No company is too big to jail, Holder says of Justice Department probes

In a video message posted to the Justice Department Web site, Attorney General Eric Holder said that “when laws indeed appear to have been broken, and the evidence supports the allegations, a company’s size will never be a shield from prosecution or penalty.” (Department of Justice)

No company or individual is too big to jail, Attorney General Eric H. Holder Jr. said Monday as the Justice Department prepares criminal charges against two of Europe’s largest banks.

In a video message posted on the Justice Department’s Web site, Holder said that “when laws indeed appear to have been broken, and the evidence supports the allegations, a company’s size will never be a shield from prosecution or penalty.”

The Justice Department has been facing criticism that federal prosecutors have failed to bring criminal charges against Wall Street banks out of fear of destabilizing the financial system. The critique was fueled a year ago when Holder told lawmakers that some companies had become so large that it was difficult to prosecute them because of the potential impact on the economy.

On Monday, Holder did not backtrack from those earlier comments, saying it would be “irresponsible” not to consider the fact that criminal charges could trigger the loss of a bank’s charter, effectively crippling its business. But he said the potential for such an outcome means prosecutors need to work with regulators to hold banks accountable without wrecking their entire business.

“So long as this coordination occurs, it is fully possible to criminally sanction companies that have broken the law, no matter their size,” Holder said. “This cooperation will prove key in the coming weeks and months as the Justice Department continues to pursue several important investigations.”

Holder would not name names but said he is “personally monitoring the status of these ongoing investigations” and is “resolved to seeing them through.”

A law enforcement official familiar with financial investigations at Justice but not authorized to speak publicly said prosecutors are coordinating with regulators to bring criminal charges against Swiss banking giant Credit Suisse and France’s BNP Paribas.

Prosecutors and lawmakers have accused Credit Suisse of helping wealthy Americans hide billions of dollars from U.S. tax collectors for several years. Justice has been aware of alleged misconduct at Credit Suisse for at least four years, and the government has indicted seven bankers and launched a probe of the institution.

Earlier this year, the Senate’s permanent subcommittee on investigations lambasted Justice for not bringing charges against Credit Suisse or any of its executives. Lawmakers have accused prosecutors of dragging their feet in getting the bank to turn over the names of about 22,000 U.S. customers.

Prosecutors have been hampered by the Swiss government, which has prevented banks from handing over information after the country’s largest bank, UBS, turned over 4,700 accounts in 2009. The Justice Department has yielded 238 names of Credit Suisse customers through treaty requests.

Holder met with Swiss Finance Minister Eveline Widmer-Schlumpf on Friday to discuss the progress of a program to allow some Swiss banks to pay fines to avoid or defer prosecution over tax evasion. The deal has attracted 106 Swiss banks, which have agreed to disclose some information about U.S. customers. It does not cover the 14 Swiss banks, including Credit Suisse, that are being investigated by the Justice Department.

Credit Suisse spokesman Jack Grone on Monday declined to comment on the status of the investigation.

Meanwhile, Justice is getting closer to wrapping up an investigation against BNP, which allegedly allowed millions of dollars from countries under sanctions to illegally move through the U.S. financial system.

The French bank is accused of processing transactions for blacklisted countries, including Sudan, Iran and Cuba, through its New York branches from as far back as 2002. BNP, which runs an investment bank in Manhattan, has been under investigation by New York’s Department of Financial Services.

In its year-end report, the bank said it conducted an internal review and found “a significant volume of transactions that . . . could be considered impermissible under U.S. laws and regulations.” As a result, BNP, which declined to comment for this article, set aside $1.1 billion in reserves in anticipation of paying hefty fines to U.S. authorities.

Danielle Douglas covers the banking industry for The Washington Post.
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