Recent media reports regarding a potential multibillion-dollar settlement between the U.S. Department of Justice and Deutsche Bank have breathed new life into the debate regarding whether major financial institutions can be “too big to jail.”
While news of the potential settlement has leaked to the media, it is very rare for the public to gain insight into Justice’s deliberations regarding the appropriateness of indicting a major financial institution. But a July 11 House Committee on Financial Services report provided exactly that. The committee report criticized former Attorney General Eric Holder and the Justice Department for refusing to indict HSBC in 2012 for money laundering and sanctions violations. The committee concluded that Justice entered into an out-of-court settlement with HSBC, rather than indict the bank, because of the bank’s “systemic importance.” According to the committee, this kind of deal creates “a two-tiered system of justice—one for the largest banks, and another for everyone else.” In other words, to use the committee’s terminology, HSBC was “too big to jail.”
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