Too Big To Jail? Maybe Not, According To Prosecutors

Federal prosecutors appear to be getting closer to bringing criminal charges against financial institutions that were previously seen as untouchable. A recent article in the New York Times discussed how the perception that banks were "too big to jail" may be fading, especially regarding some cases of tax evasion and financial wrongdoing that appear easier to explain to juries.

The report noted how authorities are seriously considering bringing criminal charges against the American units of Credit Suisse and BNP Paribas (a French bank). The case against Credit Suisse revolves around accusations that the bank facilitated tax evasion by allowing Americans to hide money overseas. BNP Paribas stands accused of taking money from countries that had been blacklisted by the international community. Both are fairly easy to understand cases and would seem to offer a good opportunity to teach financial institutions and their employees an important lesson about following the law. So what's the problem?

There are several issues according to those familiar with financial prosecutions. The one that appears to be holding back prosecutors is the worry that any criminal charges leveled against such large companies could prove debilitating to those companies, costing thousands of jobs and potentially even leading to serious shocks to the international financial market. While prosecutors say they are eager to hold those responsible for wrongdoing accountable, there's a fear that they could bring down major pillars of the financial system in the process, a result that might be worse than the original misdeeds.

Critics of the banks say that the problem with the strategy is that no individuals are actually held responsible for anything. Rather than file charges against executives or others whose decisions precipitated the illegal actions, prosecutors are instead considering filing charges only against the banks as entities. The issue here is that by holding everyone accountable, no one is actually taken to task. Rather than have a perp walk that could send an important message to others working in the financial industry, a large company will simply end up paying a fine and skating out of a potentially serious criminal charge.

Critics argue that indictments of companies should not be allowed to proceed unless there is sufficient proof that an agent of that company committed an actual crime. If that evidence exists, then why not simply file charges against that person individually? By only going after the company it makes everyone happy - prosecutors are happy to have a win, the public is happy to see that fines are being paid by someone - but no one is happier than the people who were guilty of the misconduct.


There's One Thing Missing From The Plan To Prosecute Big Banks, by Mark Gongloff, published at on April 30, 2014.

Two Giant Banks, Seen as Immune, Become Targets, by Ben Protess, published at on April 29, 2014.

BNP is Latest Pawn in U.S. Too-Big-to-Jail Saga, by Dominic Elliott, published at on April 30, 2014.

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