Bank Executives Above The Law
Appearing before the Senate Judiciary Committee on Wednesday, Attorney General
Eric Holder admitted that bank executives truly are above the law and may commit
crimes with virtual impunity. “I am concerned that the size of some of these
institutions becomes so large that it does become difficult for us to prosecute
them,” Holder said. Under questioning by Republican Chuck Grassley of Iowa,
ranking member of the Committee Holder said, “I am concerned that the size of
some of these institutions becomes so large that it does become difficult for us
to prosecute them,” Holder added, “When we are hit with indications that if you
do prosecute, if you do bring a criminal charge, it will have a negative impact
on the national economy, perhaps even the world economy. I think that is a
function of the fact that some of these institutions have become too large.”
Holder suggested to the Committee that, the size of these banks will preclude
bringing them to justice, until Congress does something about it. “I think it
has an inhibiting influence, impact, on our ability to bring resolutions that I
think would be more appropriate,” Holder said. “I think that’s something that
we, you all, need to consider.” Holder conceded that levying a fine that is a
small percentage of profit for most banks, is much less effective in scaring
bank executives into obeying the law than putting some individuals in jail. “You
are right, senator,” Holder replied to another question from Grassley. “The
greatest deterrent effect is to prosecute the individuals in the corporations
that are responsible for those decisions. The U.S. Justice Department is under
pressure from Grassley and Senator Sherrod Brown (D) and chairman of the Senate
subcommittee on financial institutions and consumer protection, to release the
names of the outside “experts” officials say advised them that it would threaten
financial stability to prosecute big banks. The “Geithner doctrine” documented
by numerous eyewitnesses to the administration’s deliberations on the financial
crisis, former Treasury Secretary Timothy Geithner consistently advocated
preservation of the banks as the paramount objective in any measure.
Senator Elizabeth Warren (D) noted in a statement following Holder’s testimony
Wednesday, “It has been almost five years since the financial crisis, but the
big banks are still too big to fail …and are still not being held fully
accountable for breaking the law.” Warren took Federal Reserve Chairman Ben
Bernanke to task at a hearing last week for the “subsidy” reaped by the big
banks from the perception that they are too big to fail. Warren said, “If you’re
caught with an ounce of cocaine, chances are good you’re going to go to jail. If
it happens repeatedly, you may go to jail for the rest of your life. But
evidentially, if you laundered nearly a billion dollars for drug cartels and
violated our international sanctions, your company pays a fine and you go home
and sleep in your own bed at night, every single individual associated with
this. And I just, I think that’s fundamentally wrong.”
Carl Icahn, with a 6% stake in Dell (DELL), a Round Rock, Texas, computer maker,
doesn't like the offer from founder Michael Dell and Silver Lake Partners, to
take the company private. The offer, in Icahn's eyes, is a weak, unacceptable
bid and won't be happening the way they expect if he has anything to say about
it. Dell reported that a special committee of board members are "conducting a
robust 'go-shop' process to determine if there are third parties interested in
proposing alternative transactions that could be superior," in a statement
response to Icahn. Icahn says Dell needs to be prepared to pay a $9-a-share
special dividend should shareholders vote the purchase down. When added to
Icahn's view of the value for Dell shares at $13.81, stock shares would be worth
$22.81-a-share. Icahn says the board and buyout group should get ready for
potentially years of lawsuits, unless they change direction.
U.S. Labor Department reported Q4 U.S. productivity of businesses and workers
fell 1.9%. Unit-labor costs climbed slightly higher by 4.6% instead of 4.5%.
Productivity in the manufacturing sector rose sharply higher by 2.1% following a
0.9% decrease in Q3. U.S. productivity rose 0.7% for all of 2012. U.S. workers
hourly wages rose 2.6% vs. an initial reading of 2.4% however, when adjusted for
inflation, hourly wages increased by a much smaller 0.4%. Output of goods and
services for Q4 was revised by Labor Dept. higher by a 0.5% increase from 0.1%.
Labor revised Q4 hours worked up by a 2.5% gain from 2.2%.
U.S. Commerce Department reported on Thursday that the U.S. trade deficit
widened by $6.3 billion to $44.4 billion in January, for the largest one-month
deficit since March 2012. The U.S. trade deficit in goods with China widened to
$27.8 billion in January while U.S. exports to the euro area were down 2.2% on a
year-on-year basis. During January, exports fell 1.2% to $184.5 billion, per
Commerce. Partially reversing a 2.6% drop in December, imports rose 1.8% to
$228.9 billion in January. The value of U.S. crude oil imports (not price
related) rose to $24.5 billion in January from $21.2 billion in December. In
January, crude imports jumped to 260.7 million barrels. After two straight
monthly declines, petroleum deficit in January widened by 27.2% to $10.6
Federal Reserve reported Thursday that U.S. consumers increased their debt at a
7% pace in January, by a seasonally adjusted $16.2 billion for the largest
monthly increase since August 2012. Consumer debt in January was led by the
non-revolving debt such as auto loans, personal loans and student loans, all
which surged higher by $16.0 billion or 10%. For January, credit-card debt
increased by $106 million or 0.2%.
European Central Bank President Mario Draghi reiterated that monetary policy
will remain "accommodative" against a backdrop of "firmly anchored" inflation
expectations on Thursday as the ECB announced they maintained its key lending
rate unchanged at 0.75%. The Bank of England will maintain the size of its
asset-buying program at 375 billion pounds or $565 billion. Draghi said data
continue to suggest the euro-zone economy should stabilize in the first half,
with activity set to pick up later in 2013.
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Mar 7, 2013