Tags: Holder | bank | fine | charge

Obama Lets Bankers Skate Again

Wednesday, 27 May 2015 11:24 AM Current | Bio | Archive

If you're glad to see Eric Holder gone as the U.S. Attorney General, don't be. His spirit still controls the "Justice" Department, which we really should rename. Justice is the last thing on its agenda.

"Equal justice" is supposedly a rock-solid American principle. If you break the law, you pay the price no matter who you are.

The exception is if you are a very large bank. Then you can break the law and get a special exemption from paying the price.

You may have heard last week that five top banks pled guilty to criminal currency manipulation charges. Traders at Citigroup (C ), JPMorgan Chase (JPM), Barclays (BCS), Royal Bank of Scotland (RBS) and Swiss giant UBS (UBS) used online chat rooms to rig prices in their own favor.

These banks are now convicted felons. As such, they are now "ineligible issuers" and can no longer underwrite public securities offerings, per Rule 405 of the Securities Act of 1933. For a modern bank, this is effectively a death sentence. So why are they still in business today?

Let's ask Eric Holder. Asked about criminal charges against banks at a Senate hearing in March 2013, he said this:

"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large."

Get that? "Too big to fail" is also "too big to jail." Holder later walked back this statement, but still studiously avoided charging large banks with crimes.

His successor, Loretta Lynch, did what Holder would not, but only after getting another agency to put out the flames she took credit for lighting.

As part of the deal, the Securities and Exchange Commission (SEC) granted the five banks a special exemption from Rule 405. A majority of the commissioners deemed it "not necessary" to follow the law in this case . . . and so the banks survive. (For the record, Commissioner Kara Stein dissented from this travesty.)

Call this whatever you like, but it is most certainly not "equal justice under law."

What happens to individual citizens convicted of felonies? They don't just pay fines and go to jail. They face all manner of other consequences, from losing professional licenses to losing the right to vote.

We should also ask why the banks are facing charges instead of the people within them. Institutions do not commit crimes. Individual human beings do.

There is no doubt that crimes occurred here. Why are the people whose acts or omissions resulted in crime not under arrest?

I have no idea. Ask the Injustice Department. They decide whom to punish.

In this case, the punishment takes the form of monetary fines. Who will pay the fines? Not the people who committed the crimes. Bank shareholders will bear this burden by seeing the value of their investments diminished.

We really have a double injustice here. The actual criminals are escaping punishment, while innocent parties pay for crimes they didn't commit.

Some normally sensible people tell me this is just another Obama attack on free enterprise. That's completely wrong, as I explained back in 2013 (Why JPMorgan Chase Deserves to Die). These banks don't represent free enterprise. They represent state-protected corporate socialism.

What we saw last week was a vivid example of the way the state protects its friends. President Obama, former AG Holder, current AG Lynch and some SEC commissioners will all have very comfortable retirements.

Their banker friends will make sure of it.

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If you're glad to see Eric Holder gone as the U.S. Attorney General, don't be. His spirit still controls the "Justice" Department, which we really should rename. Justice is the last thing on its agenda.
Holder, bank, fine, charge
Wednesday, 27 May 2015 11:24 AM
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