “fully investigated and criminally prosecuted for their role in the economic meltdown.”
Levin has questioned why Credit Suisse isn’t handing over the names of account holders as part of the plea deal, though he also says he is open to the government’s argument that the agreement with the bank will help them unmask tax evaders.
But generally, Democrats say they’re willing to take a wait-and-see attitude.
“I thought it was a step forward. I’m not turning handsprings,” said Rep. Earl Blumenauer (D-Ore.). “I’m more concerned about going forward than the look back.”
Sen. Sheldon Whitehouse (D-R.I.) said this week that the Justice Department had a “terrific” Monday with the Credit Suisse plea, the conviction of the radical Islamic cleric Abu Hamza al-Masri and the charges against Chinese hackers.
Still, Whitehouse cautioned, “I don’t think people will be convinced on the basis of one decision, one prosecution alone.”
“But that’s no reason not to celebrate a good one like that when you get it,” Whitehouse added. “I think, show us your game. This was a good one, but what else you got?”