Why Didn’t Eric Holder Go After the Bankers?
In the statement of facts accompanying the settlement, the bank acknowledged that, on a number of occasions, its employees told investors that the home loans underpinning its mortgage securities complied with underwriting guidelines. The statement went on: “JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized—and those securities to be sold—without disclosing this information to investors.”
.. This sort of behavior goes well beyond the incentive problems and the “rational irrationality” I describe in my book. It sounds a lot like securities fraud, which is a criminal offense. But rather than seek to prosecute those responsible—and their superiors, if they knew what was going on—the Justice Department settled for cash.
Proving intent remained a big issue. But Holder and Breuer have publicly stated that another factor also played a role: the fear that bringing criminal charges against a big financial firm might cause it to collapse. Appearing on Capitol Hill last year, Holder said, “I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them.”
.. If the government can bring criminal charges against Credit Suisse and BNP Paribas for violating American laws, why can’t it mete out the same treatment to JPMorgan and Bank of America, or to some of their employees? Perhaps Holder will address that question in his memoirs.