By Gretchen Wegrich
At a recent Senate Judiciary Committee meeting, US Attorney General Eric H. Holder confirmed what many have suspected to be true but the Obama administration has yet to acknowledge,
"I am concerned that the size of some of 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 world economy," said Holder to the Senate Judiciarty Committee.
He added, "I think this is a function thof the fact that some of these institutions have become too large."
Holder acknowledged that banks' size was an "inihibiting influence" and noted that for the first time he had not prosecuted big banks because he was afraid that an indictment could penalize the financial system.
The implication --that banks are still too big to fail --leaves many questions unanswered. For example, should corporations be prosecuted? Should prosecutors' decisions be influenced by the size of an institution or its importance to a system?
Mr. Holder's comments stand in stark contrast to the Obama administration's position that the Dodd-Frank financial regulations corrected banks' status as too-big-to-fail.
Democratic Senator Elizabeth Warren spoke out in support of Mr. Holder's statements, saying, "It has been almost five years since the financial crisis, but the big banks are still too big to fail. Attorney General Holder's testimoney that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail."
A prevailing lesson prosecutors learned from the financial crisis was that sometimes to collateral damage of prosecuting a company outweighed the accomplishment of justice --to the tune of tens of thousands of innocent employees losing their jobs. Prosecuting individuals responsible for criminal actions within a company appears to be much more effective.
"There is something fundamentally wrong about condemnation of one person for the actions of another, and if this is true for individuals, it is at least somewhat true when corporations, consisting of many component parts, are blamed for the actions of one component part," wrote Elizabeth K. Ainslie, a former prosecutor, in a paper about convicting corporations.
This article was based on a report published by CNBC. Read the original here.
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