Tom Hanks has a knack for playing the roles that define American generations. In “Saving Private Ryan,” he embodied the courage of the men who landed on the Normandy beaches under heavy fire. In “Apollo 13,” he conveyed calm and ingenuity under intense pressure: “Houston, we have a problem.” And Forrest Gump revealed much about America before, during and after the Vietnam War.
If Hanks turns his attention to our most recent decade, which character should he choose? My suggestion is Assistant Attorney General Lanny Breuer, the head of the criminal division at the Justice Department and the man responsible for determining whether anyone should be prosecuted for the financial crisis of 2008.
In an on-camera interview, which aired recently, Breuer stated plainly that some financial institutions are too large and too complex to be held accountable before the law. Bipartisan pressure is now being applied on the Justice Department to reveal exactly how this determination was made. Breuer, however, has announced he will leave government March 1. Good luck unraveling the cover-up that must already be in place.
Breuer made the comments for a documentary aired by the PBS program “Frontline.” The investigative report, titled “The Untouchables,” asked why no senior Wall Street executive has been prosecuted for apparently well-documented illegal acts, such as authorizing document forging, misleading investors and obstructing justice. Breuer was shockingly candid.
“Well, I think I am pursuing justice,” he said. “And I think the entire responsibility of the department is to pursue justice. But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against Institution A, and as a result of bringing that case, there’s some huge economic effect -- if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly -- it’s a factor we need to know and understand.”
Attorney General Eric Holder expressed similar views in the context of discussing why more severe charges weren’t brought against Zurich-based UBS AG last year for manipulating the London interbank offered rate. And Neil Barofsky, a onetime senior prosecutor and former inspector general of the Troubled Asset Relief Program that administered the bank bailouts, provided a scathing assessment of Justice Department policy.
The Justice Department likes to quote Thomas Jefferson: “The most sacred of the duties of government [is] to do equal and impartial justice to all its citizens,” a line that appears in its latest budget documents.
This sentiment is hardly consistent with saying that some companies have characteristics that put them above the law. Jefferson himself was very worried about the concentrated power of financiers -- he would have seen today’s problems much more clearly than do Holder and Breuer.
Last week, Senators Sherrod Brown, an Ohio Democrat who serves on the Banking Committee, and Charles Grassley of Iowa, the ranking Republican on the Judiciary Committee, wrote to Holder, seeking more details about this policy.
Their requests are entirely reasonable, centering on the question: Who are the experts with whom the Justice Department consults?
Justice recently asked Treasury for its view on prosecuting a large financial institution. Yet David Cohen, Treasury’s undersecretary for terrorism and financial intelligence, told the New York Times: “We did not believe we were in a position to offer any meaningful assessment. The decision of how the Justice Department exercises its prosecutorial discretion is solely theirs and Treasury had no role.” And it would seem that then Treasury Secretary Timothy Geithner didn’t meet with Holder on this issue.
Treasury is possibly being economical with the truth -- and Cohen should testify to the details under oath. And if Justice isn’t talking to Treasury, who are the “experts” involved? It’s safe to assume that it isn’t the Financial Stability Oversight Council, the panel of financial regulators created by the Dodd- Frank Act, because the chairman of that body is the Treasury secretary.
The line of questioning from Brown and Grassley is compelling. Is there a written list of too-big-to-jail banks, or is that status conferred on the fly? Are there objective criteria that could be reviewed by the Government Accountability Office or another responsible government body?
Is the Federal Reserve involved? Is it the New York Fed or some other part of the Fed system?
Maybe the only experts are those retained by the banks under investigation? That is certainly how it seems if you read a speech that Breuer delivered to the New York City Bar Association in September 2012.
Perhaps the most difficult question from Brown and Grassley is, “How did DOJ ensure that these experts provided unconflicted and unbiased advice to DOJ?”
Judging from its record, the Justice Department will probably do everything in its power to avoid answering these questions directly.
We can only hope that either the Senate banking or judiciary committee -- or some other congressional body with subpoena power, such as Senator Carl Levin’s subcommittee on investigations -- takes up the issue.
America’s past was dramatic and not always glorious. Our present is sordid. Financial shenanigans damaged the economy, and now a handful of powerful executives and their companies have received get-out-of-jail-free cards.
It’s official. The Justice Department said it loud and clear: No megabank will ever face meaningful prosecution.
Very big banks should be broken up immediately. That won’t happen. For his next movie, Hanks should focus on the ruin of democracy -- aided and abetted by the Justice Department.
(Simon Johnson, a professor at the MIT Sloan School of Management as well as a senior fellow at the Peterson Institute for International Economics, is co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.” The opinions expressed are his own.)
To contact the writer of this article: Simon Johnson at email@example.com