2013 Attorney General Holder and Dallas Fed President Fisher Comments
On March 6, 2013, United States Attorney General Eric Holder testified to the Senate Judiciary Committee that the size of large financial institutions has made it difficult for the Justice Department to bring criminal charges when they are suspected of crimes, because such charges can threaten the existence of a bank and therefore their interconnectedness may endanger the national or global economy. "Some of these institutions have become too large,” Holder told the Committee, “It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate," contradicting earlier written testimony from a deputy assistant attorney general who defended the Justice Department’s "vigorous enforcement against wrongdoing." Holder has financial ties to at least one law firm benefiting from de facto immunity to prosecution, and prosecution rates against crimes by large financial institutions are at 20-year lows.
Four days later, Federal Reserve Bank of Dallas President Richard W. Fisher co-authored a Wall Street Journal op-ed about the failure of the Dodd–Frank Wall Street Reform and Consumer Protection Act to provide for adequate regulation of large financial institutions. In advance of his March 8th speech to the Conservative Political Action Conference, Fisher proposed requiring breaking up large banks into smaller banks so that they are "too small to save," ending both Federal Deposit Insurance and Federal Reserve discount window access by larger banks, and requiring disclosure of this lack of federal insurance and financial solvency support to their customers. This was the first time such a proposal had been made by a high ranking U.S. banking official or a prominent conservative. Other conservatives including Thomas Hoenig, Ed Prescott, Glenn Hubbard, and David Vitter also advocated breaking up the largest banks, but liberal commentator Matthew Yglesias questioned their motives and the existence of a true bipartisan consensus.
In a January 29, 2013 letter to Holder, Senators Sherrod Brown and Charles Grassley had criticized this Justice Department policy citing "important questions about the Justice Department’s prosecutorial philosophy." After receipt of a DoJ response letter, Brown and Grassley issued a statement saying, "The Justice Department’s response is aggressively evasive. It does not answer our questions. We want to know how and why the Justice Department has determined that certain financial institutions are ‘too big to jail’ and that prosecuting those institutions would damage the financial system."
Read more about this topic: Too Big To Fail
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