In recent congressional testimony, Attorney General Eric Holder made waves by acknowledging that "it becomes difficult for [the Department of Justice] to prosecute [large financial institutions] when…a criminal charge… will have a negative impact on the national economy, perhaps even the world economy."1 His remarks were promptly reduced by the media to a sound bitethat many banks were "too big to jail"and attacked by politicians on the left and the right.
The criticism was of two sorts. One concerned broader questions as to whether post-financial crisis legislative actions have sufficiently reined in large banks. Senator Elizabeth Warren remarked that "[b]ig banks are getting a terrific break, and little banks are just getting smashed."2 A second criticism focused more narrowly on whether the Justice Department has been sufficiently aggressive in going after financial wrongdoing. Senator Charles Grassley commented that the Justice Department’s failure to "enforc[e] federal laws against corporate criminals with enough vigor" would result in "perverse incentives and ultimately undermine the integrity of the U.S. financial system and economy."3
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