Justice Department’s New Get-Tough Policy Is, Well, Not
The tough new-and-improved regime, as described by the curiously credulous Dealbook, is a policy of extracting criminal guilty pleas from foreign subsidiaries, as opposed to the “usual fines and reforms.” This was the path chosen in the recent UBS deal (in which a Japanese subsidiary was charged while the parent company was given a complete walk, a non-prosecution settlement) and in the more recent deal with the Royal Bank of Scotland. Both of those banks were implicated in the LIBOR rate-fixing case, which is only maybe the most egregious and far-reaching financial scandal of our generation. Writes Dealbook:
Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks.
In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations.
Lawyers for several big banks, who spoke on the condition of anonymity, said they were already adjusting their defenses and urging banks to fire employees suspected of wrongdoing in the hope of appeasing authorities.
The story was accompanied by a preposterous photo of Lanny Breuer angrily wagging a finger, suggesting a new, “get-tough” criminal division of the Department of Justice.
The article worried desperately over the issue of whether or not the Japanese subsidiaries would keep their licenses after these guilty pleas. As is often the case – I’ve personally heard this excuse about a dozen times coming from DC types – regulators are terrified of repeating an Arthur Andersen situation, i.e. punishing a company and seeing massive job losses as a result
Read more: http://www.rollingstone.com/politics/blogs/taibblog/justice-departments-new-get-tough-policy-is-well-not-20130220#ixzz2LXGnFEXg
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