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Thursday, October 20, 2016

A few months ago, in a press conference about the felony conviction of Credit Suisse, Attorney General Eric Holder said, “This case shows that no financial institution, no matter its size or global reach, is above the law.”

Yet, earlier this month, the Obama administration announced its proposal to waive some of the possible sanctions against Credit Suisse. The little-noticed waiver, which was outlined in the Federal Register, comes amid criticism that the Obama administration has gone too easy on major financial institutions that break the law.

In its announcement outlining the waiver, the Department of Labor notes that Credit Suisse “operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts” and in “using sham entities” to hide money.

Under existing Department of Labor rules, the conviction could prevent Credit Suisse from being designated a Qualified Professional Asset Manager. That designation exempts firms from other federal laws, giving them the special status required to do business with many pension funds. The Obama administration’s is proposing to waive those anti-criminal sanctions against Credit Suisse, thereby allowing Credit Suisse to get the QPAM designation needed to continue its pension business.

The waiver proposal follows a larger pattern. In June, Bloomberg News reported that federal prosecutors have successfully pushed U.S. government agencies to allow Credit Suisse to avoid many regulatory sanctions that could have accompanied its criminal conviction.

“The New York Fed said last month that the bank can continue handling government securities as a so-called primary dealer,” reported the news service. “The SEC let the firm continue as an investment advisor while the agency considers a permanent waiver.”

Pensions and Investments magazine has reported that despite Department of Labor assurances of tough enforcement of its sanctions against convicted financial firms, the agency has “granted waivers for all 23 firms seeking individual waivers since 1997.”

Critics say that by using such maneuvers, the Obama administration is effectively cementing a “too big to punish” doctrine. That criticism intensified in 2012 and 2013, when top Justice Department officials defended the administration’s reluctance to prosecute banks by publicly declaring that the government considers the potential economic impact of such prosecutions. Those declarations echoed an earlier memo by Holder, which stated that officials could take into account “collateral consequences” when deciding whether to prosecute major corporations.

Why is the Obama administration reducing sanctions on Credit Suisse? The administration says it is a decision based on pragmatism, not favoritism.

The Federal Register announcement, for instance, notes that Credit Suisse has assets of nearly $1 trillion, and argues that if the anti-criminal provisions were enforced, the bank would lose its ability to offer investment products to pension funds. The announcement also argues that the Credit Suisse entities that specifically conduct pension business “are independent of” and “not influenced by Credit Suisse AG’s management and business activities.”

What the administration did not mention, of course, is that according to data compiled by the Sunlight Foundation, employees of Credit Suisse have given President Obama’s campaigns more than $376,000. That’s particularly relevant in light of an April study of SEC data from London Business School professor Maria M. Correia. That analysis showed that “politically connected firms are on average less likely to be involved in … enforcement action and face lower penalties if they are prosecuted.”

Whatever the reason for the proposed waiver, one thing is for sure: The move contradicts the claim that “no financial institution, no matter its size or global reach, is above the law.” Indeed, the Obama administration’s waiver proposal suggests exactly the opposite.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising, and Back to Our Future. Email him at [email protected], follow him on Twitter @davidsirota or visit his website at

AFP Photo/Fabrice Coffrini

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  • jamesowens

    i do not blame obama for it but we should go after the big bankers. the bankers not the banks are responsible for the greed and misdoings behind the economic collapse. The rico law should be applied to these crooked organizations in the same manor it was applied to the mafia and other criminal organizations and if any one person in the organization is convicted all members are held accountable. it worked on the mafia it will work on these modern day criminals if enforced.

    • ps0rjl

      I agree wholeheartedly. There should not be two sets of laws in this country. One for the ordinary individual and one for the corporations. After all didn’t the Supreme Court give more personhood to corporations? If a few CEO’s and boards had to do a perp walk, then maybe the rest would clean up their act.

    • JSquercia

      I have to say I DO blame Obama . I would also like to see WHAT happened to those people who engaged in the behavior cited .MY guess is NOT one went to JAIL. remember an earlier case where the only guy who went to jail was the whistleblower .
      John Oliver got it right when he said Monopoly game removed the Go to JAIL card .
      I agree with the idea that the Rico Law should be used .They had NO problem going after the Unions with it . Yet THIS requires Obama to demand it and THROW some Bank CEOs in JAIL

    • ralphkr

      The biggest problem is that the government regulators of banks, stocks, & insurance companies mostly came from those same organizations and they all expect to get cushy jobs with those same firms after they leave the government so don’t expect anyone to seriously rock the boat.

  • howa4x

    Both parties depend on a largess of cash from Wall st for elections, so why bite hand that feeds you?

  • Dominick Vila

    Why doesn’t President Obama go after the worst Wall Street offenders? For the same reason former U.S. Presidents let them slide. That is, because Wall Street and our plutocrats own our government. Make no mistake, we get what the elite wants us to get. Nothing more, nothing less.
    The problems encountered by ENRON, Lehman Brothers, AIG, Bernie Maddoff and others just a few years ago, were not an aberration, or something unexpected. Speculation, lousy investments, outright fraud, insider trading, benefiting from loopholes and foreign tax shelters, subsidies, and ridiculous tax rates, are in place to protect and help those who don’t need our help and who deserve to spend time behind bars.
    What is truly amazing is the legislation that Sen. Elizabeth Warren managed to pass through a complicit Congress. Her efforts, which are modest considering the magnitude of the problem, deserve praise and support. Instead, those who refer to regulatory practices and effective oversight, as evil and anti-business, have not hesitated to label her – and the Obama administration – as anti-business…while making billions of dollars in profits as a direct result of President Obama’s domestic policies.

    • The lucky one

      “Why doesn’t President Obama go after the worst Wall Street offenders? For the same reason former U.S. Presidents let them slide. That is, because Wall Street and our plutocrats own our government.”
      Could not agree more. Obama has continued the sane obeisance to the power brokers as did his predecessors. In that he is no worse than them, BUT he is also no better.

      • The lucky one

        Oops, meant same obeisance, there is nothing sane abot it except that it benefits him and the pols.

    • Independent1

      Dominick, I’m wondering if the reason that the Obama administration, as well as many previous administrations, have been hesitant to start prosecuting these mega companies, is because, as you point out, the wrong doing is so pervasive, that if one major company was brought into court, in trying to defend itself, that company could bring out in court just how pervasive the wrong doing is, claiming it’s doing absolutely nothing wrong that company X and company y etc are doing, which could create a panic over financial industry that would cause it to collapse like a house of cards. My sense is that that is the fear presidential administrations have.

      And if the financial industry collapsed like a house of cards, millions of investors in America and around the world would end up paying an enormous financial penalty in lost wealth far greater possibly than the penalty given to the wrong doers.

    • Independent1

      In fact, what I just suggested could be the ‘blackmail’ that “too big to fail’ companies have over our government: You bring major charges against us, and we’ll sue the federal government claiming that we are not doing anything that virtually every other major ‘too big to fail’ company in America is doing. And with that case, we’ll name names and bring out to the American public just how corrupt other companies in the financial industry are which could create a panic on the financial industry in America – which is something that you just don’t want to get started.

  • joe schmo

    Well, let’s just push this one step further……Holder and his army are just a bunch of Commy’s. Like good globalists they have to have their noses in every American affair. This goes to show you that father government is watching and you, by the looks of reading these posts, are nothing but a bunch of followers.

    Hmmm….makes me wonder, waiving sanctions for some pensions…..Gee I wonder whose those could belong to? (Soros, Jarrett, Obama, Holder…..) This government is SO corrupt.

    • Independent1

      Sorry clueless!! But the feds are holding off prosecuting these perpetrators for a lot bigger reason than protecting a few pensions or foregoing a few hundred grand in donations!!

      The feds are fearful that in the process of prosecuting even one of these ‘too big to fail’ companies, so much could be exposed with respect to the extensive wrong doing being done, that the world could revisit the crash in ’29 and the depression that follwed.

      • joe schmo

        Bite me! Just like he has been so inconsistent in many areas, Obama is just harking out idle threats….

        This is beyond his jurisdiction. He does not hold the gauntlet over Suisse Banks and heads……

        • Sand_Cat

          So now you’re seeking sexual favors here, too;>) Jeez, you could at least be nice when trying to pick someone up to satisfy your perversions.

    • Sand_Cat

      You know, I was ready to agree with you that this one is too much to bear, and one I’ve many reasons why I’m not the zealous Obama supporter you seem to think I am, but then I read your post. Yes, that’s just what “Commy’s” [you make such a thing of being educated and knowledgeable: LEARN TO SPELL, WILL YOU!] the worl over have done since the beginning of the movement: shelter massive capitalist institutions from prosecution.
      One more indication you wouldn’t know a Communist if one rammed a hammer and scythe up your ass.

  • dtgraham

    Not that I necessarily buy into Holder’s reasoning—but if it is potential economic impact, collateral consequences, and the stability of the banking sector he’s concerned about if anti-criminal provisions were enforced and the fine was high enough to actually act as a deterrent (it wasn’t)…then forget the corporation and go after some individuals instead, as the Swiss would do. At some point, human beings decide to break the law or act above the law on behalf of their corporations. Go after those human beings. I know that being people, Mitt Romney and the Supreme Court feel that the literal bricks and mortar of a Credit Suisse building can sit in a jail cell with the articles of incorporation gently laying on top, however…

    The Credit Suisse general counsel remarked that there would be criminal indictments in Switzerland and most probably prison terms if they would have handed over their U.S. client’s names without the permission of the Swiss government. Ok, so where are the U.S. indictments for not doing so on their American activities within U.S. jurisdiction? The question should have been, where would you like to do your time?

  • elw

    Until we get elected people into office who have the balls to stand up to big money, we will never be in control of our Government. We will never get people like until big business can no longer contribute as much money as they want. All of our current representative rely on the contributions of the very richest in the land to get elected, that includes Republicans, Democrats and independents. We never get the choice of who can run only the choice between which of the candidates chosen by the very rich are the lessor of the evils allowed to us.

    • Independent1

      I don’t disagree with a lot of what you’re saying, but I really think that with this ‘too big to fail’ problem that like the companies, the problem in fixing it is almost ‘too big to prosecute’ and goes beyond political contributions and under the table payoffs.

      Those running the ‘too big to fail’ companies are ‘big operators’. People who are not beyond bringing down the country along with them if they are prosecuted, by exposing so much dirt about what’s going on not only in the financial industry but maybe in other industries to boot; that they’re revelations could create real havoc for our economy including driving it into another depression.

      Like Obama’s administration, I’m puzzled as to how best to address the problem without creating major problems for our economy; not only America’s but possibly the world’s. I’m sure Senator Warren must have thought of this and realize that she’s playing with fire. The problem is not as simple as just bringing the management of one wrong doing company to court. The problem is with respect to addressing the whole issue of companies that are ‘too big to fail’ and ‘two problematic to prosecute’ because of the substantial wrong doings that the management of those companies could expose to the world – possibly dirt that the feds are not even aware of at this point. Wrong doings that could bring up even more issues than what the original prosecution was all about.

      If someone on the blog has a solution for breaking up ‘too big to fail’ companies in a way that would not probably create bigger problems for America – I’d certainly appreciate reading about it. Don’t forget that the Great Recession all began with the failing of one company.

      • elw

        I agree that it is most likely a very complicated problem that is deeply woven into the very fabric of all that keeps this Country and (maybe the world) running. It scares me to even think about what we do not know. It also scares me to think about the direction we could be heading, because I honestly believe we could easily lose our humanity and slip into an age where humans become nothing more than assets to manipulate and toss aside. I know that sounds like Science Fiction stuff – but I see that trend happening now. I also think most of our problems are connected to it and they will not go away unless we start dealing with it and our leaders acknowledge and start talking about it. Right now they cannot even work together, so if we start by taking the influence of money out of elections, which would at least, hopefully, get some elected representatives that will be allowed to think for themselves. If you run across anyone who has addressed the “how to,” send me the reference and I will do the same for you. It took us a very long time to get to where we are – I would imagine we will not solve the problem quickly.

        • Independent1

          I agree completely that we need to get money out of the political processes in America. Like you, I’m very concerned about the directions that a lot of our political processes are moving, especially with respect to the obviously politically biased decisions that keep coming out of the Supreme Court. We absolutely have to get a Democrat elected in 2016 in order to be able to take any opportunity that may come up with respect to shifting the current balance of the court. If we could get a Democrat elected in 16 and at the same time maybe get control of the two houses of Congress – that would be a miracle coming true.

          • elw

            I am with you 100%.

  • Independent1

    When NM posters are thinking that this administration, or any previous administration, has dropped the ball in prosecuting these ‘too big to fail’ financial corporations, keep in mind that the financial industry is not like any other; the companies in the financial industry are what allow the world to operate; they virtually play a part in virtually every aspect of someone’s life every single day.

    From buying a house to buying a car. From possibly providing the funding that allowed the company someone works for to even creating their job. Or from possibly providing the funding needed to start a company that someone may want to create to backing the credit or debit card that they often use multiple times a day as they live their lives.

    Prosecuting huge players in the financial industry (including those associated with the stock markets) is a whole different ballgame from prosecuting companies in any other industry. There is virtually no other industry that almost every person, in an industrialized country at least, depends on in such a huge way virtually every single day. And which could have such a huge negative impact on the entire world, especially if prosecuting some operatives in these companies for wrong doing went horribly wrong.