Senators accuse Justice Department of treating banks as 'too big to jail'

ADVERTISEMENT
In their letter, the two argue that public confidence in financial markets remains low since the global financial meltdown, and the government pursuit of accountability for the collapse has done little to address that. They argue the government has pursued "disproportionately low" settlements with major financial institutions over a range of violations, giving the appearance that big banks enjoy a "favored status" when it comes to enforcing the laws.

"Our markets will only function efficiently if participants believe that all laws will be enforced consistently, and that violators will be punished to the fullest extent of the law," they wrote. "There should not be one set of rules that apply to Wall Street and another set for the rest of us."

They ask Holder whether the Justice Department has identified major financial institutions whose failure could endanger financial markets, and whether it has avoided prosecuting cases at those banks to protect markets. They also request information about outside experts brought in by the Justice Department to decide whether to bring cases against major banks, and what steps were taken to ensure they were not biased.

The letter serves as the latest example of an ongoing, bipartisan concern over the growing size and influence of the nation's most powerful financial institutions. Two and a half years after the Dodd-Frank financial reform law was enacted, members on both sides of the aisle continue to argue that the biggest banks continue to enjoy an unfair advantage in financial markets, as well as implicit government backing due to the integral role they play in financial markets.

Dodd-Frank backers contend that the law gave regulators the tools to identify those firms and wind them down safely if they begin to collapse, but skeptics remain as big banks have only grown larger since the meltdown occurred.

Brown has backed legislation that would break up the nation's biggest banks, and Grassley has been a fierce critic as ranking member of the Judiciary Committee over what he sees as a lackluster response by investigators to the financial crisis.

Backers for more prosecution of Wall Street wrongdoing hope they got a boost when President Obama nominated former federal prosecutor Mary Jo White to be the next chairman of the Securities and Exchange Commission. Currently a high-profile, white-collar defense attorney (whose clients included some major financial institutions and executives), White previously pursued charges against mob bosses and terrorists, and would be the first prosecutor to helm the SEC if confirmed.

More in Banking/Financial Institutions

Warren: Community banks thriving under Dodd-Frank

Read more »