The Senate took a small and symbolic step toward eliminating the injustice of the “too big to jail” doctrine this week, demanding the Department of Justice more aggressively pursue prosecution of large financial institutions.
Meanwhile, the House has chosen to perpetuate the industry’s heinous criminal acts by increasing taxpayer support for derivatives and creating new trading loopholes.
Sen. Jeff Merkely (D-Ore.) introduced an amendment that would create a deficit-neutral reserve fund to facilitate the criminal prosecution of U.S. financial institutions that break the law, regardless of their size. It was part of more than 500 amendments in the Senate’s budget passed Saturday.
It’s hard to contemplate the spinelessness of a ‘Justice’ department that would let terrorist aiders off with no more than a fine, but that is in fact what they do. Just last year the Department of Justice refused to prosecute HSBC for years of money laundering; laundering more than $800 million in illicit drug money and $600 million in transactions that violated U.S. sanctions on Iran, Sudan and others.
“If you’re caught with an ounce of cocaine, you’re going to go to jail,” said Sen. Elizabeth Warren (D-Mass.) during a recent Senate hearing. “But if you launder nearly a billion dollars for international cartels and violate sanctions you pay a fine and you go home and sleep in your own bed a night.”
Sadly, the Senate’s amendment will most likely die. The House has passed a vastly different budget, and the likelihood of either body approving the other’s is slim to none. It still means, however, that perhaps lawmakers in the Senate are finally ready to take “too big to jail” seriously.
The House, however, took a step backwards last week when the Agriculture Committee advanced six bills aiming to deregulate the financial industry. The most controversial bill was designed to expand taxpayer backing for derivatives, and was largely driven by Rep. David Scott (D-Ga.). Scott raised more than $1.7 million from the banking industry over his congressional career, more than double his total from any other sector.
The passage comes after Sen. Carl Levi (D-Mich.) released a report regarding extensive failures to contain derivatives risks at JPMorgan Chase, which leads to billions in losses from a single trade.