Eric H. Holder, Jr., the first African-American attorney general, under the first African-American president, announced his resignation last week. He will vacate the office he has held since 2009 once his successor is confirmed. He leaves behind a legacy of timidness and fear at the feet of big banks in the United States. It is hopefully a legacy that will not carry over to the next Attorney General.
Faced with the responsibility of exacting justice on some of the largest financial institutions that have ever existed, at a time when the nation’s economy hung precariously on the verge of collapse, Holder chose to shrink from pursuing criminal charges against the executives and white-collar crooks that created the policies responsible for the market’s destruction. Instead, Holder found it acceptable to leverage civil penalties on the banks, only pursuing criminal charges on one occasion.
Without question it was a difficult task, but that does not excuse a failure to pursue the justice owed to the American people as they pay the price of the reckless behavior of those institutions to this day. Holder found it more appropriate to establish what will be the legacy of his tenure: too big to jail.
After having been burned in a failed prosecution against two bankers from Bear Stearns, Holder sought to reconcile that result with what he saw as the larger responsibility of his office.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them,” said Holder.
Others at the Justice Department adopted Holder’s squeamish nature. Before resigning, Larry Breuer said the following to the New York City Bar Association:
To be clear, the decision of whether to indict a corporation defer a prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct. I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake. And, in some cases the health of an industry or the markets are a real factor. Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.
Hostages are what the Justice Department fears will be hurt by its criminal prosecutions. The banks have made hostages of their own employees and the nation at large. For this reason, prosecuting them is inadvisable, according to Holder.
The collateral damage of a criminal prosecution against those bankers is the price of those bankers’ sins. They are the ones that must be held accountable for the innocents they injured. Holder lacked the conviction to make them face their own music, but why?
Maybe he honestly believed that he would do more harm than good by prosecuting the banks. Or maybe it’s because he got too close to the institutions he was supposed to police. We will never get an answer because Holder, and the law firm he works for, Covington & Burling, are fully owned and operated by the very Wall Streeters Holder refused to prosecute. That will always be Holder’s legacy.