Banking & Financial Institutions

Bank critics: Get tough with DOJ pick

Greg Nash

Critics of Wall Street are pushing President Obama to take a tougher stance against the financial sector when picking a replacement for Attorney General Eric Holder.

Lawmakers and outside groups that have accused Holder of going easy on big banks are hoping for a fresh start now that the Justice Department is set to come under new leadership.

{mosads}“It is our hope the president nominates someone who will begin to police Wall Street with real conviction and prosecute the individual executives who commit crimes with the full force of the law,” said the financial reform group Better Markets in a statement.

“Slapping the big banks with what appear to be ‘cost of doing business’ fines is not a sufficient deterrent and will not prevent another devastating crime wave at the hands of Wall Street bankers.”

Several key and influential lawmakers have assailed the Justice Department for failing to bring charges against bank executives.

Liberals, such as Sen. Elizabeth Warren (D-Mass.), have been critical of the approach from Holder and other regulators, as have Republicans, such as Sens. Richard Shelby (R-Ala.) and Chuck Grassley (R-Iowa). If Republicans take the Senate after the midterm elections, Shelby is poised to take over the Banking Committee, while Grassley is line for the gavel of the Judiciary Committee.

Grassley said questions about prosecuting financial crime would be one of the main factors he considers when vetting Obama’s attorney general nominee, according to a spokesman.

During Holder’s tenure as attorney general, the DOJ has secured massive civil settlements against some of the biggest names in banking, resulting in billions of dollars in payouts.

But critics say the settlements are no substitute for jail time and want the department to take institutions to court instead of letting them cut a check.

“Big corporations are subjected to a double standard, and they’re given an opportunity to enter into deferred nonprosecution agreements almost as a normal course of business now,” said Robert Weissman, president of Public Citizen.

The Justice Department and financial regulators have defended their handling of the financial sector in the aftermath of the 2008 financial crisis.

They argued the settlement approach was the most efficient use of resources and said much of the behavior that led to the crash was foolhardy rather than criminal.

After Holder caught criticism for suggesting at a congressional hearing that bringing charges against big banks would be difficult, he sought to rebut charges that he was soft on the sector.

He repeatedly maintained that the notion of “too big to jail” does not exist and emphasized that, even when reaching civil settlements with institutions, criminal investigations remain ongoing.

Industry sources noted that the financial sector has paid billions of dollars to settle financial crisis probes, and they argue that, between the crackdown and the Dodd-Frank financial reform law, most institutions have changed their tune, to the point that some are lamenting the difficulty in lining up credit.

“It’s five years later. You have to kind of ask yourself, are we done here?” said one financial services lobbyist.

While lawmakers have been critical of how Holder has approached Wall Street, it remains to be seen how heavily it will play into Obama’s decision.

The attorney general is responsible for a sprawling Cabinet department that encompasses several law enforcement divisions, agencies and programs.

And with the financial crisis now six years in the past, the question of prosecutions for bad behavior might be moot.

Some industry sources believe that, while criticism of Holder’s approach toward Wall Street has been vocal and garnered attention, only a small number of lawmakers would make the issue a priority when vetting Obama’s nominee.

“This will come up during the hearings, but the attorney general has a vast portfolio,” said the lobbyist.

Some of the names in circulation to replace Holder are intimately familiar with the goings-on of Wall Street.

One candidate who has been floated is Mary Jo White, who spent years as a white-collar attorney for some of the biggest names in finance and is now head of the Securities and Exchange Commission.

Another potential candidate is Preet Bharara, the U.S. Attorney for the Southern District of New York, who has been up close and personal with the Justice Department’s work in that industry since taking the job in 2009.

Industry sources said none of the names being bandied about are causing panic on Wall Street. But that doesn’t mean the criticism won’t affect the behavior of Holder’s successor.

“The mounting criticism is likely to have some impact at the Department of Justice going forward,” said Weissman. “Every cousin-in-law you talk to, every cab driver you meet, everyone has the same frustration and anger, so I think that’s why the pressure matters.” 

Tags Chuck Grassley Elizabeth Warren Eric Holder

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

See all Hill.TV See all Video

Most Popular

Load more


See all Video