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WHO IS TOO BIG TO FAIL: ARE 

LARGE FINANCIAL INSTITUTIONS 

IMMUNE FROM FEDERAL PROSECUTION? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MAY 22, 2013 

Printed for the use of the Committee on Financial Services 

Serial No. 113–25 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

GARY G. MILLER, California, Vice Chairman 

SPENCER BACHUS, Alabama, Chairman 

Emeritus 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

MICHAEL G. GRIMM, New York 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

TOM COTTON, Arkansas 

KEITH J. ROTHFUS, Pennsylvania 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

PATRICK T. MCHENRY, North Carolina, Chairman 

MICHAEL G. FITZPATRICK, Pennsylvania, 

Vice Chairman 

PETER T. KING, New York 

MICHELE BACHMANN, Minnesota 

SEAN P. DUFFY, Wisconsin 

MICHAEL G. GRIMM, New York 

STEPHEN LEE FINCHER, Tennessee 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

AL GREEN, Texas, Ranking Member 

EMANUEL CLEAVER, Missouri 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

CAROLYN B. MALONEY, New York 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

May 22, 2013 ..................................................................................................... 1 

Appendix: 

May 22, 2013 ..................................................................................................... 45 

WITNESSES 

WEDNESDAY, MAY 22, 2013 

Raman, Mythili, Acting Assistant Attorney General, Criminal Division, U.S. 

Department of Justice ......................................................................................... 5 

APPENDIX 

Prepared statements: 

Raman, Mythili ................................................................................................. 46 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

McHenry, Hon. Patrick: 

Letter to Attorney General Eric Holder from Senator Jeffrey A. Merkley, 

dated December 13, 2012 ............................................................................. 50 

Letter to Attorney General Eric Holder from Senators Sherrod Brown 

and Charles E. Grassley, dated January 29, 2013 ..................................... 53 

Letter to Senator Sherrod Brown from Judith C. Appelbaum, Principal 

Deputy Assistant Attorney General, received February 27, 2013 ............ 55 

Letter to Attorney General Eric Holder from Financial Services Committee Ranking Member Maxine Waters, dated February 6, 2013 .......... 58 

Letter to Treasury Secretary Jacob Lew and Attorney General Eric Holder from Financial Services Committee Chairman Jeb Hensarling and 

Oversight and Investigations Subcommittee Chairman Patrick 

McHenry, dated March 8, 2013 ................................................................... 60 

Letter to Financial Services Committee Chairman Jeb Hensarling from 

Alastair M. Fitzpayne, Assistant Secretary for Legislative Affairs, U.S. 

Department of the Treasury, dated March 28, 2013 ................................. 63 

Letter to Treasury Secretary Jacob Lew from Oversight and Investigations Subcommittee Chairman Patrick McHenry, dated March 20, 

2013 ................................................................................................................ 65 

Letter to Oversight and Investigations Subcommittee Chairman Patrick 

McHenry from Alastair M. Fitzpayne, Assistant Secretary for Legislative Affairs, U.S. Department of the Treasury, dated May 10, 2013 ........ 68 

Letter to Federal Reserve Chairman Ben Bernanke from Oversight and 

Investigations Subcommittee Chairman Patrick McHenry, dated March 

20, 2013 .......................................................................................................... 70 

Letter to Oversight and Investigations Subcommittee Chairman Patrick 

McHenry from Federal Reserve Chairman Ben Bernanke, dated April 

22, 2013 .......................................................................................................... 72 

Letter to Comptroller of the Currency Thomas J. Curry from Oversight 

and Investigations Subcommittee Chairman Patrick McHenry, dated 

March 20, 2013 .............................................................................................. 74 

Letter to Oversight and Investigations Subcommittee Chairman Patrick 

McHenry from Comptroller of the Currency Thomas J. Curry, dated 

April 8, 2013 .................................................................................................. 76 

Letter to Attorney General Eric Holder from Oversight and Investigations 

Subcommittee Chairman Patrick McHenry, dated April 3, 2013 ............. 77 

Page

VI 

McHenry, Hon. Patrick—Continued 

Letter to Attorney General Eric Holder from Oversight and Investigations 

Subcommittee Chairman Patrick McHenry, dated April 26, 2013 ........... 78 

Letter to Oversight and Investigations Subcommittee Chairman Patrick 

McHenry from Peter J. Kadzik, Principal Deputy Assistant Attorney 

General, dated May 16, 2013 ....................................................................... 81 

Green, Hon. Al: 

List of persons who have been prosecuted by the Justice Department ....... 83 

(1) 

WHO IS TOO BIG TO FAIL: ARE 

LARGE FINANCIAL INSTITUTIONS 

IMMUNE FROM FEDERAL PROSECUTION? 

Wednesday, May 22, 2013 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:19 p.m., in room 

2128, Rayburn House Office Building, Hon. Patrick McHenry 

[chairman of the subcommittee] presiding. 

Members present: Representatives McHenry, Fitzpatrick, Grimm, 

Fincher, Hultgren, Wagner, Barr, Rothfus; Green, Cleaver, 

Maloney, Delaney, Sinema, Beatty, and Heck. 

Ex officio present: Representatives Bachus and Waters. 

Also present: Representative Sherman. 

Chairman MCHENRY. The subcommittee will come to order. Today’s hearing of the Oversight and Investigations Subcommittee of 

the Financial Services Committee is entitled, ‘‘Who is Too Big To 

Fail: Are Large Financial Institutions Immune from Federal Prosecution?’’ There is a question mark at the end of that, which is not 

as common for most of our hearings, but we are trying to learn 

something here. 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. 

Before we begin, I would like to recognize our newest member of 

the subcommittee for his first hearing, Mr. Keith Rothfus from 

Pennsylvania. Thank you, Mr. Rothfus, for being here. 

And with prior agreement with the ranking member, we will 

limit opening statements to 6 minutes per side. Without objection, 

it is so ordered. 

I will now recognize myself for the purpose of an opening statement. Almost 3 years ago, the Dodd-Frank Act was signed by President Obama. Upon enactment, the President declared an end to 

too-big-to-fail; this phenomenon would be ended. Among other 

things, Dodd-Frank authorized regulators to take certain actions to 

reduce both the likelihood that a large financial company would 

fail, and the impact of any such failure were it to occur. Thus, an 

elaborate new bureaucracy was formed. 

Within it, the new Financial Stability Oversight Council (FSOC) 

is authorized to designate certain financial institutions for enhanced prudential supervision by the Federal Reserve, and to monVerDate Nov 24 2008 12:19 Aug 05, 2013 Jkt 081760 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\81760.TXT TERRI
2 

itor risks to the financial stability of the United States in conjunction with the newly created Office of Financial Research (OFR). In 

addition, Title II establishes the Orderly Liquidation Authority 

(OLA), which putatively provides the means to safely resolve firms 

that are so complex or important that their failure and subsequent 

bankruptcy would significantly disrupt the system, or so says those 

who proposed it and supported it. 

Separate from this new regime, the Justice Department has the 

authority to prosecute a business organization, including financial 

institutions, for violations of Federal law and individuals within 

those institutions. Any resulting criminal liability may give rise to 

non-penal sanctions that, individually or collectively, impose significant cost to the organization, and potentially impact its ability 

to continue as a going concern. Standards adopted by the Justice 

Department call on prosecutors to consider the collective consequences of prosecuting a business organization. 

However, in recent testimony before the Senate Judiciary Committee, Attorney General Eric Holder stated that some financial institutions are so large or complex and consequences to innocent 

third parties from holding them criminally liable so great, that the 

Justice Department is hindered from bringing prosecutions. 

Rather than me say it, let’s let Eric Holder say it for himself. 

[no sound] 

While I certainly appreciate the Attorney General in ‘‘mute,’’ it 

doesn’t help with the presentation we are trying to make. 

All right, we will try it this way. I will actually read what he 

said. So much for technology, right? ‘‘I am concerned that the size 

of some of these institutions has become so large that it does become difficult for us to prosecute them 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. And I think that is a function of the fact 

that some of these institutions have become too large. I think it has 

an inhibiting influence and impact on our ability to bring resolutions that I think would be more appropriate.’’ That is the quote 

from Attorney General Eric Holder. We were at least able to see 

a visual representation of that. 

In addition, the Attorney General has previously stated that the 

Justice Department relies on ‘‘outside experts’’ when assessing the 

economic harm associated with prosecuting larger financial institutions. To better understand the Justice Department’s decisions not 

to seek convictions in cases involving large final institutions, including the Department’s assessment of collateral consequences as 

called for under its policies, this subcommittee has sought to determine the identities of the outside experts referred to by the Attorney General in his December 2012 statement. 

The subcommittee has contacted the Justice Department and the 

Treasury Department, as well as the Federal Reserve and the 

OCC, in addition to questioning representatives of the FSOC and 

the OFR at our March 14th hearing in this subcommittee. And so 

without objection, I would submit those letters and corresponding 

responses for the record. 

To date, the subcommittee’s investigation has indicated that the 

Justice Department has not received any material information from 

3 

outside experts when making prosecutorial decisions in cases involving large financial institutions. It should be noted that in January, Senators Grassley and Brown made a similar inquiry to the 

Attorney General requesting he disclose the identity of these outside experts with whom prosecutors consulted about the appropriate level of penalties for large financial institutions. After receiving the DOJ’s response, the Senators described DOJ’s response as 

‘‘aggressively evasive.’’ On a bipartisan basis, they said this. 

And I have to agree with their summation. The DOJ is providing 

nothing material to explain the comments made by the Attorney 

General. This is disconcerting. They have been resisting this hearing since we sent the invitation request to the Deputy Attorney 

General to testify. That request was made 4 weeks ago. Only this 

past Friday afternoon did the Department of Justice inform us that 

the Deputy Attorney General would not be available to testify. I 

find this obfuscation very troubling. 

Last week, in testimony before the House Judiciary Committee, 

the Attorney General appeared to contradict his earlier remarks to 

the Senate, stating, ‘‘There is no bank, there is no institution, there 

is no individual that cannot be prosecuted by the U.S. Department 

of Justice.’’ However, the Attorney General’s contradicting comments do not explain whether the Department’s view of the collateral harm of convicting a financial institution has changed, or if 

the Department’s view has not changed. The circumstances in 

which a party’s criminal conduct is so egregious that prosecution 

is appropriate even in the face of significant harm to innocent parties has not been made clearer by the Attorney General’s comments. 

Accordingly, this hearing will examine the following: the identities of the outside experts consulted and relied upon by the Justice 

Department in such cases; any additional analysis used by the Department when making prosecutorial decisions in such cases; and 

whether the Attorney General’s statement suggested that too-bigto-fail institutions persist despite the fact of enactment of the 

Dodd-Frank Act. 

Finally, this hearing will enable the subcommittee to begin examining whether more aggressive enforcement of existing criminal 

laws will cause persons and entities to avoid engaging in unreasonably risky economic behavior, thus lessening the need for proscriptive policy from Congress on these agencies and whether such behavior will be remedied through basic enforcement of existing laws. 

And so, I thank our witness for being here today. 

And with that, I will now recognize the ranking member for 6 

minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the witness for 

appearing today. And if I may, I would like to take just a moment 

to again express my concern for the persons in Oklahoma, our sister State. I am from Texas, of course, and I do want to make it 

very clear to them that at an appropriate time, if I am permitted 

to cast a vote, I assure you I will be voting to render aid and do 

all that I can to help them restore their lives. My sympathies and 

my prayers are with them. 

I would like to repeat something that the chairman said. He said 

it correctly, but some things bear repeating. The Attorney General 

4 

has sought to clarify the statement made earlier. In fact, it was on 

May 15th of this year that he gave clarity. And he did indicate that 

there is no institution, and there is no individual that cannot be 

prosecuted by the U.S. Justice Department. I believe that the U.S. 

Justice Department and the many men and women who work there 

seek to make sure no person is above the law and no person is beneath the law, which is the way it ought to be in our country. 

And I do want to share this thought with reference to the entirety of the Justice Department. While I think it is appropriate for 

us to critique and to criticize and to ask difficult questions, there 

are a good many persons who work in the Justice Department, 

hard-working public servants who have little, if anything, to do 

with much of what will be discussed today. And my hope is that 

what we say will not have an adverse impact upon what they do 

at the Justice Department. They are hard-working public servants, 

and I want to acknowledge their hard work. 

I would also like to let the record reflect that there are persons 

in the Justice Department who have been prosecuting individuals 

as well as corporations. And I will submit a document for the 

record that we have compiled in my office. But I would like to just 

make sure that the record is very clear on these prosecutions. 

Hence, I will read some of the list that I have of persons who 

have been prosecuted. I will be careful not to call their names, but 

I will mention their business entities: Goldman, Sachs, a member 

of the board was sentenced to 2 years in prison on October 14, 

2012; Credit Suisse, the global head of structured credit pleaded 

guilty April 12, 2013; Credit Suisse, the managing director pleaded 

guilty February 1, 2012; Credit Suisse, the vice president pleaded 

guilty February 1, 2012; UBS senior trader charged December 19, 

2012; UBS senior trader charged—these are separate persons—December 19, 2012; Morgan Stanley managing director sentenced to 

prison August 16, 2012; Galleon Management LLC managing director sentenced to prison for 11 years, October 13, 2011; Stanford 

International Bank chairman of the board of directors sentenced to 

prison for 110 years, June 14, 2012; Stanford International Bank 

chief financial officer sentenced to prison for 5 years, January 22, 

2013; Stanford International Bank chief investment officer sentenced to prison for 3 years, September 13, 2012; Colonial Bank 

senior vice president sentenced to prison for 8 years, June 17, 2011. 

And there is more to be added and said. 

The point is, while we will have our discussion today and ask our 

questions, I think we should not omit the fact that the Justice Department is still in the business of prosecuting those who commit 

crimes, offenses with malice aforethought. If it is a penal action, 

they are in the business of prosecuting. This does not include the 

list of entities that have been prosecuted. And many of them have 

sought to settle. Just a few: the Deutsche Bank, $202 million settlement, May 2012; National Mortgage Settlement, $25 billion, 

February 2012; Countrywide—this was a discrimination case— 

$355 million, December 2011. And this list goes on and on. 

I welcome the witness. I trust that the witness is prepared to answer the very difficult questions. But I do trust that the witness 

will also have an opportunity to answer the difficult questions as 

5 

we go through this process. And with that, Mr. Chairman, I will 

yield back the balance of my time. 

Chairman MCHENRY. I thank the ranking member. 

And we will now recognize our witness today. We have before us 

today Ms. Mythili Raman, who is the Acting Assistant Attorney 

General for the Criminal Division of the U.S. Department of Justice. Before that, she held a number of positions in the Department 

of Justice, including serving as Chief of Staff for the Criminal Division for many years. She has a distinguished career of service in 

our government. And she is a graduate of Yale University and the 

University of Chicago law school, both fine institutions. 

So thank you so much for being here. This is your first time testifying before the House. We have a very simple lighting system 

which is slightly different than the Senate, in that we try to abide 

by it. I have to make a little Senator jab. May I? It is bipartisan. 

But green means go, yellow means hurry up, and red means 

stop. And you will have 5 minutes to summarize your opening 

statement. Our microphones are a bit directionally sensitive, so if 

you will pull it close and direct it towards you, that would help significantly. And without objection, the witness’ written statement 

will be made a part of the record. 

Ms. Raman? 

STATEMENT OF MYTHILI RAMAN, ACTING ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF 

JUSTICE 

Ms. RAMAN. Chairman McHenry, Ranking Member Green, and 

distinguished members of the subcommittee, thank you for inviting 

the Department of Justice to appear today to discuss our efforts to 

combat financial crime. I am pleased to be here and I am privileged 

to oversee the important work of the Criminal Division. 

The Justice Department is committed to vigorously investigating 

allegations of wrongdoing at financial institutions and, along with 

our many law enforcement partners, holding individuals and corporations accountable for their misconduct. Our track record in recent years shows our commitment to pursuing the most challenging 

and complex financial crime investigations in the country. Over the 

last 3 fiscal years alone, the Department has filed nearly 10,000 financial fraud cases against nearly 14,500 defendants. 

These prosecutions have led to stiff prison sentences for many 

defendants. Last year, for example, the Criminal Division and the 

U.S. Attorney’s Office in Houston secured a 110-year sentence for 

Robert Allen Stanford for orchestrating a 20-year, $7 billion investment fraud scheme; just one of numerous investment fraud 

schemes the Department has prosecuted in recent years. We have 

been just as aggressive in bringing prosecutions involving the manipulation of the markets, as seen by the extraordinary success of 

the U.S. Attorney’s Office in Manhattan in an unprecedented string 

of insider trading cases over the last several years. 

Our prosecutors and agents also continue to doggedly pursue 

health care fraudsters. Our Medicare fraud strike force has convicted over 1,000 defendants of felony health care fraud offenses 

since the strike force’s inception. And the average sentence for the 

strike force cases is approximately 45 months in prison. Our fight 

6 

against foreign bribery, too, is as robust as it has ever been. In just 

the past 2 months, we have announced charges against 11 individuals, including corporate executives and employees and one foreign 

official, in active Foreign Corrupt Practices Act investigations. 

Similarly, our investigation of the manipulation at various banks 

of interbank lending rates, including LIBOR, has had reverberations across the globe. As detailed in my written statement, the 

consequences thus far for several multinational banks have been 

far-reaching, ranging from the replacement of senior leaders at 

Barclays, to criminal charges against traders at UBS, to detailed 

admissions of criminal wrongdoing and the payment of substantial 

penalties by three global banks, to felony guilty plea agreements by 

Japanese subsidiaries of UBS and RBS. 

As is evident from this track record, we are deeply committed to 

holding wrongdoers, whether individuals or business entities, accountable for their crimes. In our investigations of business entities 

in particular, we are guided by firmly rooted Department of Justice 

policy, set out in the U.S. Attorneys’ Manual, which requires our 

prosecutors to consider a number of factors in determining how, 

and whether, to bring charges, including: the seriousness of the entity’s conduct; the pervasiveness of the criminal misconduct; the extent of the entity’s cooperation with our investigations; and the remedial actions taken by the company. 

There has been some discussion in recent months about one of 

those factors: the potential collateral consequences of charging a 

corporate entity. And we appreciate your interest in better understanding the extent to which the Department may consider possible 

collateral consequences of criminal prosecutions against large, complex financial institutions. The consideration of collateral consequences on innocent third parties, like the other factors we must 

consider when determining how and whether to proceed against a 

corporation, has been required by the U.S. Attorneys’ Manual since 

2008. 

But the basic principles underlying that policy have a much 

longer history at the Department. The first Department-wide guidance on this subject was issued in 1999, and those basic principles 

have been reaffirmed multiple times since then—including in 2003, 

2006, and 2008. As more fully explained in my written statement, 

although the factors set forth in the U.S. Attorneys’ Manual, for 

good reason, inform our prosecutorial decisions, none of those factors, including potential collateral consequences, acts as a bar to 

prosecution or has prevented the Justice Department from pursuing investigations and seeking criminal penalties in cases involving large, complex financial institutions. 

No individual and no institution is immune from prosecution. 

And we intend to continue our aggressive pursuit of financial fraud 

with the same strong commitment with which we pursue other 

criminal matters of national and international significance. 

Thank you for the opportunity to provide the subcommittee with 

this overview of our financial fraud efforts, and I look forward to 

answering your questions. 

[The prepared statement of Acting Assistant Attorney General 

Raman can be found on page 46 of the appendix.] 

7 

Chairman MCHENRY. Thank you for your testimony. I now recognize myself for 5 minutes for questions. 

On March 6th, the Attorney General testified, as I said in my 

opening statement, ‘‘It does become difficult for us to prosecute 

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’s economy.’’ Are these 

decisions that affect prosecution decisions? 

Ms. RAMAN. I should start by saying, Mr. Chairman, the Attorney General, as he said, was clear that no institution and no individual is immune from prosecution because of its size. Of course, 

there are complexities that come along with the size of an institution. But the complexities do not equal immunity, as seen by our— 

Chairman MCHENRY. Does size mean immunity? 

Ms. RAMAN. Size does not equal immunity. Because although 

complexities certainly accompany investigations of large financial 

institutions, as you might expect they would, those complexities do 

not result in immunity for the corporation. In fact, our track record 

is clear on that. We have— 

Chairman MCHENRY. Right. The track record is not as clear as 

on this side for viewing this. But in testifying that the DOJ is having difficulty prosecuting large financial institutions because ‘‘it 

will have a negative impact on the national economy, perhaps even 

the world economy,’’ isn’t the Attorney General implying that some 

of these institutions are so large that it is very difficult to make 

a decision to prosecute them? 

Ms. RAMAN. I don’t think that is what the Attorney General was 

saying, Mr. Chairman. I think that what the Attorney General was 

saying—I believe it to be so—is that complexity does accompany 

our investigations of large financial institutions. And that, of 

course, does not—that is not specific as to large institutions. We 

see complexities in lots of our large investigations. 

Chairman MCHENRY. Okay, sure. Has the size of an institution 

ever been a meaningful element in whether or not you prosecute? 

Ms. RAMAN. As I alluded to in my written testimony and in my 

oral testimony, when we look at prosecution of business entities— 

putting individuals aside for a moment, where collateral consequences never enter into the equation—when we look at the prosecution of business entities, we are guided by long-established Department policy, which sets out a number of factors. 

Chairman MCHENRY. Certainly. 

Ms. RAMAN. And those factors include the seriousness of the misconduct, the pervasiveness of the misconduct, cooperation, and collateral consequences on innocent third parties. 

Chairman MCHENRY. In a separate statement the Attorney General made in March, he referenced that some of these large institutions have ‘‘an impact on our ability to bring resolutions that I 

think would be more appropriate.’’ He refers to perhaps a different 

way, rather than prosecution, criminal prosecution. What are those 

other avenues, those other ways that he says are more appropriate? 

Ms. RAMAN. The U.S. Attorneys’ Manual sets out a number of 

different types of resolutions that a prosecutor can reach with a 

8 

business entity following an investigation. Just to step back for a 

moment and to give you an overview of what we do, when we— 

Chairman MCHENRY. Right, I understand. But the Attorney General sets policy, the U.S. Attorneys’ Manual determines procedure, 

right? So when he lays this out, and says these large financial institutions are very difficult to prosecute, is that not true? 

Ms. RAMAN. I— 

Chairman MCHENRY. So they are—is that not true? 

Ms. RAMAN. There are complexities and difficulties with any 

large investigation. But our prosecutors are well-prepared for that. 

Chairman MCHENRY. Okay, so a larger institution would be 

more difficult, is what he is implying, than a smaller institution? 

Ms. RAMAN. The larger investigations are always more challenging. 

Chairman MCHENRY. Right. 

Ms. RAMAN. And they are challenging for the— 

Chairman MCHENRY. My time is short here. Last week, the Attorney General testified that banks are not ‘‘too-big-to-jail.’’ That 

was his quote. Does this mean that the DOJ is preparing to prosecute a case, even if it determines that a conviction would cause 

harm to domestic or international economy? 

Ms. RAMAN. We have, in recent months, prosecuted a number of 

multinational banks, as I am sure the chairman is aware, including 

RBS and UBS subsidiaries in Japan, and achieved resolutions 

against large multinational banks involving significant criminal 

misconduct. The factor that you are referring to is one of nine factors that we consider, but it is never the dispositive factor. It can 

be, in certain circumstances, an important factor. But none of those 

nine factors set out in Department policy ultimately drives the decision on its own. 

Like with any case, our prosecutors need to look at all of the 

facts, apply it to the policy of the Department of Justice, and apply 

the law that is applicable in that particular circumstance. And in 

each of those circumstances, after assessing those considerations, 

we do assess what the appropriate resolution is. Of course if there 

is no evidence of crime in the first place, that is an easy call; we 

don’t prosecute at all. 

Where there is evidence of criminal misconduct, we have a number of different tools that we have available to us to extract the 

kind of punishment and deterrence and cooperation and— 

Chairman MCHENRY. Like a fine, for instance. 

Ms. RAMAN. —that we need. Sometimes there is a guilty plea, 

sometimes there are charges resulting in trials, sometimes there 

are deferred prosecution agreements, sometimes there are nonprosecution agreements. 

Chairman MCHENRY. And sometimes, there are huge fines. So 

with that, my time has expired. 

Mr. Cleaver will be recognized for 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman. Ms. Raman, not long 

ago, one of the larger banks was charged with mortgage fraud. Are 

you familiar with the case? Bank of America? 

Ms. RAMAN. I may not be thinking of the specific case you are, 

Congressman, but you may be referring to the Lee Farkas Colonial 

Bank case? 

9 

Mr. CLEAVER. Well, either one. That is not the one, but it is the 

same arena. How was that case resolved, adjudicated? 

Ms. RAMAN. In the case that I am thinking about, this was a 

massive prosecution of executives of Colonial Bank and Taylor, 

Bean & Whitaker for an almost $3 billion fraud that eventually 

led—ended up resulting in the failure of Colonial Bank. In that 

case, we prosecuted a number of top executives there, all of whom 

are serving time. The chairman of Taylor, Bean & Whitaker, Lee 

Farkas, is serving 30 years in prison. 

The senior vice president of Colonial Bank, Cathie Kissick, is 

serving 8 years in prison. TBW’s CEO is serving more than 3 years 

in prison. TBW’s CFO is serving 5 years in prison. TBW’s president 

is serving 21⁄2 years in prison. And its treasurer is serving 6 years 

in prison. So those are the types of resolutions we have been able 

to get to after aggressive and tenacious investigation. 

Mr. CLEAVER. Thank you. Before the hearing is over, I will get 

the name of the bank that I am talking about. Would you agree 

that for some of the larger banks, they simply build into their 

budget fines for violating the law as a regular course of doing business? 

Ms. RAMAN. I can’t speculate about how each bank may set aside 

money to pay fines. But what I can tell you, Congressman, is our 

penalties are driven by an assessment under the sentencing guidelines or pursuant to forfeiture law about what the appropriate 

monetary penalty should be in any particular case. When the penalty is driven by the sentencing guidelines, we look at issues such 

as loss to investors and intended loss. When our penalty is driven 

by forfeiture laws, we look at how much criminal proceeds may 

have flowed through a bank and seek to forfeit that money and 

take it away from that bank. 

And so, we have a number of different statutory and regulatory 

regimes under which we can assess monetary penalties, and we always approach that analysis aggressively and responsibly to ensure 

that the maximum deterrent effect is achieved. 

Mr. CLEAVER. I think there is a general view out in the world 

from which I come that the banks are now larger than they were 

when the economic crisis began. And that they are simply fined 

when they are caught in violation of the law. Then, when we hear 

that none of the Wall Street culprits have gone to trial, it contributes to this feeling out here that if you have money, you can get 

off. 

If you rob a convenience store, you are going to go to jail. If you 

rob the Nation, you just get richer, and you pay a fine. It is difficult 

to justify that to my constituents at town hall meetings. So what 

would you suggest I say at a town hall meeting, as this issue surfaces? 

Ms. RAMAN. I can assure you, Congressman, that our career prosecutors and our investigative agents are absolutely tenacious about 

getting to the bottom of criminal wrongdoing at any entity, including large financial institutions. And I think our experience over the 

last several years shows that we use all of the tools that are at our 

disposal. First and foremost, individual prosecutions against culpable executives and employees of business entities, which can 

10 

have the biggest deterrent effect one can hope to have on criminal 

wrongdoing in the future. 

We also, on separate tracks but sometimes as part of a comprehensive approach to our law enforcement efforts, look at wrongdoing as a general matter within a business entity and decide 

whether the entity itself, separate and apart from the employees or 

executives, should also have to pay a significant monetary penalty 

and, among other things, agree to cooperate with the government 

in ongoing investigations and engage in remedial efforts. So you 

can assure your constituents that our career prosecutors and 

agents are absolutely dedicated to ensuring that we root out criminal wrongdoing at these institutes. 

Chairman MCHENRY. The gentleman’s time has expired. 

Mr. Fitzpatrick, the vice chairman of the subcommittee, is recognized for 5 minutes. 

Mr. FITZPATRICK. I thank the chairman. And Ms. Raman, I appreciate your service to the Department of Justice and, certainly, 

your statement here today. I listened to the few prosecutions that 

you outlined in your opening statement, including the Allen Stafford Ponzi scheme prosecution. And there were a couple of others, 

but with all due respect, they are not really what brings us here 

today. 

With all the misconduct that has been alleged and all of the significant losses that our constituents have suffered as a result of the 

2008 mortgage and real estate meltdown, it is true, is it not, that 

nobody has gone to jail since then? 

Ms. RAMAN. I don’t think that is true. We have prosecuted a 

number of executives at large financial institutions since 2008. And 

the numbers actually speak for themselves. In terms of executives, 

we have had, as I said, UBS traders, a boardmember of Goldman 

Sachs, a— 

Mr. FITZPATRICK. Ms. Raman, are they laid out in your testimony? 

Ms. RAMAN. I am sorry? 

Mr. FITZPATRICK. Are they laid out in your testimony? Are any 

of those related to the mortgage foreclosure crisis of 2008? 

Ms. RAMAN. I think it is hard to describe what is or is not related 

specifically to the mortgage foreclosure crisis. And I can’t— 

Mr. FITZPATRICK. Why is it hard? 

Ms. RAMAN. What I can tell you is that as with all Americans, 

the employees at the Justice Department understood the gravity of 

the 2008 mortgage foreclosure crisis. We have investigated, and 

continue to investigate, any conduct that may have led to that 

mortgage foreclosure crisis. And— 

Mr. FITZPATRICK. Can you, as the acting AG in charge, identify 

any prosecution and subsequent incarceration related directly to 

the mortgage foreclosure crisis? Is there one? 

Ms. RAMAN. Without speaking to any ongoing investigations, into 

the ongoing work of our mortgage— 

Mr. FITZPATRICK. In the past. 

Ms. RAMAN. —we have had several prosecutions, including most 

recently in Manhattan of executives of Credit Suisse and the global 

head of structured credit at Credit Suisse, who have all pleaded 

11 

guilty, which related to hiding of profits from residential mortgagebacked securities. 

Mr. FITZPATRICK. Yes. I want to get to a separate issue, Ms. 

Raman. In a May 16, 2013, letter the Justice Department wrote 

that it has from time to time contacted relevant government agencies, including domestic and foreign regulators, to discuss the potential collateral consequences of prosecutorial actions that the 

Justice Department might take with respect to large, complex financial institutions. What are the identities of those domestic and 

foreign regulators consulted by the Justice Department, as identified in your May 16th letter? 

Ms. RAMAN. As an initial matter, and to be clear, contacts with 

regulatory partners can occur at different times during an investigation and at certain periods of an investigation. And, frankly, in 

only certain types of investigations. Many of our bank prosecutions 

are ones that we do hand-in-glove with a regulatory partner. And 

so there are many times that they will take civil enforcement actions at the same time we take criminal enforcement actions. And 

many of our partners, such as the Treasury Department, the OCC, 

the Federal Reserve, and foreign regulators are ones that we work 

with closely in connection with many of those investigations. 

There are other times where—in the few—without going into 

open cases or matters that are currently in litigation, it is correct 

that as a matter of policy, whenever we do need to assess broader 

collateral consequences—and, again, I have to emphasize this is in 

a very small series of cases, we have been able to reach out to our 

regulatory partners, partners such as those, to get feedback on 

what regulatory actions may or may not be taken as a result of a 

conviction. And so, those are the types of interactions that we are— 

Mr. FITZPATRICK. Ms. Raman, when it is measuring how much 

damage a prosecution could cause to an institution, does the Department assume that regulators will impose sanctions if the company is convicted? 

Ms. RAMAN. We never assume that a particular action will necessarily be taken. But it is absolutely correct that convictions trigger a number of regulatory actions. And that, in fact, regulatory actions and criminal actions, when brought together, can sometimes 

have the best impact that we need to have— 

Mr. FITZPATRICK. But it is not assumed, as part of a prosecutorial 

decision? 

Ms. RAMAN. It is not assumed, meaning none of these things are 

ever— 

Mr. FITZPATRICK. Is it ever factored into the decision as to whether to prosecute that a regulator may issue or impose sanctions? 

Ms. RAMAN. Yes. As in any type of fraud case, such as defense 

procurement fraud cases where we consult with debarment officials 

from time to time to understand what a conviction may trigger, we 

do understand fully that convictions of banks— 

Mr. FITZPATRICK. So it is weighed into the prosecutorial decision 

whether to prosecute or not, whether sanctions would be imposed 

by a regulator. 

Ms. RAMAN. The collateral consequences of a conviction is a factor that we can and do consider from time to time, in certain cases 

when we decide to pursue an investigation. But it is never the reaVerDate Nov 24 2008 12:19 Aug 05, 2013 Jkt 081760 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\81760.TXT TERRI
12 

son we don’t bring a case. Indeed, we recognize that sometimes 

civil and criminal enforcement actions, when taken together, can be 

the most powerful response that the government can have. 

Chairman MCHENRY. The gentleman’s time has expired. 

We will now go to Mr. Ellison for 5 minutes. 

Mr. ELLISON. Thank you, Mr. Chairman. And let me thank the 

ranking member, as well, for this hearing. 

Ms. Raman, thank you for your testimony and your willingness 

to be here and answer questions. My question is, I don’t know 

anecdotally, I don’t have it here in my notes, but I do know that 

during the S&L crisis, DOJ had a significantly larger number of 

lawyers in a position to bring accountability. I don’t know if they 

were civil or criminal, but in general a larger number of lawyers 

compared to today. Do you know what the difference is? Because 

I don’t, and I know that is kind of an unfair question. 

But given that they are—and do you agree that there is a difference? And if so, do you think that there is any—do you think 

that you could prosecute more cases if you had more lawyers? 

Ms. RAMAN. I don’t have the exact numbers, although I am 

happy to go back to the Justice Department and provide those 

numbers to you if we are able to get those. As a general matter, 

of course we can always do more with more. And, in fact, the recent 

sequestration has had significant effects on how we deploy our resources and where we deploy our resources. It has caused us to 

have to make hard choices about our enforcement priorities. But 

putting that aside, I don’t think there is a prosecutor or agent in 

the Department of Justice who isn’t as committed as they were before to— 

Mr. ELLISON. Of course not. Yes, of course not. And I don’t mean 

to imply—the position that you are in is, you are going to say we 

are going to do the best we can every time no matter what. And 

I know that because I know that is true. But there are budgetary 

realities you are dealing with. And another reality is that in the 

aftermath of 9/11, it was incredibly appropriate for the United 

States to turn its attention to protecting the American people from 

terrorism. 

But did that decision that needed to be made have an effect on 

the ability to, say, prosecute white collar crime or mortgage fraud? 

Ms. RAMAN. I can’t speculate about whether the diversion of resources to national security impacted actual numbers of fraud prosecutions. But as I think I tried to make clear during my oral testimony and written testimony, the numbers of fraud prosecutions are 

still very, very high. And that is because financial fraud will always be a top priority of the Justice Department. It is the kind of 

case that if Federal prosecutors don’t bring them, sometimes they 

will never be brought at all. 

And so I do not expect that the Department’s commitment to 

prosecuting financial crime will ever diminish. It is a core mission 

of ours. 

Mr. ELLISON. Yes. Since 2010, according to our numbers, there 

have been about 24 significant fraud cases that were settled 

through agreements. And I think that is a significant number. In 

2012, there were 7 major cases resulting in over $30 billion in 

fines. And so, you all have been active. But, of course, given all the 

13 

pain and suffering that so many American homeowners have faced, 

I think many of them have just been shocked that they haven’t 

seen more folks on television being ‘‘perp-walked,’’ as they say. 

That is just a comment. You don’t need to respond to that. I also 

have a question that is not exactly on the issue of too-big-to-fail, 

but is important in my district. And that is—under the Bank Secrecy Act, there are significant penalties for noncompliance. I have 

had bankers in my district tell me that they have to hire highly 

paid professionals in order to make sure that they comply. And 

then, they have told me, as a result, it has made it difficult for 

them, from an expense standpoint, to be able to facilitate transactions, particularly ones that involve wiring money overseas, particularly to East Africa. 

Have you all thought about this issue? And have you ever reflected on how the Bank Secrecy Act may be adjusted, since it has 

been in force for so many years, to be more tailored? Of course, we 

want to go after the terrorist financers, but I can tell you from my 

experience in representing the largest Somali-American community 

in the country that there are a lot of people who have seen the 

number of banks that will even facilitate these transactions go 

down. 

And a lot of folks seem to think that it is because the Bank Secrecy Act and other things that you all are—and other sort of laws 

in place. Can you respond to that at all? 

Ms. RAMAN. I think, Congressman, that it is important for me to 

note that there are both civil and criminal enforcement authorities 

under the Bank Secrecy Act. And, of course, I am here in the capacity of the criminal prosecutor. I can tell you that we always deploy our resources and bring charges only when the evidence supports it and when the law supports it. The Bank Secrecy Act is a 

powerful tool. And it is one that has caused the compliance culture 

at financial institutions to improve in a way that is helpful to this 

country and protects our financial system. 

And in our prosecutions, we ensure that our use of the Bank Secrecy Act is targeted and effective. 

Chairman MCHENRY. The gentleman’s time has expired. 

Mr. ELLISON. Thank you. 

Chairman MCHENRY. We will now recognize Mr. Fincher for 5 

minutes. 

Mr. FINCHER. Thank you, Mr. Chairman, and thank you, Ms. 

Raman, for coming today. Just going back to Mr. Fitzpatrick’s line 

of questioning, you mentioned the regulators and the role that they 

play, working with the Department of Justice. What are the identities of the regulators that DOJ is contacting to provide an economic 

analysis when you do prosecute or look at prosecuting? Who are 

the regulators that you are talking about, specifically? 

Ms. RAMAN. Just to step back for a second to make sure that I 

am clear in my response, our interactions with regulators often are 

just organic interactions with regulators in— 

Mr. FINCHER. Like who? 

Ms. RAMAN. In the course of criminal investigations, we often announce criminal resolutions in conjunction with FinCEN or OFAC, 

the OCC, the Treasury Department, the Federal Reserve, or foreign 

regulators. And so, we are often partners with our regulatory counVerDate Nov 24 2008 12:19 Aug 05, 2013 Jkt 081760 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\81760.TXT TERRI
14 

terparts when we look at banks for either criminal or other misconduct. I should step back by saying that is the bread and butter 

of our interaction with regulators. It is as partners addressing a 

common problem. 

There is a small sliver of cases—and, again, I can’t speak about 

open matters or about open investigations or matters in litigation— 

where it has been necessary for us to test any arguments that a 

subject bank may make about the collateral consequences that may 

befall them if we prosecute. And in those limited cases, it has been 

our practice to ensure that we reach out to those types of partners 

to make sure that we— 

Mr. FINCHER. So my time, I am—I apologize. But before you look 

at prosecuting someone, so you talk to the regulators to make sure 

that—no, you just go on and prosecute if that is the need, and then 

talk to the regulators. So you are working with OCC and all these 

agencies before you make a decision on whether the systemic risks 

are too great to prosecute? 

Ms. RAMAN. I just want to emphasize that systemic risk as a collateral consequence only appears in the smallest sliver of financial 

institution cases that we have prosecuted. The bread and butter 

collateral consequences that we always look at as prosecutors include things like harm to innocent employees who may lose their 

jobs if a business goes out of business, shareholders, or customers. 

That is the kind of collateral consequence that our fraud prosecutors look at, as one of many factors, when we prosecute a business 

entity. 

When we are talking about systemic risk, which I think is the 

focus of your question, that comes up very, very rarely. And, again, 

without speaking to open cases which I can’t speak about, we have, 

on occasion and from time to time, reached out to those same regulatory partners to understand whether or not a criminal proceeding 

will trigger a regulatory— 

Mr. FINCHER. So to end this line, and I will start in on another 

line, you are working with the regulators to make sure you are not 

harming employees, to a certain extent, before you make the decision to prosecute or not to prosecute if there is something criminal 

that has been done. Correct? 

Ms. RAMAN. We consider collateral consequences as one of several factors. And in some of those cases, we consult regulators. 

Mr. FINCHER. Okay. In the first—the chairman was asking you 

earlier, and you kept going back to the complexity. And a lot of 

these cases are very complex. Can you give me some examples of 

what makes them so complex? Because it seemed like you were 

using that word a lot, and just— 

Ms. RAMAN. When we talk about multinational banks—and we 

have looked at them for a number of different types of misconduct—what we need to deal with is what we need to deal with 

sometimes in other international investigations: evidence located 

abroad that might be difficult to get; subjects who are located 

abroad that may be hard to extradite; data privacy laws existing 

in some of these other countries which may preclude an entity from 

providing us with the information that we need in order to get to 

the bottom of what we are looking at, the number of employees of 

15 

an entity who may or may not be affected by our criminal proceeding. And so, that is the kind of— 

Mr. FINCHER. That is what you were talking about with— 

Ms. RAMAN. Those are the kinds of concerns that we need to look 

at in any— 

Mr. FINCHER. My time is almost up. Let me just finish up with 

this. And since the DOJ hasn’t criminally prosecuted any large financial institutions, is it fair to say there are still some financial 

institutions that are too-big-to-fail, and Dodd-Frank didn’t end toobig-to-fail? 

Ms. RAMAN. I don’t know about too-big-to-fail. I do know there 

is no institution that is too large to prosecute. 

Mr. FINCHER. Without talking to the regulators. 

Ms. RAMAN. Only when we talk to—only in the small minority 

of cases, when that issue even arises. And I have to emphasize as 

much as I can, that issue rarely comes up. 

Mr. FINCHER. My time has expired. Thank you, Mr. Chairman. 

Chairman MCHENRY. Mrs. Maloney for 5 minutes. 

Mrs. MALONEY. Thank you very much for yielding. And I thank 

the ranking member and the chairman. 

I want to try to understand how DOJ initiates investigations. 

And when you face a multimillion-dollar, billion-dollar scheme or 

another type of large-scale circumstances, how does the Department decide to settle versus going to trial? It seems like you settle 

all the time. What goes into those decisions? And does the complexity of the case or the institution involved play a factor in your 

decision that you are making whether to prosecute or just settle? 

Ms. RAMAN. First and foremost, we look at the evidence that we 

have been able to gather during the course of an investigation to 

satisfy ourselves that we could prove beyond a reasonable doubt 

that the entity or individual in fact violated the law. And in white 

collar crimes, one of the most important elements of our proof includes whether or not the entity or person acted willfully, that is, 

with an intent to violate the law. So, that is our baseline assessment. 

We need to look first at the evidence and the law to see whether 

we have a prosecutable case. When we are talking about business 

entities as opposed to individuals, we then look at the nine factors 

that are set out in long-established Department policy. And we consider them one by one to determine, at the end of the day, does the 

balance sway in favor of charging, resolution, guilty pleas, or some 

other resolution altogether. And some of the factors that obviously 

drive our decision the most strongly are seriousness of the misconduct and pervasiveness of the misconduct, including whether we 

are talking about one rogue employee or whether we are talking 

about a criminal practice that was sanctioned by the managers of 

that particular institution. 

And so, the pervasiveness of the wrongdoing is obviously something that we need to look at closely. We look at, in these cases, 

whether the corporation cooperated. Did they come in and disclose 

that they had a problem? And if they did, did they come in and cooperate with us, give us the documents that we needed, point us 

to the witnesses, suggest to us who we might need to interview? 

Did they give meaningful cooperation? Have they, on their own, 

16 

taken remedial action? Is this now a new company that we are 

talking about? 

Meaning, have they replaced their managers? Have they set into 

place a compliance structure that now will ensure, or do better to 

ensure, that the same misconduct doesn’t reoccur? Have they made 

restitution to victims? Would there be collateral consequences if 

there was one type of resolution versus another? There are all of 

these factors that we look at. And at the end of the day, it is a balanced decision about whether or not we sit across from the table 

from a bank counsel and say, we are ready to charge you. 

And often, when we have that conversation, the response is that 

the bank elects to plead guilty, which is, obviously, a successful 

resolution for any prosecution. Oftentimes, our assessment, based 

on all of those factors, is that one of the middle-ground resolutions 

is most appropriate, a deferred prosecution or a non-prosecution 

agreement. And even for those, we require complete admission of 

wrongdoing. So there is a stipulated statement of facts in which the 

entity fully acknowledges publicly what the misconduct was. 

Mrs. MALONEY. But may I further ask, I don’t know if it is DOJ 

or other settlements, I often see settlements in the paper that ‘‘X, 

Y, Z firm’’ settled for $700 million, a billion dollars, whatever. And 

a statement was issued that they did nothing wrong. And I am asking, why did they pay $700 million if they did nothing wrong? But 

that has happened several times. I am just reading the paper and 

seeing this. 

What is going on there, where they give a huge settlement and 

then a statement that they did nothing wrong? It is confusing to 

me. I would think, why are you paying a fine if you didn’t do anything wrong? 

Ms. RAMAN. I am glad you asked that question. It is not the policy of the Department of Justice to allow a company to neither 

admit nor deny. In fact, to the contrary, the Criminal Division’s 

policy has been that regardless of the resolution—that is a DPA, 

an NPA, or a guilty plea—the company must fully acknowledge its 

criminal wrongdoing and may not retract that later. 

Mrs. MALONEY. My time is running out. I really want to know 

how you decide between prosecuting an institution versus an individual? Oftentimes, it is an individual who has committed a criminal act. And in some cases, the institution doesn’t even know that 

they did it. So how do you decide whether to prosecute the individual or prosecute the firm? 

Ms. RAMAN. And there are times that it is not an either/or, but 

it is both or neither. And we look at, first, whether or not—who the 

culpable individual is. And again, I would say that it is important 

to us whether it is a rogue employee or whether an employee who 

should be prosecuted and that should be the end of it. Or whether 

it is someone who is of a higher position in the entity who committed the misconduct and that kind of misconduct ended up profiting the entity. 

And in those cases, it may be appropriate to prosecute the entity, 

and sometimes— 

Chairman MCHENRY. The gentlelady’s time has expired. 

With that, we will now go to Mr. Rothfus for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

17 

A recent Law Review article surveyed 54 public companies that 

were convicted of Federal crimes from 2001 to 2010, finding that 

no company was charged with a fraud or financial crimes offense, 

except in one instance of securities fraud. Further, the study found 

that no public company from the financial sector was convicted of 

any offense during this period. DOJ’s prosecutorial standards remind prosecutors that the nature of some crimes may be such that 

national law enforcement policies mandate prosecutions. 

My question to you is this: Does any national law enforcement 

policy mandate prosecution of financial crimes, despite a company’s 

cooperation or the presence of other mitigating factors? 

Ms. RAMAN. I don’t believe it is fair to say it is mandated. But 

I think it is absolutely fair to say that those factors are never going 

to be the only factors that drive a decision. So there, in fact, may 

be instances in which, no matter how cooperative an entity has 

been, they should, and will be, charged or enter into a resolution. 

And so, again, it is one of several factors that we consider. 

Mr. ROTHFUS. Looking again at the financial crisis in 2008, has 

DOJ prosecuted any company, any entity, for conduct related to the 

financial crisis? 

Ms. RAMAN. I don’t think that we can say that there is one company we have prosecuted which was directly related to the financial crisis. But I can say that we have looked diligently and tenaciously since 2008, and we continue to do so through our residential mortgage-backed securities working group. And we are committed to ensuring that we look at every fact and make appropriate 

decisions. When the evidence— 

Mr. ROTHFUS. But to date, no entity has been prosecuted? 

Ms. RAMAN. When the evidence suggests that a crime has been 

committed, and the law allows for it, a prosecution will be brought. 

When the evidence is not there, we will not bring a case. 

Mr. ROTHFUS. In matters related to the 2008 financial crisis, has 

the Department of Justice found potential violations worthy of 

prosecution? 

Ms. RAMAN. I think, again, I can say this in the most sort of general terms. When the evidence and the law suggest that a prosecution is appropriate we have, and will, bring those prosecutions. 

When the evidence and the law does not support such a prosecution we cannot, and will not, bring a prosecution. 

Mr. ROTHFUS. If I could shift gears a little bit, with respect to 

the sliver of cases where you are taking into account the economic 

consequences of prosecuting large institutions, can you please identify the regulators by name whom you are contacting in this small 

sliver of cases to which you are referring? 

Ms. RAMAN. I understand the committee’s interest in this. And 

I hope that the committee understands that I am extremely limited 

in what I can say about open investigations and cases that are currently in litigation. We have several cases that are currently in litigation, and so— 

Mr. ROTHFUS. Are there any cases where you have actually 

closed the investigation? 

Ms. RAMAN. I know that our staff at the Department, at the committee’s request, has done some good faith searches in connection 

with the request of this committee for that kind of information. 

18 

And my understanding is that in closed cases, we have not identified the kinds of documents—in certain—keeping in mind that the 

searches were limited, in which systemic risk was a factor in those 

decisions. 

Mr. ROTHFUS. Looking at the case, the rate-rigging case against 

UBS, wasn’t that case structured so that a foreign subsidiary with 

no real exposure to the United States was used to limit the potential consequences to the broader organization? 

Ms. RAMAN. I don’t think it is correct to say that was the reason 

that UBS Japan pleaded guilty. Again, we look at a number of factors, including where the bulk of the misconduct occurred. And oftentimes, it is absolutely appropriate for a subsidiary of a company 

to be the entity that pleads guilty, with the parent company perhaps entering into another resolution. And— 

Mr. ROTHFUS. And if the parent company also profited, wouldn’t 

it be appropriate to also prosecute the parent company? 

Ms. RAMAN. In certain circumstances. And again, only after considering all of those factors. It may well be that the parent company was absolutely cooperative and has engaged in remedial action, but we nevertheless believe that it is important to bring a 

prosecution against a subsidiary. And, again, it is not a science, it 

is an art how we come to these decisions. But we look at each of 

those factors in good faith and through the lens of— 

Mr. ROTHFUS. Isn’t it true that if UBS Japan was the entity that 

you prosecuted, there would be no effect on UBS in the United 

States? 

Ms. RAMAN. I can’t say that. 

Mr. ROTHFUS. Thank you. I yield back. 

Chairman MCHENRY. Mrs. Beatty is recognized for 5 minutes. 

Mrs. BEATTY. Thank you, Mr. Chairman, and Mr. Ranking Member. 

Ms. Raman, getting ready for today’s hearing I reviewed a report 

that is a couple of years old, but I think still very relevant today. 

And in that report, the GAO reported regarding the Department of 

Justice’s monitoring of deferred pension agreements and non-pension agreements as a tool to respond to corporate crime. The report 

was based on the understanding that because the Department of 

Justice has recognized that it could be potentially harmful to criminally prosecute a company if you didn’t look at what the investors 

or the employees or the pensioners or the customers who were not 

involved in that, and the effect it would have on them. 

So they relied a lot on what we are going to call the DPAs and 

the NPAs to avoid harm to the innocent parties. And this made 

sense to me. But the GAO report concluded with a recommendation 

that the Department of Justice develop performance measures to 

evaluate the contribution of the DPAs and the NPAs towards its 

strategic objective of combating public and corporate corruption. 

Specifically, the report suggests that the Department of Justice 

use two different metrics for such evaluation: one, whether the 

company had successfully met all the terms of the agreement; or 

two, if the company had re-offended. Given the significant increase 

in the use of DPAs over the last few years, can you tell us what 

efforts the Department has made with respect to measuring and 

19 

tracking the effectiveness of these deferred prosecution agreements? 

Ms. RAMAN. Congresswoman, I am somewhat familiar with that 

GAO report. And I am aware that the Department took a number 

of steps in response to the recommendations of the GAO in that investigation, and that the GAO has since closed out those recommendations, understanding that the Department, in fact, followed through. The response to your question, I think, comes in 

several parts. One is that we have instituted a tracking procedure 

to ensure that we know how many DPAs the Department enters 

into, and whether or not those DPAs are favorably resolved. 

We often, as you know, install monitors to oversee the conduct 

of a business during the course of a DPA. And during that period 

of time, if there is any derogatory information that comes forth as 

a result of the monitor’s work, we are able to take a number of 

steps, including sometimes extending the period of the DPA, requiring correction, or in some circumstances, breaching the deferred prosecution agreement and requiring that the company 

pleads guilty. 

So I think through both the tracking—ensuring that we have 

watchful eyes on the company during the course of the DPA, including through, at some points, monitors—I think we have done 

a good job of ensuring that we understand, during the period of a 

deferred prosecution agreement, whether or not a company is living 

up to the promises that it made when we entered into a DPA. And, 

of course, they understand—the company understands—that the 

Department can always withdraw that DPA if the DPA is 

breached, and require a guilty plea. 

Mrs. BEATTY. Just to further elaborate, since you have these 

tracking mechanisms, can you tell us if there are any statistics to 

show us what percentage of those agreements are meeting the Department objectives? 

Ms. RAMAN. I can get you those statistics. I know that we track 

the number of DPAs that we enter into every year, and we can certainly get that information for you. In terms of being satisfied that 

the DPAs are achieving our law enforcement objectives, I can tell 

you from simply supervising these cases and speaking to our prosecutors who are prosecuting these matters that the matters in 

which we enter into DPAs have real beneficial impacts for law enforcement. First and foremost, because companies are required to 

cooperate with the government during the period of the DPA, it is 

often the case that the information they provide us during the 

course of a deferred prosecution agreement can lead to individual 

prosecutions. 

And we had a recent example of that in the foreign bribery arena 

where we entered into a DPA with BizJet, and they were cooperative. And just about a month ago, we announced the unsealing of 

charges against four of its executives. And so, that is a real benefit 

that the government and law enforcement get out of these deferred 

prosecution agreements when we enter into them, and where appropriate. Of course, our insistence during the period of the DPA 

that the company engage in remedial action is also a real benefit 

to law enforcement and, frankly, sometimes can have cascading 

benefits to other companies in the same industry who are able to 

20 

see that if company A has instituted a certain remedial program 

that if they institute the same compliance program that it can help 

them, and— 

Chairman MCHENRY. The gentlelady’s time has expired. 

With that, Mr. Hultgren is recognized. And I would just counsel 

the witness that she does not have to take up the full 5 minutes. 

You don’t have the obligation to do such. With that, we will recognize Mr. Hultgren for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Chairman. Thank you for being 

here today. 

Standards adopted by the Justice Department call on prosecutors, I know, to consider collateral consequences of prosecuting a 

business organization ‘‘including whether there is a disproportionate harm to shareholders, pension holders, employees and others not proven personally culpable, as well as the impact on the 

public arising from the prosecution.’’ The Justice Department, I 

know, consults with outside experts when seeking to determine the 

economic impact of prosecuting financial institutions. 

We know this because in announcing the statement with UBS, 

the settlement with UBS for manipulation of the LIBOR in December of 2012, the Attorney General said, ‘‘The impact on the stability 

of the financial markets around the world is something we take 

into consideration. We reach out to experts outside the Justice Department to talk about what are the consequences of actions that 

we might take. What would be the impact of those actions if we 

would want to make particular prosecutive decisions or determinations with regard to a particular institution.’’ 

In those small slivers of cases where there is economic impact or 

potential economic impact—and I recognize that is probably a relatively small number of cases—I wondered if you could just let us 

know the identities of the domestic and foreign regulators contacted by the Justice Department to provide information about that 

economic impact in determining whether prosecution will move forward. 

Ms. RAMAN. And, again, recognizing that I am extremely limited 

in what I can say about open matters and— 

Mr. HULTGREN. More the closed ones, I guess. 

Ms. RAMAN. And we have not been able to identify, thus far at 

least, any closed cases in which that kind of impact has been a factor. 

Mr. HULTGREN. So you think the Attorney General was referring 

to open cases, or closed cases? It seems like the settlement case in 

the LIBOR case would be closed, so who do you think he would 

have been referring to as far as the experts who were reached out 

to, either foreign or domestic regulators? 

Ms. RAMAN. The LIBOR investigation is incredibly active and ongoing. That having been said, I know that the Attorney General 

was referring to domestic and foreign regulators and not third parties outside of the government. He was talking about— 

Mr. HULTGREN. Which specific regulators would he have been referring to? What nations, which specific entities? 

Ms. RAMAN. And, again, because I am limited in what I can say 

based on my ethical duties on open investigations, I will have to 

rely on what is in the public record. I am aware that some of those 

21 

regulators have informed this committee about contacts made by 

the Department of Justice. 

Mr. HULTGREN. So as far as you know, there is none that you 

could list today that have been contacted that are not part of an 

open, ongoing investigation. Let me move on because my time is 

limited. Quick question: The Treasury Department hasn’t provided 

any information that DOJ has used to determine the economic impact of prosecuting a large financial institution. Is that correct? 

Ms. RAMAN. I am sorry, the— 

Mr. HULTGREN. The Treasury Department hasn’t provided any 

information that DOJ has used to determine the impact of prosecuting a large financial firm. Is that correct? 

Ms. RAMAN. And I apologize that I need to continue to say this, 

but I can’t comment on any— 

Mr. HULTGREN. Okay. Let me move on to the next one, then. Has 

the Treasury Department ever requested that DOJ consider the 

economic consequences of prosecuting a large financial institution? 

Ms. RAMAN. I am not aware of that. 

Mr. HULTGREN. Has the Justice Department contacted FSOC or 

OFR about an economic analysis of prosecuting a large financial institution? And if so, have FSOC and OFR provided such an analysis? 

Ms. RAMAN. I am personally not aware of that, but I have not 

done a comprehensive— 

Mr. HULTGREN. Okay. Has DOJ contacted the OCC about the 

economic impact of potential prosecution of a large financial institute? And if so, has the OCC provided such an analysis? 

Ms. RAMAN. And I—again, because the OCC has publicly stated 

that contact has been made, I understand that the committee does 

have that information that the OCC has been contacted by the Department of Justice. But again, I am relying on the public record 

because I do not want to go outside the public record in open matters. 

Mr. HULTGREN. As far as DOJ, has the DOJ contacted the Federal Reserve about the economic impact of prosecuting a large financial institution? And has the Federal Reserve provided such an 

analysis? 

Ms. RAMAN. Again, based on the public record, I believe that the 

Federal Reserve has informed this committee that it was not contacted. 

Mr. HULTGREN. It was not contacted? Has DOJ contacted the 

Council of Economic Advisors about the economic impact of prosecuting a large financial institution? And if so, have they provided 

such an analysis? 

Ms. RAMAN. Without getting into any open matters, I am afraid 

I can’t identify particular entities that have not already provided 

public information to this committee. 

Mr. HULTGREN. Last, has the Justice Department ever determined the economic impact of prosecuting a large financial institution without using analyses provided by regulators? 

Ms. RAMAN. I am not aware of any circumstance in which a prosecutor, on their own, made any such determination. But, again, 

keeping in mind that we are talking a very small sliver of cases. 

22 

Mr. HULTGREN. I see my time has expired. Thank you, Mr. 

Chairman. 

Chairman MCHENRY. Mr. Heck is recognized for 5 minutes. 

Mr. HECK. Thank you, Mr. Chairman. 

Ms. Raman, most of the questions today have been associated 

with inquiries regarding prosecuting the big guys. I actually want 

to turn this on its head, and ask you about prosecuting the little 

guys. As you probably know, the citizens of both Washington State 

and Colorado voted last November to legalize marijuana. But it remains, of course, a Federal crime. One of the ways that this Federal-State conflict manifests, of course, is under the Bank Secrecy 

Act. 

Companies that provide banking services that aid in, or result 

from, Federal crimes must file suspicious activity reports. And they 

face peril, of course, because if they accumulate too many before 

the regulators or DOJ, they get in trouble. Of course, the practical 

effect of this is that businesses related to what is, in Washington 

State and Colorado, the legal sale of marijuana cannot access the 

banking system or won’t access the banking system as a matter of 

prudent judgment. 

And I am not just talking about dispensaries or growers. I am 

even talking about informational Web sites which do nothing more 

than provide reviews. They can’t take credit cards, they can’t write 

checks, they can’t direct deposit payroll. They can’t do any of that. 

They are basically shot out of the banking system. And the net effect of that, of course, is that they will operate entirely in cash. 

And we are talking about an industry in Washington State that is 

projected to grow to hundreds of millions of dollars. 

I am very hard pressed, Ms. Raman, to figure out or divine how 

it is society would be better served by that much cash rattling 

around in that sector of our economy and all of the potential damage and ill-doing that could result from that. Therefore, ma’am, 

what can or will the Department of Justice do to help with this 

problem? 

Ms. RAMAN. I am not familiar, Congressman, with the specific 

issue you raised in Colorado or Washington. But I can tell you that 

the Bank Secrecy Act has been helpful to us in ensuring that our 

financial markets are able to operate without criminal proceeds 

flowing through them. And recent prosecutions that we brought in 

Los Angeles and Brooklyn under the BSA of check cashing businesses are a good example of why the use of the BSA in these circumstances can be very helpful for law enforcement. Those were 

matters in which those check cashing businesses and the individuals who ran them were alleged to have essentially been accepting, 

knowingly, the proceeds of massive health care fraud. 

And so we use the BSA where it is appropriate and where we 

believe that we will get a real law enforcement impact out of those. 

And— 

Mr. HECK. Is it your position that it is appropriate to use the 

Bank Secrecy Act in pursuing banks that receive deposits from 

businesses that are legally engaged in the business of dispensing 

or growing or providing information about marijuana in Washington State? 

23 

Ms. RAMAN. Again, I am not specifically aware of the circumstances presented in those two States with those particular 

businesses. So I am hesitant to opine on whether or not enforcement is appropriate in those circumstances, but I understand the 

concern that you have raised. 

Mr. HECK. I am surprised that you are not familiar with the 

issue insofar as our governor has spoken directly and in person 

with your boss on more than one occasion about this. But I would 

make every effort here to impress upon you that we are all now 

well-served if the net result of DOJ or the regulators using the 

Bank Secrecy Act, in this instance—and I am a fan of the Bank Secrecy Act—to prosecute people in this regard for an activity that 

has been legalized, frankly, by a substantial majority in Washington State; thus rendering it an entirely a cash business. 

Nobody is going to be better off for that. In fact, you will incite 

or induce or prompt or incentivize increased criminal behavior with 

that much cash flowing around in the economy for this. So please 

go back and take a look at it. 

Ms. RAMAN. I will. 

Mr. HECK. Thank you. 

I yield back the balance of my time, Mr. Chairman. 

Chairman MCHENRY. I thank the gentleman. 

And I will now recognize Mrs. Wagner for 5 minutes. 

Mrs. WAGNER. Thank you, Mr. Chairman. Ms. Raman, back on 

March 8th of this year, the committee sent a letter to Attorney 

General Holder requesting that he produce records regarding DOJ’s 

assessment of the economic impact when prosecuting large financial institutions. Over the past 10 years, the Department of Justice 

has investigated one or more large financial institutions for violations of Federal law, correct? 

Ms. RAMAN. Yes. 

Mrs. WAGNER. And am I correct that the Department of Justice 

keeps written records of its prosecutorial decisions in these matters? 

Ms. RAMAN. Every prosecutor in every U.S. Attorney’s Office has 

very different ways of— 

Mrs. WAGNER. Do you have written records on these particular 

prosecutorial decisions? 

Ms. RAMAN. I am not certain which prosecutorial decisions in 

particular, but every— 

Mrs. WAGNER. You keep no written records? 

Ms. RAMAN. That is not what I said. The 94 U.S. Attorneys’ Offices and each of the litigating components in the Department of 

Justice have very different ways of documenting decisions about 

whether, and when, they have brought cases. 

Mrs. WAGNER. Generally speaking, do they keep written records 

on their prosecutorial decisions? 

Ms. RAMAN. Many prosecutors do, but I can’t speak for the entire— 

Mrs. WAGNER. And when making these prosecutorial decisions 

involving large financial institutions, am I correct in stating that 

the Department of Justice applies the standards of the U.S. Attorneys’ Manual for principles of Federal prosecution of business organizations? 

24 

Ms. RAMAN. Yes. 

Mrs. WAGNER. I think you have spoken to that directly already 

in your testimony. 

Ms. RAMAN. Yes. 

Mrs. WAGNER. And the standards in this Manual instruct prosecutors to consider the collateral consequences, as we have talked 

about, of the prosecution, including harm to the public. Is that correct? 

Ms. RAMAN. That is right. 

Mrs. WAGNER. And considering the harm to the public, is this a 

form of economic analysis? Is that correct? 

Ms. RAMAN. Again, I want to emphasize that the issues I think 

that this committee is focused on, which is systemic risk to the 

global markets, rarely, if ever, comes up. And so the collateral consequences that we are ordinarily looking at are things such as how 

many employees, innocent employees, may go out of—may have to 

leave their jobs if a company goes out of business; how will pensioners be affected; how will— 

Mrs. WAGNER. So, harm to the public. This is a form of economic 

analysis, correct? 

Ms. RAMAN. Not always. It is not— 

Mrs. WAGNER. But sometimes? 

Ms. RAMAN. I think we are probably talking about two different 

things. When I am talking about collateral consequences to, for example, innocent employees, that is not an economic analysis. That 

is a decision about how many employees may lose their jobs if a 

company goes out of business. 

Mrs. WAGNER. Ms. Raman, can you commit today, in this hearing, to providing these records containing this analysis to the committee, without delay? 

Ms. RAMAN. I know that our staff has been speaking with your 

staff and has described in detail the parameters of searches that 

have been done in good faith to try to answer the committee’s questions. So I know— 

Mrs. WAGNER. Thanks. I am glad to hear that. When can we expect those records to be produced, ma’am? 

Ms. RAMAN. Our staffs have been talking, and I think we have 

described to your staff the searches that we have done and the results of those searches, which have thus far not turned up any documents that— 

Mrs. WAGNER. You have no documents on any of these cases, or 

records—are—is that your testimony—to provide? 

Ms. RAMAN. I have been informed that the searches that we did 

on closed cases did not—certain closed cases in certain U.S. Attorneys’ Offices and litigating components did not yield information 

about systemic risk to the global markets. And I am not talking 

about other collateral effects, such as loss of jobs or loss of pensions. I am talking about systemic risks to the global markets. 

Mrs. WAGNER. I think what we asked for March 8th was that you 

produce records regarding the Department of Justice’s assessment 

of the economic impact when prosecuting these large financial institutions. And this would pertain to any and all records. Now, are 

you having conversations with the committee about bringing forth 

those records? 

25 

Ms. RAMAN. We have been clear that, of course, we cannot provide records on any ongoing investigations or— 

Mrs. WAGNER. Absolutely. We are not looking for that. We are 

looking for closed cases. And certainly, I guess I would ask that 

since 2008, have there been closed cases for which you are able to 

provide some kind of record? 

Ms. RAMAN. And as our staffs have been discussing, in the closed 

cases that our staff has looked through there is not the specific information about economic analyses relating to global systemic risk 

that this committee had asked about. Of course, because collateral 

consequences to employees and others is a factor that has long 

been considered, there are many, many cases in which those issues 

are likely to have— 

Mrs. WAGNER. I think my time has expired, I think. Thank you, 

Mr. Chairman. 

Chairman MCHENRY. Ms. Waters, the ranking member of the 

full committee, is recognized for 5 minutes. 

Ms. WATERS. Thank you very much. I would like to continue 

some discussion about drugs. This testimony was started by my colleague here, Mr. Heck, but I would like to take a little different 

spin on it. This year marks the 40th anniversary of the war on 

drugs, a critical time to shine a spotlight on 40 years of failed policy. Since the declaration of a war on drugs 40 years ago, America 

has spent at least $1 trillion on the drug war. It cost U.S. taxpayers at least $51 billion in 2009 at the State and Federal levels. 

That is $169 for every man, woman, and child in America, and that 

is not counting opportunity costs or costs at the local level. 

Millions of people have been incarcerated for low-level drug law 

violations, resulting in drastic racial disparities in the prison system. Yet drug overdose, addiction, and misuse are more prevalent 

than ever. The number of people behind bars for drug law violations rose from 50,000 in 1980 to more than a half-million today, 

a 1,100 percent increase. Drug arrests have more than tripled in 

the last 25 years, totaling more than 1.63 million arrests in 2010. 

More than 4 out of 5 of these arrests were for mere possession, and 

46 percent of these arrests were for marijuana possession alone. 

Arrest and incarceration for drugs—even for the first-time, lowlevel violations—can result in debilitating collateral consequences 

for an individual and their family. I have worked on something 

called mandatory minimum sentencing for the last 20 years. I hold 

workshops every year at the CBC Legislative Weekend Conference. 

And we worked on trying to bring about some justice in the area 

of mandatory minimum sentencing, where we had all these young 

people who were being incarcerated. Five grams of crack cocaine 

triggered a 5-year mandatory minimum sentence; 50 grams of 

crack cocaine triggered a 10-year sentence. 

And I could go on and on about this. But you can understand 

why, when I see that we have some of the biggest banks in the 

world who get a slap on the wrist for laundering drug money from 

the drug cartels and they are not going to jail. And this keeps happening year after year after year. I don’t believe—it is hard to believe that we don’t understand how they launder this money. But 

we know this: If there was no profit, if they were not able to launVerDate Nov 24 2008 12:19 Aug 05, 2013 Jkt 081760 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\81760.TXT TERRI
26 

der this money, perhaps we wouldn’t have drugs on the street with 

all of these young people getting arrested. 

And basically some of them not criminals, just stupid, getting involved with small amounts of cocaine or crack cocaine. And yet, we 

have some of the richest, most powerful banks in the world who are 

laundering drug money from the drug cartels. Why don’t they go 

to jail? 

Ms. RAMAN. I think I can respond to your— 

Ms. WATERS. I can’t hear you. 

Ms. RAMAN. I can respond to your question in a couple of ways. 

First and foremost, the bank entity, of course, cannot go to jail. The 

bank entity, when we are talking about an entity, a corporate entity, the punishment that we are able to secure comes in the form 

of monetary penalties, a period under which they must engage in 

remedial action or cooperate with the United States in its investigation. So in our cases, we are focused on ensuring that we understand how much of these crime proceeds that you are referring 

to have flowed through a bank. 

And when we determine that, we seek to forfeit that money or 

we seek to find— 

Ms. WATERS. Excuse me. I don’t want to interrupt you or take 

too much time. But we know what you do. It is what you do that 

we don’t like. What you do is, they get fined. It is the cost of doing 

business, these fines. And I know maybe you can’t incarcerate a 

corporate entity. But are you telling me that the CEOs and those 

who are responsible for the operations of the banks, the boards, the 

presidents, nobody can be—have criminal violations because of the 

laundering of drug money in the bank? 

Ms. RAMAN. We, in the Criminal Division, in fact established a 

money laundering and bank integrity unit that is focused on prosecuting precisely these kinds of cases, including professional money 

launderers and the entities in which they work. 

Ms. WATERS. But you have not sent anybody to jail. 

Ms. RAMAN. We have prosecuted innumerable money laundering 

cases involving persons who assist drug and other criminal organizations in laundering their money. And so—and we are committed 

to doing that. And when we have resolved any such cases with 

bank entities, those resolutions have not, in the least, precluded 

the possibility of individual— 

Ms. WATERS. Let me just say this, because I guess we could go 

on with this conversation—and I appreciate the time here. But you 

have not prosecuted anybody, you have not sent anybody to jail. As 

a matter of fact, the most shameful case, that I won’t mention, 

where hundreds of millions of dollars were laundered through one 

of the biggest banks in the world and they got away with a hefty 

fine. And this goes on and on and on. It is unacceptable. It is not 

your fault. It is not a personal attack on you. 

But it is about the system, it is about the Justice Department. 

Something needs to be done. These kids, they go to jail and do 5 

years for 5 grams of crack cocaine. You tell me that they are more 

guilty than the presidents of banks who have the responsibility for 

running that bank don’t know that drug money is going through 

those banks? I don’t think so. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

27 

Chairman MCHENRY. I thank the ranking member. 

We will now recognize Mr. Barr for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. Ms. Raman, thank you for 

your testimony today. Thank you for your service. As an attorney, 

but not a prosecutor and not a U.S. Attorney, I would like to kind 

of ask you a little bit about the background of the U.S. Attorneys’ 

Manual, how that is put together, how the collateral consequences 

analysis entered into that Manual in 1999, and the evolution of 

that analysis and direction to U.S. Attorneys. 

Who sets the standards? Who writes and drafts the Manual at 

the Department? 

Ms. RAMAN. Generally—there are many, many provisions of the 

U.S. Attorneys’ Manual, covering all manner of procedures and 

policies in place at the Department of Justice. And each of those 

provisions is likely drafted by a very different group of people. But 

at the end of the day, any provision of the U.S. Attorneys’ Manual 

is drafted with the input of litigating components, U.S. Attorneys 

and the leadership of the Department of Justice. 

Mr. BARR. I want to talk about that small sliver of cases that you 

talked about involving systemic risk. Since enactment of the DoddFrank law, has there been any discussion within the Department 

that you are aware of to modify the Manual in any way, to eliminate consideration of collateral consequences with respect to that 

small sliver of cases that could potentially involve systemic risk? 

Ms. RAMAN. I am not aware of any such discussions. Because, in 

fact, I think that policy exists for a good reason. Any law enforcement action we take needs to be targeted and effective and proportional. And that particular provision of the U.S. Attorneys’ Manual 

ensures that any action we take does not have disproportionate 

harm on non-culpable people, like the public or employees. 

Mr. BARR. I am thinking in terms of Title II of the Dodd-Frank 

law and OLA. After the codification of this Orderly Liquidation Authority, has the Justice Department considered the fact that—or 

the possibility that—collateral consequences are no longer needed 

as a consideration in terms of the prosecutorial discretion that the 

Department has? 

Ms. RAMAN. In our bread and butter prosecution of business entities, collateral consequences will always be— 

Mr. BARR. I understand that. I am not talking about bread and 

butter. I am talking about that small sliver of cases involving potential systemic risk. In light of codification of OLA, Title II of 

Dodd-Frank, has there been any discussion about eliminating the 

collateral consequences analysis from the Manual? 

Ms. RAMAN. I am not aware of any such discussion, and I would 

be surprised if there was such a discussion. Because we do want 

to make sure that our prosecutions don’t have a disproportionate 

effect on the public. 

Mr. BARR. If OLAs resolves the too-big-to-fail problem, why 

would collateral consequences analysis even be required in that 

small sliver of cases? 

Ms. RAMAN. We are still going to want to assess any time we 

prosecute a business entity whether, for example, we will have a 

disproportionate effect on the employees or the pensioners. And so, 

those types of collateral consequences will always be at play. And 

28 

the U.S. Attorneys’ Manual is drafted relatively broadly to encompass any such collateral consequences that may be appropriate to 

consider, and— 

Mr. BARR. Are you aware of any cases in which the Justice Department has declined prosecution as a result of consultation with 

financial regulators? 

Ms. RAMAN. It is never the sole factor in any of our decisions. All 

of the nine factors set out in the U.S. Attorneys’ Manual are always 

considered in combination. 

Mr. BARR. Are you aware of any particular cases where where a 

decision to prosecute has been withheld as a result of consultation 

with regulators, domestic or foreign? 

Ms. RAMAN. Again, it will never—and to my knowledge will 

never be the sole factor in determining how we resolve a case. 

Mr. BARR. Does the Administration, or does the Department have 

the resources necessary to evaluate the economic consequences that 

could result from a prosecution of a large financial institution? 

Ms. RAMAN. Given that these issues arise rarely, I think that we 

are equipped to address any arguments that are made by banks 

when they face potential indictment. But that having been said, we 

can always do more. And, in fact, we have continued to redouble 

our efforts to ensure that we engage as robustly as we can with 

regulators to best understand these sorts of circumstances. And we 

are committed to continuing to do so. 

Mr. BARR. Thank you. I yield back. 

Chairman MCHENRY. We will now recognize the ranking member 

of the subcommittee, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. Attorney Raman, is that 

correct? 

Ms. RAMAN. Yes. 

Mr. GREEN. You heard me earlier go over a list of prosecutions 

and convictions. Do you agree with what was on the list, generally 

speaking? I know that you didn’t have a chance to actually have 

me hand it to you. And, first, do you agree, generally speaking? 

Ms. RAMAN. I do. 

Mr. GREEN. And do you also agree that I did ask you, prior to 

this hearing, to provide me information on prosecutions so that I 

might have this available at the hearing? Is this true? 

Ms. RAMAN. Yes, you did. 

Mr. GREEN. And I appreciate your providing the information that 

I requested. Mr. Chairman, if there are no objections, I would like 

to have this placed in the record. 

Chairman MCHENRY. Without objection, it is so ordered. 

Mr. GREEN. Thank you, Mr. Chairman. 

Now, I would like for you to give a little bit more information 

about you. Tell us about the number of years you have been in the 

Justice Department, please. 

Ms. RAMAN. I have been a prosecutor with the Justice Department for almost 17 years. I started in the Criminal Division in 

1996 as a trial attorney in the narcotic and dangerous drug section 

in the Criminal Division, and went to the U.S. Attorney’s Office in 

Maryland for much of my career, and then returned to the Criminal Division more recently, in the last 5 years, in various leadership positions. 

29 

Mr. GREEN. Is it fair to say that you have prosecuted many cases 

as opposed to a few? 

Ms. RAMAN. Yes. 

Mr. GREEN. Is it fair to say that you have prosecuted a good 

number? And would you give just an estimate as to the number 

you have been associated with, please? 

Ms. RAMAN. I couldn’t even give an estimate. I have supervised, 

and myself handled, hundreds of cases over the last 17 years. 

Mr. GREEN. And you have an understanding of both civil and 

criminal prosecution. Is this a fair statement? 

Ms. RAMAN. A better understanding of criminal than civil, but 

yes. 

Mr. GREEN. But is it true that in civil prosecutions, from time 

to time persons who admit or find themselves paying a fine or penalty they don’t always acknowledge liability in civil cases, not 

criminal cases? 

Ms. RAMAN. I think that is fair to say. 

Mr. GREEN. And is it true that—let me just ask you. Will you 

prosecute any size, any complexity, any difficulty of case? 

Ms. RAMAN. Where the evidence and the law supports it, we absolutely will. 

Mr. GREEN. And is it true that you have—you failed to prosecute 

any case because of systemic risk? 

Ms. RAMAN. It has never been a sole factor in our decision. It 

has—as I mentioned during the course of this hearing, collateral 

consequences can be a factor, and have been a factor, in our decision-making in the past. 

Mr. GREEN. I am going to go back to the list that I talked to you 

about earlier and that I called to the attention of the public earlier. 

Is it true that the chairperson of the board of directors of Stanford 

International Bank received 110 years? 

Ms. RAMAN. He did. 

Mr. GREEN. Is he currently serving time, or is he currently on 

appeal? 

Ms. RAMAN. My understanding is that he is currently serving his 

sentence. 

Mr. GREEN. And I have another list, and I thank the staff for 

providing this information. Much of what I have came from staff. 

But I have a list of what appears to be monies that have been 

made available to the Justice Department for various reasons in 

terms of settlements. And I am just looking at the numbers: One 

case, $8.5 billion; another case, $25 billion; another case, $285 billion; another case, $10.4 billion. And I just have a long list of cases 

where you have settled for large sums of money. 

It might be helpful to just mention the types of cases, rather 

quickly. You have dealt with mortgage fraud settlements, mortgage-backed securities settlements, fraudulent practices. These are 

the types of cases that you have settled? Is this a fair statement? 

Ms. RAMAN. It is. And we have secured record penalties and forfeitures in the last several years. 

Mr. GREEN. Now, I think that there is always more that the Justice Department can do, and I think that it is fair to criticize some 

of the things that have occurred. But I also want people to know 

that there are people at the Justice Department who are busily 

30 

prosecuting cases, and that the Justice Department, I don’t think, 

is perfect but I do think that I will acknowledge that there are 

some prosecutions taking place that are very meaningful. 

And with this, Mr. Chairman, I think I am going to yield back 

the balance of my time. 

Chairman MCHENRY. Thank you. 

Mr. Grimm is recognized for 5 minutes. 

Mr. GRIMM. Thank you, Mr. Chairman, and thank you, Ms. 

Raman, for being here today. Thank you for all your many years 

of service. It is greatly appreciated and very well-respected and 

well-received. 

I am concerned. In your earlier testimony, I think we all pretty 

much know that the wrongdoers that led to the crisis of 2008 really 

have not been brought to justice. And I just want to ask, for the 

committee’s purposes, it is a 5-year statute of limitations on that, 

correct, on those crimes? 

Ms. RAMAN. With some statutes. Some statutes trigger a 5-year 

statute of limitations. We do have some other statutes available to 

us that have longer statutes of limitation. 

Mr. GRIMM. But most of them would probably fall in the general 

5-year? So— 

Ms. RAMAN. Most criminal laws do have a 5-year statute of limitations. 

Mr. GRIMM. So if my math is right, in 2013, we are about at the 

end. So a lot of those that led to this big crisis in 2008, if they 

haven’t been caught by now, they are not going to be. And a lot 

of them are going to be protected by the statute of limitations very 

soon. 

Ms. RAMAN. I don’t think it is fair to say that if they haven’t 

been caught by now, they won’t be caught. As I said, we still do 

have some statutes that trigger longer statutes of limitations. And 

there are ongoing and active efforts still to ensure that the Department of Justice and all of our partners are looking at the conduct. 

Mr. GRIMM. Okay. I think those statutes with longer than 5 

years are far and few between. They are very technical. And the 

nature of these criminals, with the lawyers they will be hiring, 

based on my experience with the Department of Justice who—I 

think my analysis is actually spot on. But you just mentioned—my 

friend and colleague, Mr. Green, asked you a question about prosecuting. And you said absolutely prosecute—will prosecute any 

size. 

I believe you, and I know that, based on your experience, is in 

your heart. But when you look at the actual quote from the boss, 

the Attorney General, Eric Holder, it says, ‘‘I am concerned that 

the size of some of these institutions becomes so large that it does 

become difficult for us to prosecute them 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 just have to tell you, it does seem like you may be on a different page than the Attorney General, based on that quote—taking it not out of context, but as I read it. 

Ms. RAMAN. He described difficulties with certain prosecutions. 

But the Attorney General and all of its prosecutors are not deVerDate Nov 24 2008 12:19 Aug 05, 2013 Jkt 081760 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\81760.TXT TERRI
31 

terred by difficulty. We have brought very difficult cases, after long 

investigations, because we frankly have a talented corps of prosecutors and agents. 

Mr. GRIMM. That I agree with 100 percent, as far as you having 

a very talented corps and dedicated people. Is it possible, though, 

that sometimes it is more than just the size? Is it possible that 

there are sometimes political affiliations? The reason I ask is it 

brings you to the very curious case of Jon Corzine. A lot of people 

on the street, a lot of people in my very district, in New York City, 

the financial capital of the country, believe that because he had a 

lot of political clout and had a lot of political ties he walked, he 

skated. 

You think about it. This man was overseeing a company, and 

right from under his nose, $1.6 billion vanished. It was missing, it 

was gone. And he came before this very committee, as well as other 

committees here in Congress, and he said—this is a quote from Mr. 

Jon Corzine—‘‘I simply do not know where the money is. I simply 

don’t know where it is. It was segregated funds.’’ 

In all the cases I worked on in over 5 years of working financial 

fraud, when segregated funds went missing and the captain of the 

ship who was in charge said, ‘‘I don’t know where it went,’’ they 

were getting handcuffed 99 percent of the time. He said, ‘‘I was 

stunned, when I was told on Sunday, October 30, 2011, that MF 

Global could not account for many hundreds of millions of dollars 

of client money.’’ Then he goes on to say that, ‘‘I did not, however, 

generally involve myself in the mechanics of the clearing and settlement of trades or in the movement of cash and/or collateral.’’ 

So he has been cleared during the investigation. But I would ask 

the Department of Justice, how do they jibe that the trustees’ report is replete that he perjured himself. That he did—in fact, was 

notified that the money went to JPMorgan Chase beforehand, and 

that he did, in fact, know—because he got daily reports on cash 

and where cash was being moved—he perjured himself. Is the Department of Justice going to look into this matter of Jon Corzine 

any further, considering $1.6 billion went missing and he claimed 

he just didn’t know what happened to it? 

Ms. RAMAN. Without speaking to any particular investigation, I 

can tell you that politics never enters into the calculus. I know that 

your question started with a concern that somehow political clout 

leads to decision-making in the Department of Justice, and that is 

simply not the case. I can’t speak to any open investigations but, 

again, prosecutors and agents do not take that into consideration. 

Mr. GRIMM. Thank you for your testimony. 

I yield back. 

Chairman MCHENRY. Mr. Sherman is recognized for 5 minutes. 

Mr. SHERMAN. I thank the chairman for allowing me to participate, even though I am not a member of the— 

Chairman MCHENRY. Oh, I am sorry, sir. I ask unanimous consent that members of the full committee be allowed to participate 

in—if anybody, in the interest of time, wants to object, well, I am 

sorry. 

Mr. Sherman, you are recognized for 5 minutes. 

Mr. SHERMAN. Thank you. 

32 

Thanks for being with us here today. It is an interesting division 

of responsibilities. You in the Justice Department, and the Judiciary Committee around the corner, deal with enforcing our laws. 

And if I have understood your testimony as I have watched it on 

television, you are going to enforce the law no matter how big the— 

or interconnected of systemically important the company involved 

might be. Does that summarize it pretty well? 

Ms. RAMAN. I think I want to be clear that the size of a corporation will never be a factor in and of itself. And that no institution 

is too big to prosecute. 

Mr. SHERMAN. And you don’t have economic analysis people in 

your division telling you what the effect is going to be on the stock 

market if you announce a particular indictment, or suggesting that 

the unemployment rate will go up a tenth of a percent if this or 

that bank is put in the hot seat? You don’t even have that information? 

Ms. RAMAN. In very rare cases, a bank will make that argument, 

of course. And it is our obligation to ensure that we test those assertions. 

Mr. SHERMAN. Even if the assertions were right and they said, 

‘‘Hey, if you bring this indictment, if you fail to accept this plea 

offer, economic growth is going to decline by a tenth of a point’’— 

and they have 99 economists who all swear that that is the case— 

would that cause you not to indict? 

Ms. RAMAN. Again, a single collateral consequence cannot be the 

reason we don’t charge a case or resolve it in a particular way. But 

collateral consequences are issues that we must, and do, consider. 

Mr. SHERMAN. Okay. The thing is, in this division of responsibilities, it is really this committee that has the responsibility of minimizing those consequences. And there are indeed companies that 

are so big that if you were to enforce the law, it would have an effect on the entire economy. That is why we have to break them up. 

And this is a problem that arises because we have punted to the 

regulators and said they can break them up, but we haven’t said, 

okay, if you have reached a certain size, too-big-to-fail is ‘‘too-bigto-exist.’’ 

You, then, have to deal with these very large institutions. My 

hope is that you are not looking at collateral consequences at all. 

But it is this committee that has to—that realizes that any one of 

these giant institutions could be prosecuted, could run into economic problems and fail. And as long as we allow those that are 

too-big-to-fail or ‘‘too-big-to-jail’’ to exist, they may fail, you may jail 

them, and the economy will suffer because we haven’t done our job. 

Do you have any further comments? 

Ms. RAMAN. I want to emphasize that in our prosecutions we act 

aggressively and responsibly. And that is one of the reasons why 

collateral consequences are even in the equation. We want our enforcement efforts to be effective and targeted, but also proportional. 

And so, of course, we want to be cognizant if any actions we take 

might have a disproportionate impact on non-culpable third parties, including the public at large. So we are committed, regardless 

of those difficulties, to ensure that we come to the resolution that 

is right and will lead us to the right— 

33 

Mr. SHERMAN. You have somewhat confused me. Because in real 

life, there may be a circumstance where if you do bring a case, 

1,000 people or 10,000 people who would otherwise be employed 

are not going to have jobs. You can read the sociology reports as 

to what 10,000 unemployments means in terms of number of divorces, adverse impact in school performance, et cetera. And you 

seem to be implying that if all that came together, you might not 

prosecute somebody who was otherwise culpable. Is that the case? 

Ms. RAMAN. I have to be clear that we are talking about business 

entities and not individuals. 

Mr. SHERMAN. Right. 

Ms. RAMAN. Individuals are—when we prosecute individuals and 

make decisions about that, collateral consequences don’t ever get 

into the equation. When we are talking about business entities, 

and specifically those business entities where we actually have evidence beyond a reasonable doubt that a law was violated, that is 

when we need to look at all of the factors, including collateral consequences. So there may be circumstances in which that argument 

is more weighty than in other circumstances, depending on how it 

balances with the seriousness of the misconduct. 

Mr. SHERMAN. I would hope that you would enforce the law, period. I would hate to think that those who create collateral consequences are somewhat immune. 

Chairman MCHENRY. The gentleman’s time— 

Mr. SHERMAN. And I yield back. 

Chairman MCHENRY. We will now begin a second round of questions. 

We will begin with Mr. Hultgren, from Illinois, for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Chairman. Again, thank you for 

being here, Ms. Raman. I had a lot of questions first time around, 

but I do appreciate your service very much and appreciate you taking the time and helping us through this. 

A couple more questions. I wondered, has the Justice Department ever contacted the FDIC to understand how the Orderly Liquidation Authority in the Dodd-Frank Act works? 

Ms. RAMAN. I can’t speak about our open litigation matters, and 

I am not aware that there has been anything on the public record 

about that. So, I am unable to answer that question. 

Mr. HULTGREN. I think this wouldn’t be, really, an open investigation. But it would really just be more of the processes of how 

Dodd-Frank works and, specifically, the Orderly Liquidation Authority. So the Justice Department certainly wouldn’t be an expert 

on Dodd-Frank. So there would be—I think it would be understandable if there would be a reaching out to ask for an understanding of how it is expected from the FDIC to understand the Orderly Liquidation Authority. So apart from any type of open cases, 

would you know of any time where there has been a reaching out 

by Justice to FDIC to understand this Orderly Liquidation Authority? 

Ms. RAMAN. We always try to educate ourselves on what collateral consequences might occur from a conviction. And certainly, the 

FDIC’s authority to revoke deposit insurance is a collateral consequence that some may raise from time to time. I am not aware 

of specific conversations in matters that I can speak about. 

34 

Mr. HULTGREN. Okay. 

Ms. RAMAN. But I think it is fair to say that it is a relevant regulator in these instances. 

Mr. HULTGREN. Okay, but you are not aware of any communication that has gone on to understand that further. Let me ask a different question here. The Department of Justice’s prosecutorial 

standards remind prosecutors that the government may charge 

even the most cooperative corporation: ‘‘Government may charge 

even the most cooperative corporation. Put differently, even the 

most sincere and thorough effort to cooperate cannot necessarily 

absolve a corporation that has, for example, engaged in egregious, 

orchestrated and widespread fraud.’’ 

Within the last 10 years, has any financial institution ever engaged in such egregious, orchestrated, and widespread criminal 

conduct as to merit prosecution, regardless of this cooperation? 

Ms. RAMAN. The most recent examples of large financial institutions that we have insisted accept guilty pleas are RBS Japan and 

UBS Japan at the end of 2012. And I think it is fair to say that 

even though we received cooperation, we determined that the appropriate prosecutorial response was guilty pleas from those to entities and various other resolutions as to the parent companies. 

Mr. HULTGREN. So, those two. Any others in the last 10 years 

that you would be aware of that are closed cases? 

Ms. RAMAN. I can certainly get you that information. 

Mr. HULTGREN. That would be great. If you could get to me, it 

would be great. The Attorney General implied in his testimony before the Senate Judiciary Committee, again on March 6th that absent the size of some financial institutions, some resolutions ‘‘are 

more appropriate to particular criminal matters.’’ Does that mean 

that the Department of Justice was prepared to prosecute some 

past matters if the institution was not so big? 

Ms. RAMAN. I don’t think that is what the Attorney General 

meant. I do think that what he was trying to convey and what the 

Department has said unequivocally is that there are difficulties, 

complexities with these kinds—that sometimes a company—investigations of large, multinational corporations. But I should also emphasize that the specific collateral consequence issue is one that is 

specifically contemplated by the U.S. Attorneys’ Manual as an appropriate factor to ensure that our resolutions and our law enforcement actions are aggressive but responsible at the same time. 

And I think that is what he was trying to convey is that there 

are a number of different enforcement tools that we have available, 

and it just may be the case that in certain circumstances, one tool 

is more appropriate than the other. And I think our record has 

shown that we have used all of those tools over the last several 

years. 

Mr. HULTGREN. I see my time ticking away. One last question, 

kind of follow up of—you had mentioned that if there is other information, you can get that to the committee. I wonder if I can ask, 

as well, if you could provide to the committee—if you could check 

with your staff, other members of DOJ—a log of each consultation 

with domestic and foreign regulators regarding possible prosecutions of large financial institutions. Again, these would be closed 

35 

cases. We have already talked about how we don’t want to go into 

open cases. 

But if there are closed cases where there has been a consultation, 

getting back, again, that this is technical. The Department of Justice has many areas that it has to prosecute and, certainly, it 

would be understandable if there was outreach to regulators, foreign or domestic. If those contacts have been made with—in that 

small sliver of cases where it would potentially have a significant 

financial impact on our financial systems. If the DOJ could provide 

that log to us of those entities, domestic or foreign, that were contacted, it would be great. 

Ms. RAMAN. I think we have been talking with the committee 

staff about the searches that we have been able to do and what we 

haven’t been able to do. And we will be happy to continue to engage with staff. 

Mr. HULTGREN. And then if you can get that to us in writing, if 

there is anything that is found. Thank you. 

With that, I yield back. 

Mrs. WAGNER [presiding]. Thank you. The Chair recognizes the 

gentleman from Missouri, Mr. Cleaver, for 5 minutes. 

Mr. CLEAVER. Thank you, Madam Chairwoman. And thank you, 

too, Ms. Raman. You have been, I think, as candid as you could be, 

considering the fact that you can’t speak about ongoing cases, 

which I understand. And there have been prosecutions. I have a 

list of them here, and I think most of the Members have that same 

list. What I hope to convey is that there is a lot of concern. 

The case I couldn’t bring out of my computer when I spoke first 

is getting older. It is a case from 2012. It was categorized by the 

U.S. Attorney who filed it in Manhattan as ‘‘spectacularly brazen.’’ 

And yet, there were no criminal charges. It was mortgage fraud, I 

guess primarily Countrywide-connected. As you know, they were 

purchased by Bank of America. 

And so, when those huge cases are brought to the public, and you 

find that there are no charges, it just doesn’t feel good as a citizen, 

who realizes that if you do something, you are going to go to prison. And somebody—even the attorney says violates the law in a 

spectacularly brazen way, and nothing was done, it creates a problem. 

Ms. RAMAN. It sounds like the case that you are referring to was 

a civil suit that was brought. And that may explain some of what 

you are asking. I am not, myself, familiar with that particular case. 

But I do think that it is important for me to convey that we have 

different burdens of proof in civil cases and criminal cases. And 

that we can only bring criminal cases when we can prove beyond 

a reasonable doubt willful intent to violate the law and an actual 

violation of the law. And, when we are able to make that proof, we 

do bring it. 

You mentioned that this particular announcement was by the 

U.S. Attorney’s Office in Manhattan, which has been, frankly, one 

of the most aggressive— 

Mr. CLEAVER. They have, yes. 

Ms. RAMAN. —offices on bringing financial fraud cases. 

Mr. CLEAVER. And that is why it is so concerning. He goes on to 

call it ‘‘the hustle,’’ and no criminal charges were filed. I am just 

36 

a Methodist preacher. I don’t know a lot about the law. That is why 

I am sitting next to the judge. I try to sit next to him all through 

the hearings every time we have one just so osmosis might help me 

learn something about the law. 

But it just creates a problem—no criminal charges. That is what 

people see. And then hundreds of million dollars are involved, and 

somebody takes a carton of milk out of one of the convenience 

stores and they are going to go to jail. 

Ms. RAMAN. On behalf of the entire— 

Mr. CLEAVER. I understand. 

Ms. RAMAN. —Justice Department, we have many fraudsters in 

jail for decades now, as we speak, because we have been able to 

make that proof, because we have been able to root out the evidence of the crime and file those charges. There are countless such 

people who have defrauded the public, and we are committed to 

continuing to bring those kinds of cases. I think Allen Stanford, 

who is serving a 100-year sentence, feels like he is been appropriately punished. 

Mrs. WAGNER. I thank the gentleman from Missouri for yielding 

back. And a marvelous preacher he is, might I just say. 

[laughter] 

I would like to yield myself 5 minutes for our second round of 

questioning. Thank you for hanging in there with us, Ms. Raman. 

I am interested in what foreign regulators the Department of Justice has contacted about an economic analysis of prosecuting large 

financial institutions, and what information have any such regulators provided to DOJ. 

Ms. RAMAN. When we are talking about multinational banks, 

sometimes the multinational bank’s primary prudential regulator is 

a foreign regulator. And, again, I can’t talk about open cases or 

cases that are currently in litigation, but many of the banks that 

we have looked at and this committee is aware of has tentacles in 

countries all over the globe. And— 

Mrs. WAGNER. Can you talk about any closed cases, and some of 

the foreign regulators that you have been dealing with over the period of time here the last 5 years? 

Ms. RAMAN. Again, I am not aware that our search has yielded 

any evidence that in closed cases there has been that sort of contact with foreign regulators on economic impact issues in particular. 

Mrs. WAGNER. Would you agree, then—let me try and come at 

this from a different angle. Would you agree that foreign regulators 

have a vested interest in shielding companies headquartered in, 

say, their jurisdictions from prosecution in other countries? 

Ms. RAMAN. Our experience has not shown us that. In fact, sometimes the biggest impact we can have is when we literally bring a 

global resolution; when regulators across the globe or American 

regulators and the Justice Department act in concert or investigate 

in concert. So I don’t think, at least in my experience, I can say 

that the regulators have tried to shield the banks. In fact, they can 

be of great assistance if they bring civil enforcement actions. And 

that can assist us in our prosecution. 

Mrs. WAGNER. Then perhaps, Ms. Raman, you can explain how 

it is exactly the Department of Justice weighs statements made by 

37 

foreign regulators about prosecutions in the United States of firms 

headquartered abroad. 

Ms. RAMAN. Because they do have an interest in assisting in any 

investigation, and that has been our experience. To the extent that 

we consult them, we consult them as we would with any other 

partner. That is, engage in a discussion with them, and make sure 

we understand what they are saying and that they understand 

what we are saying. 

Mrs. WAGNER. As a matter of course, does the Department of 

Justice regularly solicit input from foreign regulators about whether to pursue prosecutions of foreign firms? 

Ms. RAMAN. I don’t think it is fair to say we regularly do that. 

In fact, I think it has been rare that we have had to address specific types of issues that are of concern to this committee. That is, 

impacts—systemic impacts on global markets. 

Mrs. WAGNER. And you are not able to share with the committee 

any of the foreign regulators that you all have contacted vis-a-vis 

economic analysis on these prosecutions? 

Ms. RAMAN. Because I can’t get into matters that are currently 

in litigation or— 

Mrs. WAGNER. But how about those that are closed? 

Ms. RAMAN. And I have been—I think I have been trying to explain, but I should be as clear as I can be, that in the closed cases 

that we have searched in the parameters that—under the parameters that we have discussed with committee staff we have not 

identified any cases in which those kinds of conversation—in which 

economic impact was a factor in those closed cases. And I haven’t— 

I can’t tell you for certain what other document searches may be 

possible or may not be possible, but I am not aware, I am not personally aware, that we have searched and that search has resulted 

in any documents that— 

Mrs. WAGNER. I guess the confusion here, and the persistence is, 

one, that the Department of Justice has indicated that they have 

received analysis from those foreign and domestic regulators. Yet 

you are—there seems to be no record, no knowledge of records by 

any of the U.S. Attorneys’ Offices by your own. Nothing that you 

can share with this committee to shed some light on these prosecutions. 

Ms. RAMAN. It is not—setting aside the open cases, because in 

some ways I think that is what this committee may be interested 

in and, unfortunately, I just can’t speak about those, setting those 

aside, it is not surprising to me that in our closed cases in past 

years there has not—our current searches thus far have not yielded 

the kinds of economic analyses that the committee is interested in. 

And it doesn’t surprise me because these types of arguments come 

up only rarely. 

And, again, I know that our staffs have been talking about the 

parameters— 

Mrs. WAGNER. And I just have a few more minutes left. And, the 

economic analysis was referred to by the Attorney General. So this 

is—we would really implore you to continue to work with the staff 

to come up with records, with information, with regulators, with 

entities that you all have been working with as, frankly, indicated 

38 

already by the Department of Justice and the Attorney General. I 

think I am out of time. 

And I am pleased to recognize the gentleman from California, 

Mr. Sherman. 

Mr. SHERMAN. I thank the ranking member for letting me ask 

questions at this point. With regard to the closed files, can you 

identify and describe any case involving a financial institution 

where, due to collateral damage, you didn’t assert the strongest 

possible charges or impose the maximum possible penalty? 

Ms. RAMAN. I am not aware, in any closed case, that we didn’t 

pursue the appropriate response because of any such argument. 

Mr. SHERMAN. Okay. So we have all this conversation from the 

Department of Justice saying that they may look at collateral consequences. Could you, for the record, ask your staff to review the 

closed files and identify any time that they can find in which a collateral consequence has affected the prosecutorial actions? 

Ms. RAMAN. We will absolutely continue to work with the committee to ensure that the committee has the information that it 

needs. 

Mr. SHERMAN. This is a question I would like you to respond to 

for the record, independent of what the committee staff has to say 

to you. Please respond appropriately for the record whether you 

have been able to conduct a review and whether there has ever 

been a case where economic consequences have affected prosecutorial action. Since we don’t have any practical cases, I am going 

to get a little theoretical here. 

You may have a small bank, where ordinarily you would impose 

a million-dollar penalty. And you are convinced that will cost dozens of jobs. It could be in a small town, or it could be dozens of 

jobs in a big town. Big town people count, too. Or there could be 

a big entity you are thinking of imposing a billion-dollar penalty 

on, and you know that is going to cost tens of thousands of jobs 

with international implications. 

Is the small entity or the large entity more likely to get reduced 

prosecution due to collateral consequences? Are you focused on the 

national and international collateral consequences, or is it all kind 

of proportional? 

Ms. RAMAN. I think it is fair to say that there are different collateral consequences that are apparent in different types of prosecutions. And so the— 

Mr. SHERMAN. But I am just posing—in one case you get a great 

economic analysis. If we don’t cut the penalty by a million bucks, 

we are going to lose dozens of jobs. In another case, you get in an 

economic analysis if we don’t cut the penalty by a billion dollars, 

we are going to lose tens of thousands of jobs. As a matter of fact, 

assume that the penalty reduction-job loss ratio is identical. It is 

$8,000 of penalty per job, or $18,000 or whatever it is. 

Are you more likely to make an adjustment to save 12 jobs for— 

by reducing the penalty by a million bucks, or to save tens of thousands of jobs by reducing the penalty by a billion? 

Ms. RAMAN. Congressman, I am— 

Mr. SHERMAN. Does size matter? 

Ms. RAMAN. Congressman, I am actually not aware that the size 

of a penalty has ever been changed because of such arguments. 

39 

What we do consider is whether or not a collateral consequence 

might suggest that one type of resolution is superior to another, a 

deferred prosecution— 

Mr. SHERMAN. These resolutions tend to take the form of a company writing a check. So you can say it is not—you can’t put a corporation in jail. 

Ms. RAMAN. Whether guilty plea, deferred prosecution, or nonprosecution agreement, our punitive tool for any corporate entity is 

a fine. And, of course, any additional— 

Mr. SHERMAN. Yes. And the lower the—both how much you 

charge and what fine you settle for is a matter of money. And I 

have given you an example of a dozen jobs for a million-dollar reduction here, tens of thousands of jobs. And I will ask again, does 

size matter? Does being systemically important lead to a reduction 

in the penalty? 

Ms. RAMAN. Being systemically important can cause us to evaluate certain collateral consequences. But again, I am not aware that 

the amount of the fine has changed because of that. We do consider, whenever we consider collateral consequences, whether a deferred prosecution agreement may be more appropriate than a 

guilty plea. 

Mr. SHERMAN. Not only do the big banks save 80 basis points, 

as we have heard testified in this room, on their cost of funds, but 

they are more likely—apparently, by your testimony—to get deferred prosecution and other understandings of the collateral consequences. In any case, you can’t assure me that small bank is— 

I am trying to understand what the implications of your answer 

are, and I think I would rather be a big bank than a small bank. 

Ms. RAMAN. I can tell you that in our big bank prosecutions, including our LIBOR investigation involving UBS, RBS, and 

Barclays, more than $2.5 billion has been the monetary assessment. In our prosecution of BP, it was a $4 billion— 

Mr. SHERMAN. And yet, there could be a small community bank where $100,000 would be just as big. 

Chairman MCHENRY. The gentleman’s time has expired. I have 

been very generous with allowing Members to get full answers. We 

will end with that. Mr. Green has 5 more minutes and I have 5 

minutes. And so, I will recognize myself for 5 minutes, and then 

give the ranking member the opportunity to close. 

You have referenced that you have certain ongoing matters that 

prevent you from testifying about the Department of Justice going 

after financial firms and those people in it who were breaking the 

law. When those matters close, would you be willing to come back 

before this committee to give us the rundown, and share? 

Ms. RAMAN. Absolutely. Within the parameters of what I will be 

able, by court rules and other ethical obligations, to share with you 

we— 

Chairman MCHENRY. On a closed case. 

Ms. RAMAN. We will be ready to share with you whatever we can. 

Chairman MCHENRY. There is a deferred prosecution that has 

been before a judge for a number of months, and we wanted to ask 

some questions about that, and I understand your unwillingness to 

talk about that. I did want to talk about, though, this economic 

analysis. You went through the nine rules—and again, we are getVerDate Nov 24 2008 12:19 Aug 05, 2013 Jkt 081760 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 K:\DOCS\81760.TXT TERRI
40 

ting close to the end here—the nine sets of weighing through these 

things. 

So you have U.S. Attorneys who look at this, and you weigh 

those things out. And they are not all equally weighted, are they? 

Ms. RAMAN. Depending on the facts of the cases, each can have 

different— 

Chairman MCHENRY. Okay. 

Ms. RAMAN. —proportionate weights, yes. 

Chairman MCHENRY. Okay, okay. But you talk about the impact 

on the economy. Senator Merkley sent a letter to the Attorney General in December of 2012, and he said that the Dodd-Frank Act, 

‘‘explicitly created new authority to permit a failed institution to be 

wound down safely without impacting financial stability.’’ Do you 

agree with that analysis? 

Ms. RAMAN. I am not an expert on Dodd-Frank. I will have to 

defer to— 

Chairman MCHENRY. Okay. So when the Justice Department estimates economic costs of prosecuting a firm, we are not talking 

about a specific example, we are talking about your policy, your 

procedure. That is why we have you here. But when you are estimating the economic cost of prosecuting a large financial institution, that analysis takes into account the cost associated to the 

economy, right? 

Ms. RAMAN. Again, only when it is raised and only in a very 

small sliver of cases in which that argument may be raised by a 

bank or a subject entity. 

Chairman MCHENRY. So yes, it is, on occasion, raised. 

Ms. RAMAN. Banks have raised, and I expect will continue to 

raise these sorts of arguments. 

Chairman MCHENRY. Okay. So internally, within your Department, when you are estimating the costs associated with perhaps 

a failure of a large financial firm, do you take into account the 

Dodd-Frank process of the Orderly Liquidation Authority? 

Ms. RAMAN. As prosecutors, we do not take into account DoddFrank, per se. As prosecutors, we want— 

Chairman MCHENRY. But you are taking the fact that a firm 

could fail as a result of your prosecution. 

Ms. RAMAN. Yes, because of the potential collateral consequences 

to— 

Chairman MCHENRY. Yes. So now we have a procedure that is 

within the government to wind down an institution, and it is called 

the Orderly Liquidation Authority. Senator Merkley, some of my 

colleagues contend that it ended—it actually ends too-big-to-fail, 

right? Going back to the Attorney General’s quote that I referenced 

at the beginning of this hearing—where he says that some of these 

firms are too large, too complex—that goes counter to the arguments that proponents of the Orderly Liquidation Authority make, 

that this authority means that firms that are too big actually can 

fail, and there is a process for that. What I am asking is, that is 

very important when you are talking about a firm failing if you 

have a government procedure that some contend means that the 

firm is wound down. So you don’t take that into account whatsoever? 

41 

Ms. RAMAN. We take into account whether or not a particular 

type of law enforcement action will trigger disproportionate collateral consequences on the public or innocent third parties. And so 

in whatever form or format that might present itself in any particular case, we have to, and do, consider those. And so, the Orderly Liquidation Authority issue— 

Chairman MCHENRY. But how can you not take in the DoddFrank Orderly Liquidation Authority when you are going through 

what you just said? 

Ms. RAMAN. Our concern is to ensure that when we bring a 

charge, when we don’t bring a charge, when we resolve a case that 

we have a full understanding that it is an— 

Chairman MCHENRY. But if you have a full understanding, you 

would know that Orderly Liquidation Authority exists in that procedure. 

Ms. RAMAN. And I understand that the purpose of Dodd-Frank 

legislation is to ensure such orderly liquidation. 

Chairman MCHENRY. It has been on the books for 3 years. 

Ms. RAMAN. We consider collateral consequences of all types, and 

they don’t always— 

Chairman MCHENRY. But do you consider that consequence of 

the Orderly Liquidation Authority? 

Ms. RAMAN. We consider all of the—and I am trying to answer 

the question, but I want to answer it— 

Chairman MCHENRY. But you are not. Do you consider the DoddFrank Orderly Liquidation Authority, yes or no? 

Ms. RAMAN. The bottom line is that the liquidation of a company 

or not is only one factor that is of relevance when we are talking 

about collateral consequences. 

Chairman MCHENRY. I understand you don’t want to answer the 

question. It is kind of clear because I am trying to restate it in a 

way that you could answer it. And I am not trying to badger you 

about this, but it is important to note. It is either yes, you take it 

into account, or no, you do not. And it is an existing law that deals 

with a whole class of companies that have been designated as systemically important or systemically significant. 

Ms. RAMAN. We take into consideration every single regulatory 

action and option available that may be triggered by a criminal 

conviction. Sometimes— 

Chairman MCHENRY. So on this matter of the Orderly Liquidation Authority, has your Department had conversations with the 

FDIC, which is charged with that procedure? Not about an individual case, about that procedure? 

Ms. RAMAN. We have had many conversations with regulators 

across-the-board about— 

Chairman MCHENRY. I understand. You have said that repeatedly. I am talking about the Orderly Liquidation Authority. 

Ms. RAMAN. I have not had that conversation, but I know that 

we— 

Chairman MCHENRY. But you are in charge of the division. 

Ms. RAMAN. —have had conversations with regulators about all 

of the regulatory actions that can be triggered by a criminal conviction, including the FDIC’s authority to revoke a bank’s deposit insurance if a charter is revoked, for example. And so we have had 

42 

robust, and will continue to have robust, conversations with these 

types of regulators. And—but we— 

Chairman MCHENRY. It sounds like you have not yet had those 

robust conversations on a law that has existed for 3 years. 

The ranking member has been very generous, and I would now 

recognize the ranking member for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. If you need more time, 

I will gladly yield some of my time to you. 

I want to ask a couple of questions about persons who have 

asked you to submit additional evidence for the record. You have 

had more than one request today. I assume that you will comply 

and you will submit the additional evidence for the record? 

Ms. RAMAN. We will. 

Mr. GREEN. I asked you for evidence, and you complied and you 

provided this evidence to me. Was my request any different than 

any of the other requests that you have had today for evidence to 

go into the record? 

Ms. RAMAN. No. I haven’t kept track of every single request, although I am certain some behind me have. 

Mr. GREEN. No, I am talking about— 

Ms. RAMAN. But we are happy to be as helpful as we possibly 

can. 

Mr. GREEN. Yes. I am talking about, now, more specifically in 

terms of my having just made a request to you to give me something to go into the record. Was that request made any differently? 

Other than it was made before we got here today because I wanted 

to make sure I had something that I could look at and peruse beforehand. 

Ms. RAMAN. That is right. 

Mr. GREEN. Let’s go on to something else now. The Code of Judicial Conduct, the canons of ethics, all of these codes that deal with 

professional responsibility, most of them focus on protecting not the 

Justice Department itself, but they have to do with rights of individuals who may be prosecuted, rights of entities that may be prosecuted. But you don’t promulgate some of these codes. I know the 

canons of ethics don’t allow lawyers to do certain things and the 

Code of Judicial Conduct will prohibit a judge from discussing a 

case pending before the court. 

These are not professional codes of responsibility that you are 

trying to hide behind. But you do have to adhere to them. Is that 

a fair statement? 

Ms. RAMAN. I do. 

Mr. GREEN. And in so doing, it is not to preclude our knowing 

about evidence. It is just that if you do this and you violate one 

of the codes, then there may be consequences for you if you should 

do this. Is that a fair statement? 

Ms. RAMAN. Yes. And there are obviously good reasons why those 

ethics rules and local rules in courts exist. It is to avoid interfering 

with ongoing matters. 

Mr. GREEN. Yes. I know that, as a judge, if the judge happens 

to make a comment about a pending matter, it could prejudice the 

case one way or the other, depending on how the comment is made. 

And I just wanted to get that in the record because it is important 

43 

for people to know that you don’t produce the codes but you do 

have to adhere to them. 

Now, let’s talk for just a moment about FSOC and the Orderly 

Liquidation Authority. You personally have not had any conversations with persons concerning cases that are associated with the 

Orderly Liquidation Authority. Is this correct? 

Ms. RAMAN. Setting aside ongoing matters. 

Mr. GREEN. Yes. 

Ms. RAMAN. The Department of Justice is constantly engaged, as 

a general matter, with our regulatory partners and with experts 

within the government about these sorts of matters to ensure that 

we are best educated. And, in fact, we have redoubled efforts to do 

so just to ensure that we are doing everything we possibly can. I 

have not personally had a discussion with FSOC. 

Mr. GREEN. And I will close with this. Do you believe Mr. Holder 

when he says there is no institution, there is no individual that 

cannot be prosecuted by the U.S. Justice Department? Do you believe that? 

Ms. RAMAN. I believe him, and I believe that the career prosecutors in the Department understand that principle. 

Mr. GREEN. Thank you. 

I yield back the balance of my time, Mr. Chairman. 

Chairman MCHENRY. I thank the ranking member. And again, 

the hearing title today is, ‘‘Who is Too Big to Fail: Are Large Financial Institutions Immune from Federal Prosecution?’’ And the 

questions we raised today were about whether or not Dodd-Frank 

did, in fact, end too-big-to-fail, the Justice Department’s refusal to 

prosecute some large firms with contradicting statements from the 

Attorney General, and whether or not too-big-to-fail, in fact, results 

in ‘‘too-big-to-jail.’’ 

And then finally, in deciding not to prosecute large financial institutions, the Justice Department either did not consider the 

Dodd-Frank’s Orderly Liquidation Authority, or found that the Orderly Liquidation Authority did not solve the problems of too-bigto-fail. Those are among the questions. 

I thank the ranking member for his indulgence in this long hearing. Ms. Raman, thank you so much for being here today and making it through what was a large and long hearing. 

The Chair notes that some Members may have additional questions for this witness, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to this witness 

and to place her responses in the record. Also, without objection, 

Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. 

And with that, this hearing is now adjourned. 

[Whereupon, at 4:42 p.m., the hearing was adjourned.] 

(45) 

A P P E N D I X 

May 22, 2013 

46 


81760.001

ileparlment of lJusure 

STATEMENT OF 

MYTHILI RAMAN 

ACTING ASSISTANT ATTORNEY GENERAL 

CRIMINAL DIVISION 

U. S. DEPARTMENT OF JUSTICE 

BEFORE THE 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS 

COMMITTEE ON FINANCIAL SERVICES 

U. S. HOUSE OF REPRESENTATIVES 

ENTITLED 

"WHO IS TOO BIG TO FAIL: ARE LARGE FINANCIAL 

INSTITUTIONS IMMUNE FROM FEDERAL PROSECUTION?" 

PRESENTED 

MAY 22, 2013 
47 


81760.002

Statement of Mythili Raman 

Acting Assistant Attorney General, Criminal Division 

U.S. Department of Justice 

Before the Subcommittee on Oversight and Investigations 

Committee on Financial Services 

U. S. House of Representatives 

May 22,2013 

Chairman McHenry, Ranking Member Green, and distinguished Members of the 

Subcommittee: Thank you for inviting the Department to appear before you today about 

the Department of Justice's enforcement efforts to combat financial crime. I am pleased 

to be here and to oversee the important work of the Criminal Division. 

The Justice Department is committed to aggressively investigating allegations of 

wrongdoing at financial institutions and, along with our many law enforcement partners, 

holding individuals and corporations to account for their conduct. Over the past four 

years, we have stood firm in our approach that no person or corporation is above the law. 

Our track record in recent years shows our commitment to pursuing the most 

challenging and complex financial crime investigations in the country. Over the last 

three fiscal years alone, the Department has filed nearly 10,000 financial fraud cases 

against nearly 14,500 defendants. These prosecutions have led to stiff prison sentences 

for many defendants. Last year, for example, the Criminal Division and the U.S. 

Attorney's Office in Houston secured a II O-year sentence for Robert Allen Stanford for 

orchestrating a 20-year, $7 billion investment fraud scheme - just one of numerous 

investment fraud schemes the Department has prosecuted in recent years. Indeed, over 

the past several years, well over 100 defendants have been sentenced to 10 years or more 

in prison in cases involving bank fraud, investment fraud, procurement fraud or 

healthcare fraud, with more than 50 being sentenced to 20 years or more. 

We have been just as aggressive with cases involving the manipulation of the 

markets, as seen by the extraordinary success of the U.S. Attorney's Office in Manhattan 

in an unprecedented string of insider trading cases over the last several years. Since 

August 2009, the Manhattan U.S. Attorney's Office has convicted more than 70 insider 

trading defendants. Among others, the office successfully prosecuted Raj Rajaratnam, 

General Partner of Galleon Management L.P., and Rajat Gupta, a former Goldman Sachs 

board member, for their involvement in the largest hedge fund insider trading scheme in 

history. 

Our prosecutors and agents also continue to doggedly pursue health care 

fraudsters. Our Medicare Fraud Strike Force has convicted over 1,000 defendants of 

felony health care fraud offenses since the Strike Force's inception, and the average 

sentence in Strike Force cases is approximately 45 months in prison. In this past fiscal 

year alone, Strike Force prosecutors brought charges against 278 defendants who 

collectively billed Medicare more than $1.5 billion. 
48 


81760.003

Our fight against foreign bribery, too, is as robust as it has ever been. Just since 

last month, we have announced charges against several key defendants in ongoing, active 

Foreign Corrupt Practices Act investigations, one case involving an alleged bribery 

scheme to secure mining rights in the Republic of Guinea, another involving an alleged 

bribery scheme to secure power contracts in Indonesia, and, just two weeks ago, an 

alleged bribery scheme to obtain financial trading business from Venezuela's state 

economie development bank. 

Similarly, our investigation of the manipulation at various banks of interbank 

lending rates, including LIBOR, has had reverberations across the globc. Thus far, the 

consequcnces for several multinational banking institutions have been far reaching, 

ranging from replacement of senior leaders at Barclays, to criminal charges 

against individuals, to detailed admissions of criminal wrongdoing and the payment of 

substantial penalties by three global banks, to felony guilty plea agreements by 

subsidiaries of banks at which much of the misconduct took place. In December 2012, 

Swiss-based UBS AG and its Japanese investment banking subsidiary agreed to pay $1.5 

billion in criminal and regulatory penalties and disgorgement for their rolc in the 

manipUlation of the bank's LlBOR submissions. As part of that resolution, UBS 

Securities Japan, which played a direct role in the criminal conduct, agreed to plead 

guilty to felony wire fraud. In addition, the Department charged two former UBS traders 

with felony eounts for allegedly manipulating LlBOR submissions. In February 2013, 

the Japanese investment banking subsidiary of the Royal Bank of Scotland agreed to 

plead guilty to felony wire fraud for its direct role in manipulating LlBOR submissions 

and, together with its parent company, RBS pic, agreed to pay approximately $612 

million in criminal and regulatory penalties and disgorgement. 

As is evident from this track record, we are deeply committed to holding 

wrongdoers - whether individuals or business entities - to account for their crimes. In 

doing so, we follow long-standing Justice Department policy. 

In our investigations of business entities, in particular, we are guided by firmly 

rooted Department policy, set out in the U.S. Attorneys' Manual, which requires our 

prosecutors to consider a number of factors in determining how and whether to proceed. 

Those factors include, among other considerations, the nature and seriousness of the 

offense; the pervasiveness of wrongdoing within the corporation; the existence and 

effectiveness of the corporation's pre-existing compliance program; the corporation's 

timely and voluntary disclosure of wrongdoing, and cooperation with the Department's 

investigation; the corporation's history of similar misconduct; the potential collateral 

consequences of prosecution, including on innocent third parties; and the adequacy of 

alternative remedies such as civil or regulatory enforcement actions. 

There has been some discussion in recent months about one of those factors - the 

potential collateral consequences of charging a corporate entity and we appreciate your 

interest in better understanding the extent to which the Department may consider possible 
49 


81760.004

collateral consequcnces, including potentially to the economy, of criminal prosecutions 

against large, complex financial institutions. 

As I noted, the U.S. Attorneys' Manual requires federal prosecutors to consider 

the potentially adverse impact a prosecution may have on investors, pension holders, 

customers, employees, and the public, including on innocent people who had nothing to 

do with the criminal conduct. Of course, as a threshold matter, federal prosecutors must 

determine that a business entity's conduct actually constitutes a federal crime. [f 

prosecutors determine that the conduct does not constitute a federal crime, they need not 

even reach the question of assessing potential collateral consequences (including those 

affecting the public or the economy). And, of course, we do not consider such factors in 

deciding whcther or not to charge individual executivcs and cmployees. 

The consideration of collateral consequences and other factors when determining 

whether to charge a corporation has been required by the U.S. Attorneys' Manual since 

2008. But the basic principles underlying those USAM provisions have a much longer 

history at the Department. The tirst Department-wide memo on this subject was issued in 

1999, and those basic principles have been reaffirmed multiple times since then, 

including in 2003, 2006, and 2008. 

When we do consider potential collateral consequences, we may, as the Attorney 

General has previously said, consult with experts outside the Justice Department - that is, 

with relevant domestic and foreign regulators. When the Department consults with 

relevant regulators, or hears from the companies that are the subjects of the Department's 

investigations and their counsel regarding potential collateral consequences, neither those 

agencies nor the companies receive any compensation from the Department. 

None of the factors set forth in the U.S. Attorneys' Manual that I've mentioned, 

including potential collateral consequences, acts as a bar to prosecution, or has prevented 

the Justice Department from aggressively pursuing investigations and seeking criminal 

penalties in cases involving large, complex financial institutions. No individual or 

institution is immune from prosecution, and we intend to continue our aggressive pursuit 

of financial fraud with the same strong commitment with which we pursue other criminal 

matters of national and international significance. 

Thank you for the opportunity to provide the Subcommittee with this overview of 

our financial fraud enforcement efforts. I look forward to answering any questions you 

may have. 
50 


81760.005

JEFF MERKLEY 

CHW{)N 

Hon. Eric Holder 

Attorney General 

Department of Justice 

950 Pennsylvania Avenue, NW 

Washington, DC 20530 

Dear Attorney General Holder: 

'Bnitcd ~tatC5 ,$£I1Qtf WASWNGTON. DC 20510 

December 13, 2012 

CO:\-;MrlTEE5: 

ENVIRONMENT AND 

.. f'UBLlC WORKS 

HEALTH, "1)UCATtO:>.l. 

LAeOfi, '-"NO PENSIONE 

B;\NKING, HOUS!NG, 

ANO URBAN AFFAIRS 

BUDGET 

On Tuesday, the Justice Department entered into a deferred prosecution agreement with HSBC 

related to more than $800 million in illicit narcotics proceeds that drug traffickers laundered 

through the bank's Mexican and American affiliates, as well as over $600 million in transactions 

that violated U.S. sanctions against Cuba, Iran, Libya, Sudan, and Burma. I Assistant Attorney 

General Lanny Breuer highlighted just how brazen the violations were, with traffickers 

depositing "hundreds of thousands of dollars in cash, in a single day, into a single account, using 

boxes designed to fit the precise dimensions of the teller window."z Sanctions violations were 

equally deliberate, with the bank intentionally stripping information from transactions to avoid 

detection. Yet despite these clear and blatant violations, the Department of Justice refused to 

bring criminal charges against the bank, relevant employees, or senior management. 

Indeed, Mr. Breuer stated yesterday that in deciding not to prosecute, the Department considered 

the "collateral consequences" of its decision on the financial system. Mr. Breuer stated "If you 

prosecute one of the largest banks in the world, do you risk that people will lose jobs, other 

financial institutions and other partics will leave the bank, and there will be some kind of event 

in the world economy?,,3 The HSBC decision comes on the back of deferred proseclltion 

agreements with Standard Charter Bank and ING Group related to similar charges. 

I Department of Justice, Office of Public Affairs, HSBC Holdings Pic. and HSBC Bank USA N.A. Admit to AnliMoney Laundering and Sanctions Violations. FOifeit $1.256 Billion in Deferred Prosecution Agreement, Dec. II, 

2012, http://www.justice.gov/opalprI2012/DecemberI12-crm-1478.html. 

2 Peter finn, Sari Horwitz, Justice Departmellt outlines HSeC transactions with drug rraffickers, TilE WASHINGTON 

POST, Dec. 11,2012, http://www.washingtonpost.com!worldlnational-security/jusrice-depanmenr-outlines-hsbctransactions-with-drug-traffickersI20 IV I21l lli b8130c4-43bf-ll e2-8061-253bcefc7532 story.html (quoting Mr. 

Breuer). 

' ld. 

313 HAirr S=NATE: OFFICE BUiLO'NG 

WASHINGTON, DC 20510 

r202} 224-3753 

F,\X (202} 228-3997 

121 S.W. SALMe N 5H>t:ET 

SUITE 1400 

POR'fl.\NO. OR 97204 

(503) 32&-3386 

FAX (503) 326-2900 
51 


81760.006

Hon. Eric Holder 

December 13, 2012 

Page 2 

I do not take a position on the merits of this or any other individual case, but I am deeply 

concerned that four years after the financial crisis, the Department appears to have firmly set the 

precedent that no bank, bank employee, or bank executive can be prosecuted even for serious 

criminal actions if that bank is a large, systemically important financial institution. Ihis "too big 

to jail" approach to law enforccment, which deeply offends the public's sense of justice, 

effectively vitiates the law as written by Congress. Had Congress wished to declare that 

violations of money laundering, terrorist financing, fraud, and a number of other illicit financial 

actions would only constitute civil violations, it could have done so. It did not 

Instead, Congress placed these financial crimes squarely in the federal criminal code precisely 

because the consequences are so severe. Drug trafficking between the U.S. and Mexico 

continues to wreak extraordinary violence across North America, leading to 15,000 deaths in 

Mexico in2010 alone and continued gang violence and deaths in the U.S.4 Drug cartels are also 

increasingly connected to terrorism. According to the Drug Enforcement Administration, 39 

percent of State Department-designated foreign terrorist organizations (FIOs) have "confirmed 

links" to the drug trade, as ofNovembcr 2011. 5 The consequences to U.S. national security for 

violations involving terrorism financing and Iran sanctions violations are obvious and severe. 

Congress deemed criminal law the appropriate tool for punishing and deterring actions that have 

such serious and damaging public consequences. 

Refusing to prosecute on the grounds of financial stability is also troubling from the perspective 

of ending "too big to faiL" The Dodd-Frank Wall Street Reform and Consumer Protection Act, 

which declared some institutions to be systemically important financial institutions subject to 

tougher regulation, did not declare that those institutions would be exempt irom criminal 

prosecution. Indeed, the Dodd-Frank Act explicitly created new authority to permit a failed 

institution to be wound down safely, without impacting financial stability. If a financial 

institution, because of its criminal actions, ultimately fails, that may indeed be precisely the 

consequence that justice and accountability demand, and which is so necessary to deterring 

future illegal behavior. I am deeply concerned that the Department's continuing application of 

deferred prosecution agreements on the grounds of financial stability runs contrary to the intent 

of Congress and undermines the accountability to the rule of law that is so fundamental to a 

healthy, functioning free market economy. 

4 Sara Miller Llana, Mexico drug war death toll up 60 percent in 2010. Why?, CHRISTIAN SClENCEMONlTOR, Jan. 

13,2011, http://www.csmonitor.comlWorld/Americasl201 1101 13lMexico-drug-war-death-toll-up-60-percent-in2010.-Why. 

5 Prepared testimony of U.S. Drug Enforcement Administration Special Operations Division Special Agent in 

Charge Derek S. Maltz, in U.s. Congress, House Comm. on Foreign Affairs, Subc. on Terrorism, Nonproliferation, 

and Trade, Narcoterrarism and the Long Reach afUS. L1IW Enforcement, Part 1I, 112'" Cong., Nov. 17,2011. 
52 


81760.007

Hon. Eric Holder 

December 13, 2012 

Page 3 

According to the U.S. Sentencing Commission, jail time is served by over 96 percent of persons 

that plead or are found guilty of drug trafficking, 80 percent of those that plead or are found 

guilty of money laundering, and 63 percent of those caught in possession ofdrugs.6 !"s the 

deferred prosecution agreement appears now to be the corporate equivalent of acknowledging 

guilt, the best way for a guilty party to avoid jail time may be to ensure that the party is or is 

employed by a globally significant bank. The Department's deferred prosecution agreements 

may offer something in the way of promises of future compliance, but they look sorely lacking in 

justice and accountability. 

I ask for your immediate response and explanation. 

Sincerely, 

United States Senator 

cc: Hon. Timothy Geithner, Secretary of the Treasury 

Hon. Ben Bernanke, Chairman, Federal Reserve Board 

Hon. Tom Curry, Comptroller ofthe Currency 

Hon. Martin Gruenberg, Chairman, Federal Deposit Insurance Commission 

6 U.S. Sentencing Commission, 2011 Sourebook of Federal Sentencing Statistics, Table 12, (2011) 

http://www.ussc.govlData and Statistics/Annual Reports and Sourcebooks/2011fTableI2.pdf. 
53 


81760.008

The Honorable Eric H. Holder, Jr. 

United States Attorney General 

U.S. Department of Justice 

950 Pennsylvania Avenue, N. W. 

Washington, D.C. 20530 

Dcar Attorney General Holder: 

January 29, 2013 

"Ine large number of private and government lawsuits since the global financial crisis continues 

to undermine public confidence in our financial markets. This confidence can only be restored 

by demonstrating that there are consistent rules in place that provide accountability for 

wrongdoing and deter financial predators. 

Unfortunately, many of the settlements between large financial institutions and the federal 

government involve penalties that are disproportionately low, both in relation to the profits 

which resulted from those wrongful actions as well as in relation to the costs imposed upon 

consumers, investors, and the market. 

The nature of these settlements has fostered concerns that "too big to fail" Wall Street banks 

enjoy a favored status, in statute and in enforcement policy. This perception undermines the 

public's confidence in our institutions and in the principal that the law is applied equally in all 

cases. 

On settling with Swiss Bank UBS for Libor manipulation, for example, you said, "[t]he impact 

on the stability of the financial markets around the world is something we take into 

consideration. We reach out to experts outside of the Justice Department to talk about what are 

the consequences of actions that we might take, what would be the impact of those actions if we 

want to make particular prosecutive decisions or determinations with regard to a particular 

institution. " 

In an interview with Frontline, outgoing Assistant Attorney General Lanny Breuer defended the 

Department of Justice's inability to prosecute large financial institutions by saying, "but in any 

given case, I think I and prosecutors around the country, being responsible, should speak to 

regulators, should speak to experts, because ifI bring a case against institution, and as a result of 

bringing that case, there's some huge economic effect- if it creates a ripple effect so that 

suddenly, counterparties and other financial institutions or other companies that had nothing to 

do with this are affected badly - it's a factor we need to know and understand." 

These statements raise important questions about the Justice Department's prosecutorial 

philosophy. In order to explore the Justice Department's treatment of potential criminal activity 

by large financial institutions, please answer the following questions and provide the following 

information: 
54 


81760.009

I. Has the Justice Department designated certain institutions whose failure could jeopardize 

the stability of the financial markets and are thus, "too big to jail"? If so, please name 

them. 

2. Has the Justice Department ever failed to bring a prosecution against an institution due to 

concern that their failure could jeopardize financial markets? 

3. Are there any entities the Justice Department has entered into settlements with, in which 

the amonnt of the settlement reflected a concern that markets could be impacted by such 

a settlement? If so, for which entities? 

4. Please provide the names of all outside experts consulted by the Justice Department in 

making prosecutorial decisions regarding financial institutions with over $1 billion in 

assets. 

5. Please provide any compensation contracts for these individuals. 

6. How did DOJ ensure that these experts provided unconflicted and nnbiased advice to 

DOJ? 

Our markets will only function efficiently if participants believe that all laws "''ill be enforced 

consistently, and that violators will be pnnished to the fullest extent of the law. There should not 

be one set of rules that apply to Wall Street and another set for the rest of us. 

Thank you for your cooperation and attention in this matter. We would appreciate a response by 

February 8, 2013. Jfyou have any questions, please do not hesitate to contact Graham Steele for 

Senator Brown at (202) 224-2315 or Chris Lucas for Ranking Member Grassley at (202) 224-

5225. 

Sherrod Brown 

Chairman 

Banking Committee, 

Sincerely, 

Subcommittee on Financial Institutions 

and Consumer Protection 

~h Ranking Member 

Judiciary Committee 
55 


81760.010

The Honorable Sherrod Brown 

Chainnan 

lLS. I}cpartment of Justice 

FEB 27l0l3 

Subcommittee on Financial Institutions and Consumer Protection 

Committee on Banking, Housing, and Urban Affairs 

United States Senate 

Washington, D.C. 20510 

Dear Mr. Chairman: 

This responds to your letter to the Attorney General dated January 29,2013, regarding 

criminal prosecutions of large financial institutions. An identical response is being sent to 

Senator Grassley, who joined in your letter. 

The Department of Justice is committed to aggressively investigating allegations of 

wrongdoing at financial institutions and, along with our law enforcement partners, holding 

individuals and corporations responsible for their conduct. We appreciate your interest in better 

understanding the Department's "prosecutorial philosophy" concerning wrongdoing by large 

financial institutions. Our decision-making in this regard is guided by long-standing policie<, set 

forth in the United States Attorneys' Manual ("USAM"), particularly USAM 9-27.000 el seq., 

Principles of Federal Prosecution, and 9-28.000 et seq., Principles of Federal Prosecution of 

Business Organizations. Federal prosecutors have relied on these Principles in making charging 

determinations against corporations since they were first articulated, in their initial form, over a 

decade ago. 

As a general matter, the USAM instructs prosecutors to apply the same factors in 

determining whether to charge a corporation as they do with respect to an individual: that the 

defendant's conduct constituted a federal crime and that the admissible evidence is more likely 

than not sufficient to obtain and secure a conviction by ajury. See USAM 9-27.220, 9-28.300. 

The USAM Principles dictate that corporations should be treated neither more leniently nor more 

harshly due to their artificial nature. See USAM 9-28.200. No corporate entity, no mattcr how 

large, is immune from prosecution. 

The USAM details the benefits of vigorous enforcement against corporate wrongdoing 

but also explicitly notes that in certain instances it may be appropriate, upon consideration of 

factors set forth in the Principles, to resolve corporate criminal matters by means other than 

indictment. See USAM 9-28.200. Non-prosecution and deferred prosecution agreements occupy 
56 


81760.011

The Honorable Sherrod Brown 

Page 2 

an important middle ground between declining criminal prosecution altogether and pursuing 

prosecution of an entity where harm to innocent parties is likely to result. It should be 

recognized that some of the tenns typically agreed to by companies in negotiated corporate 

dispositions may not be available if a court were imposing a criminal sentence in a litigated case. 

For example. the requirement that a company cooperate with the Department's ongoing criminal 

investig'dtion (which is a common tenn in most negotiated corporate dispositions) may not be an 

available sanction in a litigated sentencing. . 

The USAM instruets that, in detennining whether to bring charges or negotiate a plea or 

other agreement with a corporate target, prosecutors should consider, among other factors, th,' 

nature and seriousness of the offense; the pervasiveness of wrongdoing within the corporation; 

the corporation's timely and voluntary disclosure of wrongdoing; the existence and effectiveness 

of the corporation's pre-existing compliance program; the adequacy of remedies such as civil or 

regulatory enforcement actions; and the collateral consequences of prosecution. See USAM 'I. 

28.300,9-28.900. 

In considering collateral consequences, prosecutors must detennine whether there would 

be disproportionate harm to investors, pension holders, customers, employees, and others who 

were not personally culpable, as well as impact on the public arising from the prosecution. See 

USAM 9-28.300, 9-28.1000. In analyzing the collateral consequences of any particular 

corporate prosecution, it is entirely appropriate for prosecutors to hear from subject matter 

experts at relevant regulatory authorities. When the Department consults with relevant 

regulatory authorities, or hears from the companies who are the targets of the Department's 

investigations and their counsel regarding potential collateral consequences for enforcement 

actions, neither those agencies nor the target companies receive any compensation from the 

Department. The USAM also clarifies that while neither a corporation nor an individual may 

avoid prosecution merely by paying a sum of money, a prosecutor may consider, again, among 

other factors, the corporation's willingness to make restitution, or take other remedial actions. 

such as improving existing compliance programs or disciplining employees. The USAM 

explicitly enCOUr'dges prosecutors to consult with relevant federal or state agencies in evaluating 

the appropriateness or adequacy of remedial compliance progranls. See USAM 9-28.800. 

The Department shares your concern that there must be accountability for corporate 

wrongdoing. Whether it is securing felony manslaughter convictions for BP or fraud 

convictions for a board member of Goldman Sachs, the Department has not hesitated to 

criminally prosecute major corporations and top executives when we have the evidence, no 

matter what the crime. And, as our ongoing criminal investigation into the manipUlation of tile 

London Interbank Offered Rate (LIBOR) demonstrates, we will vigorously investigate financial 

institutions, regardless of size, for suspected misconduct, and make charging decisions in 

accordance with the USAM. In December 2012, Swiss-based UBS AG and its Japanese 

subsidiary agreed to pay $1.5 billion in criminal and regulatory penalties and disgorgemcnt ftlr 

their roles in manipulating LIBOR submissions, and UBS Securities Japan agreed to plead guilty 

to felony wire fraud. UBS Securities Japan's guilty plea was the first criminal conviction of a 
57 


81760.012

The Honorable Sherrod Brown 

Page 3 

significant financial institution in several years. The Department also charged two former UBS 

traders with felony counts for allegedly manipulating the bank's LlBOR submissions. Following 

the announcement of the UBS agreement, another major financial institution·· the Japanese 

subsidiary of the Royal Bank of Scotland - agreed to plead guilty to felony wire fraud for its role 

in manipulating LlBOR submissions, and together with its parent company, RBS pic, agreed [0 

pay approximately $612 million in criminal and regulatory penalties and disgorgement. 

In addition, over the past several years, the Department has secured significant financial 

fraud convictions of high-level executives. For example, we obtained convictions against Rohert 

Allen Stanford, the former chairman of the board of directors of Stanford International Bank, and 

several of his executive-level co-conspirators for their roles in orchestrating a 20-year, 

multibillion dollar investment scheme. Stanford was sentenced to J J 0 years of imprisonmenl 

and required to forfeit $330 million to the United States. The Department also successfully 

prosecuted Raj Rajaratnam, Oeneral Partner of Galleon Management L.P., and Rajat Gupta, 

former Goldman Sachs board member, for their involvement in the largest hedge fund insider 

trading scheme in history. Rajaratnam is serving 11 years and Gupta is serving two years in 

prison. These prosecutions, as well as others we have brought over the past four years, are th.: 

result of the Department's aggressive approach to financial fraud enforcement. 

In combating financial fraud, the Department and its partners arc committed to using all 

of the remedies available - criminal, civil, regulatory and administrative. The cases outlined 

above demonstrate the Department's commitment to using the full range of tools provided by 

Congress to seek justice for financial misconduct. 

We hope this information is helpful. Please do not hesitate to contact this office if we 

may be of assistance with this or any other matter. 

cc: The Honorable Patrick J. Toomey 

Ranking Minority Member 

Sincerely, 

C. Appelbaum 

Principal Deputy Assistant Attorney Gencral 
58 


81760.013

JE:;8 HENSAHllNG, TX, CHjI.lHMAN Unitrd J."5ratrs liousr or'RcprcsrntBtilJcs 

il:ommitm on jl1inenciel ~cr\)i(cJl 

'l])ashingtoll, B.il:. 20515 

The Honorable Eric H. Holder, Jr. 

Attorney General 

U.S. Department of Justice 

950 Pennsylvania Avenue, N.W. 

Washington, D.C. 20530 

Dear Attorney General Holder: 

February 6, 2013 

MAXINE WATERS, CA, RANKING MEMBER 

I commend the Department of Justice, the Commodity Futures Trading Commission, 

and the banking regulators for your collective efforts in recent months to investigate and 

prosecute offenses related to LIB OR manipulation, money laundering, and violations ofthe 

Bank Secrecy Act. However, I remain generally concerned about whether deferred 

prosecution agreements, civil actions and monetary settlements alone aTe enough to detel' 

the abuses we've witnessed in the financial sector. 

As the Justice Department continues its ongoing efforts to investigate financial 

crimes in the United States, the Department should consider the scope of misconduct and 

identifY individual actors, when appropriate, who can be criminally prosecuted and tried in 

a court of law. In the absence of any indictments in cases involving "egregious" misconduct, 

the negative incentives that encourage and reward rule breaking will remain unchecked. 

A number of money laundering investigations have made headlines in the last 

several months reflecting a dramatic increase in enforcement activity. Despite these 

enhanced efforts, however, the Justice Department has been publicly criticized for entering 

into defened prosecution agreements rather than proceeding with criminal prosecutions of 

individual actors. While some contend, as I do, that the government should pursue 

criminal prosecutions of individuals to deter future misconduct, we are told by DO,r officials 

that they sometimes lack sufficient evidence to prove in court that an individual or group of 

employees acted with criminal intent. 

Therefore, I respectfully request your participation - or designated members of your 

Financial Fraud Enforcement Taskforce - in a roundtable discussion with Members of the 

House Financial Services Committee to discuss the Department's enforcement activities. 

Many of our Members are anxious to understand your collaborative efforts with foreign and 

U.s. banking regulators; the nature and number of suspicious activity reports (SARs) you 

have received from federal financial regulatory agencies; and, whether deferred prosecution 

agreements and monetary settlements have empirically resulted in a decrease in 

fraudulent or cl'iminal conduct. We would also welcome your comments on the extent to 

which the Justice Department takes into account the "systemic risk" a financial institution 

may pose in choosing whether to enter into a settlement agreement with the institution 

rather than pursue prosecution, and whether those considerations occur in consultation 

with the institution's regulatory agencies. 
59 


81760.014

The Honorable Eric H. Holder, Jr. 

Page 2 

February 6,2013 

Once again, I want to commend you for your aggressive efforts to investigate and 

prosecute financial crimes. I strongly believe that the federal govcrnment must remain 

committed to accountability. We can achieve this through effective law enforccment in which 

we demonstrate that no one individual or institution is above the law. 

Sincerely, 

~iJf:.,/i/~ 

!~':C:' Ranking Member 

cc: The Honorable Gary Gensler, Chairman, Commodity Futures Trading Commission 

The Honorable Thomas J. Curry, Chairman, Office of the Comptroller of the CUlTency 
60 


81760.015

Hr'N$,\Rl United $tJtrs ilQUSC of RrprcsrntatllJfS 

([ommimr on jinancial ~cr\}iflS 

mq Ra~IJu[11 tlouSt (:)ffi[( BUilding U1ashmEt!lJL B,<E. 2C5ii 

The Honorable Jacob I.,ew 

Secretary 

U.S. Department of the Treasury 

1500 Pennsylvania Avenue, N.W. 

Washington, DC 20500 

The Honorable E,,;C II. Holder, Jr. 

Attorney General 

U.S. Department of ,Tustice 

950 Pennsylvania Avenue, N.W. 

Washington, DC 20530 

March 8, 2013 

Dear Secretary Lew and Attorney General Holder: 

RI\NKING 

We write today to express our dccp concern regarding recent comments hy the Attorney 

General and the Undersecretary for TelTorism and Financial Intelligence at the Treasury 

Department, David Cohen, relating to criminal pl'Osecutions of large financial institutions. 

Yesterday, according to press reports, in testimony before the Senate Banking Committee, 

Undersecretary Cohen stated that the Treasury Department declined to provide the Justice 

Department with an opinion on the "impact to the financial system" of filing charges 

against HSBC. The Justice Department solicited this information in connection with its 

investigation of violations of federal anti-money laundering laws and l'elated statutes that 

ultimately resulted in a deferred prosecution agreement and HSBC's payment of $1.9 

billion in fines. Undersecretary Cohen explained that in regard to the HSBC matter, "we 

[Treasury] weren't in a position to offer any meaningful assessment of what the impact 

might be." 

In testimony on March 6, 2013, before the Senate Judiciary Committee, in response to a 

question from Senator Grassley regarding the ,Justice Depal·tment's prosecution of high· 

profile financial companies or individuals, Attorney General Holder testified that the size of 

certain financial institutions was hindering the ,Tustice Department's ability to prosecute: 

I am concerned that the size of some of these institutions beeOll1eS so large that. it 

does hecome difficult for us to prosecute them 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. And I think that is a 

function of the fact that some of these institutions have become too large .... I think 

it has an inhibiting influence - [an] impact on OUr ability to bring i-esolutions tbat I 

think would he more appropriate. 

And on December 19, 2012, in announcing the Justice Department's settlement with 

UBS for manipulation of the London Inter·Bank Offered Rate (LIBOR), Attorney General 

Holder noted that the Justice Department was relying on outside experts in making 

prosecutorial decisions: 
61 


81760.016

1:1 oited ,stiltfS 't1ousr of'RcprcstnturiilCS 

[ommittcc on j~il1dncia( ~cr\)ic(s 

mg 11 ousr Offirr 13uildillfi 

fuL ~OjJ} 

11;\X1NE WATERS 

The impact on the stability of the financial markets around the world is something 

we take into consideration. We reach out to experts outside of the Justice 

Department to talk about what are the consequences of actions that we might take, 

what would be the impact of those actions if we want to make particular prosecutive 

decisions or determinations with regard to a particular institution. 

These statements by the Attorney General and Undersecretary Cohen raise important 

questions regarding our financial system and the economic analyses the Justice 

Department is relying upon to make its prosecutorial decisions in cases involving large, 

complex financial institutions. Accordingly, in order to assist the Committee in evaluating 

these issues and to prepare for possible hearings on this matter, please provide the 

following: 

(1) All records' related to the economic impact on the financial system of the United 

States of any actuul or potential criminal prosecution, civil lawsuit, or 

administrative enforcement action, in which a financial institution' has been 01' may 

be a party, including without limitation records in the nature of analysis, forecasts, 

legal or other memoranda, and correspondence, whether or not actually prepared by 

you or any other individual employed by, or working on behalf of, your ageucy. 

(2) All records related to a request by any division, department, agency, 

instrumentality, 01' other authOl'ity of the fedcral or a state government, or by any 

individual, that the Department of ,Justice consider the economic impad on the 

financial system of the United States when determining whether to commence a 

criminal prosecution, civillawsuiL, or administrative enforcement action, in a matter 

in which a financial institution has been or may be a party. 

(3) All records in your possession generated by the Office of the Comptroller of the 

Currency ("OCC") related to the economic impact on the financial system of the 

United States of any actual or potential prosecution, civil lawsuit, or administrative 

enforcement action, in which a financial institution has been 01' may be a partYt 

within the jurisdiction of the OCC. 

(4) b'or purposes of this request only, the term "You" means the Secretary of the 

Treasury in his capacity as Chairperson of the Financial Stability Oversight Council 

("FSOC"). All records in the possession of FSOC related to the economic impact on 

tbe financial system of the United States of any actual or potential criminal 

prosecution, civil L'lwsuit, or administrative enforcement action, in which a financial 

institutiou has been or may be a paTty, including without limitation records in the 

nature of analysis, forecasts, legal or other memoranda, and correspondence, 

1 The term "records" means any wyitten, recorded, 01' gTaphie matter of any nature whatsoever, 

regardless of how recorded or preserved, and whether original or copy. 

2 For purposes of this letter, "'financial institution" means any legal entity that is predominantly 

engaged in financial act,ivities, 
62 


81760.017

fI,,''',I'''''N('; rx CHAIRMA~ United ;otat(s tlOUSC of Rcprcscnmi\)(s 

ILommittct on jf[nanriat ,5CrtlirC5 

mq l\Jllburn t1 OU5£ Gffirc !Suilding 

tll,lsl!mytGI1, B,'r" 

whether or not actually prepared hy you or any other individual employed by, or 

working on behalf of, ]<,SOC. 

Please work with the Finandal Services Committee staff to provide the requested 

documents and communications as soon as practicable but not late1' than March 22, 2013. 

We appreciate your prompt attention to this matter. If you have questions regarding this 

request, please contact Joseph Clark of Committee staff at (202) 225·7502. 

Sincerely, 

Chairman 

Committee on Financial Services 

cc: The Honorable Maxine Waters 

The Honorable AI Green 

~~ Chairman 

Subcommittee on Oversight 

and Investigations 
63 


81760.018

ASSISTANT SECRETARY 

The Honorable Jeb Hensarling 

Chairman 

Committee on Financial Services 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Hensarling: 

DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C. 20220 

March 28, 2013 

I am writing in response to your recent letter to Secretary Lew regarding criminal prosecutions of 

large financial institutions. We appreciate your interest in these important issues. As Under 

Secretary Cohen testified before the Senate Banking Committee, the Department of the Treasury 

strongly supports vigorous enforcement of the law. 

Treasury believes that no individual or institution is above the law. Although Treasury does not 

have statutory authority to prosecute criminal misconduct-that authority rests exclusively with 

the Department of Justice (DOJ)-we do have authority to enforce U.S. economic sanctions, as 

well as certain anti-money laundering laws and regulations, through civil actions. Treasury has a 

clear record of aggressively pursuing investigations and enforcement actions against both U.S. 

and foreign financial institutions that violate those laws and regulations. For example, over the 

past year, Treasury's Office of Foreign Assets Control and its Financial Crimes Enforcement 

Network entered into record-setting civil settlements with various financial institutions for 

violations of U.S. sanctions programs and the Bank Secrecy Act, respectively. 

Treasury also has key responsibilities under the Dodd-Frank Wall Street Reform and Consumer 

Protection Act. The Act is designed to make sure American taxpayers never again have to 

rescue large financial firms. It provides regulators with critical tools and authorities-which did 

not exist before the financial crisis-including authorities to resolve large firms whose failures 

would have serious adverse effects on financial stability. The Act expressly prohibits taxpayer 

bailouts, while protecting American taxpayers and the U.s. economy. Treasury is committed to 

this purpose, and we will continue to work with the independent regulators to finish 

implementing the Act. 

Your letter specifically inquires about economic analyses that the DOJ may have relied upon to 

make prosecutorial decisions in cases involving large, complex financial institutions. We have 

conducted a search of Treasury records and have not identified any such analyses. We have 

identified, however, an analysis that was prepared in a context unrelated to the HSBC matter-an 

informal presentation prepared by staff of a Financial Stability Oversight Council (FSOC) 
64 


81760.019

member agency for the Deputies Committee of the FSOC that describes the potential impact on 

the financial system of certain recent regulatory investigations. The presentation was not 

provided to the DOl nor to the FSOC, and it was prepared more than two months after the first 

civil settlement of those investigations was announced. The document contains market-sensitive 

information, but we are prepared to make it available for review by you or your staff. Please 

contact me to arrange a convenient time for such a review. 

In addition, your letter seeks similar records generated by the Office of the Comptroller of the 

Currency (OCC). We have not identified any such records in our possession. As you know, the 

OCC is a bureau of Treasury, but it operates independently in its role as a fmancial regulator. 

Thank you for your letter. We look forward to working with you and the Committee on these 

important issues. 

Identical letter sent to: 

The Honorable Patrick McHenry 

cc: The Honorable Maxine Waters 

The Honorable Al Green 

The Honorable Eric Holder 

Sincerely, 

kt~l(...V f~rll'-' Alastair M. Fitzpayne 

Assistant Secretary for Legislative Affairs 
65 


81760.020

JEB HENSARLING, TX , CHAIRMAN '1llnitcd ,2itJtES '!fLoune of'Reprmntati\)cJI 

Il:ommittcr: on jfinan[ial ~£f\)i[f.S 

21291Ro!!burn '!flouse 0fficc )3uilding 

WQJ>hingtQn, 33,(1;, 20515 

The Honorable Jacob Lew 

Secretary 

U,S. Department of the Treasury 

1500 Pennsylvania Avenue, NW 

Washington, D.C, 20500 

Dear Secretary Lew: 

March 20, 2013 

MAXINE WATERS, CA. RANKfNG MEMBER 

I write today to obtain additional information about the economic analyses relied upon by 

the Department of Justice in making prosecutorial decisions in cases involving large, 

complex financial institutions. 

On December 19, 2012, in announcing the Justice Department's settlement of a criminal 

case with a large financial institution, the Attorney General noted that the Justice 

Department was relying on outside experts in making prosecutorial decisions. Then, when 

appearing before the Senate Judiciary Committee on March 6,2013, the Attorney General 

testified that the size of certain financial institutions made them difficult to prosecute because 

such prosecutions could have "a negative impact on the national economy, perhaps even the 

world economy." A day later, on March 7, 2013, Under Secretary for Terrorism and Financial 

Intelligence David Cohen testified before the Senate Banking Committee that the Treasury 

Department had declined to provide the Justice Department with an opinion on the "impact to the 

financial system" of filing charges against HSBC by explaining that "we [Treasnry] weren't in a 

position to offer any meaningful assessment of what the impact might be , .. given the fact that 

we're not the prudential regulator ... [and] we're not privy to the responses that the regulators 

may have to the variety of different ways that the Justice Department may resolve the case." 

As you know, the Dodd-Frank Wall Street Reform and Consumer Protection Act (PuB. L. 

111-203) ("the Dodd-Frank Act") created the Financial Stability Oversight Council 

("FSOC"), which you chair, and subsection (a)(1) of Section 112 of the Dodd-Frank Act 

requires FSOC: 

(A) to identifY risks to the financial stability of the United States that could arise 

from the material financial distress or failure, or ongoing activities, oflarge, 

interconnected bank holding companies or nonbank financial companies, or 

that could arise outside the financial services marketplace; [and] 

* * * 

(C) to respond to emerging threats to the financial stability ofthe United States 

financial system. 
66 


81760.021

JEB HENSARLING, TX , CHAIRMAN 'lIlnitrd ;i5tatrs ilious£ of'RrprrscntatiU£s 

[:ommittcr on jfinancial5;5rr\)ic(5 

2129 'Ra!!burn ~oU5r emct 13uilding 

'lil)Qshington. '9.6:. 20515 

MAX!NE WATERS, CA, RANKING MEMBER 

Furthermore, under subsection (a)(2) of Section 112 of the Dodd-Frank Act, FSOC is 

specifically required, among other duties: 

(A) [to] collect information from member agencies ... and, if necessary to assess 

risks to the United States financial system, to direct the Office of Financial 

Research to collect information from bank holding companies and nonbank 

financial companies; 

* * * 

(C) [to] monitor the financial services marketplace in order to identify potential 

threats to the financial stability ofthe United States; [and] 

* * * 

(E) [to] facilitate information sharing and coordination among [FSOC's] member 

agencies and other Federal and State agencies regarding domestic financial 

services ... enforcement actions[.] 

Accordingly, based on its statutory authority, and because FSOC is composed in part of 

prudential regulators that supervise large financial institutions, it appears that FSOC 

would be the appropriate entity to conduct the analysis the Attorney General was seeking. 

However, on March 14, 2013, before the House Financial Services Committee's 

Subcommittee on Oversight and Investigations, representatives of FSOC and the Office of 

Financial Research ("OFR") testified that neither agency was queried regarding any 

potential Justice Department prosecutions. Amias Gerety, the Deputy Assistant Secretary 

for FSOC at the Treasury Department, testified that "[m]y understanding is that the 

Justice Department reached out to Treasury but not to the Council [FSOC] as a whole." 

Mr. Gerety further testified that "I was not personally contacted [by the Justice 

Department]," and that "I'm not personally aware of the officials within the Treasury that 

... engaged with the Department of Justice on this question. I can say that my 

understanding is that the Treasury is not able to offer a meaningful assessment of the 

impact." The OFR Director, Richard Berner, also testified that neither FSOC nor the 

Justice Department contacted OFR on this issue, and that as a result OFR has not 

performed any analysis of the impact of such prosecutions. 

This testimony raises troubling questions about the process the Treasury Department 

followed in assessing the Justice Department's request and the Treasury Department's 

failure to consult with FSOC and OFR - entities purportedly equipped to provide the 

Justice Department with exactly the kind of financial analysis it appeared to be seeking. 

Accordingly, to assist the Subcommittee in its investigation of this matter and to prepare 

for potential hearings, please provide the names of the agencies, bureaus, components, 

groups andlor departments within the Treasury Department that were involved in 

conducting the requested analysis for the Justice Department. 
67 


81760.022

JEB HENSARLING, TX • CHA!RMAN 'lIinitrd 5!itatrs fllousr of'Rcprmntatillrs 

cr:ommittf:£ on .financial ,5rrlJic£s 

2l2q 'Ra!!burn i'lousr 0ffirc Building 

illlashington, l'l.I1:. 20515 

MAX!NE WATERS, CA, RANKING MEMBER 

Please provide the requested information as soon as practicable but not later than April 3. 

2013. I appreciate your prompt attention to this matter. Any questions regarding this 

request should be directed to Joseph Clark of Committee staff at (202) 225-7502. 

Sincerely, 

~C~ Chairman 

Subcommittee on Oversight and Investigations 

cc: The Hon. AI Green, Ranking Member 
68 


81760.023

ASSISTANT SECRETARY 

The Honorable Patrick McHenry 

Chainnan 

DEPARTMENT OF THE TREASURY 

WA~HINGTON, D.C. 20220 

May 10, 2013 

Subcommittee on Oversight and Investigations 

Committee on Financial Services 

u.S. House of Representatives 

Washington, DC 20515 

Dear Chainnan McHenry: 

I am writing in response to your recent letter to Secretary Lew regarding economic analyses 

relied upon by the Department of Justice (DOJ) in criminal cases involving large, complex 

fmancial institutions. We appreciate your continued interest in these important matters. As we 

noted in previous correspondence, however, we have not identified any analyses prepared by the 

Department of the Treasury for the DOJ regarding the potential prosecution oflarge, complex 

financial institutions. 

The DOJ has exclusive statutory authority to prosecute criminal misconduct. Nonetheless, 

Treasury believes that no individual or institution is above the law. Treasury has authority to 

enforce u.S. economic sanctions, as well as certain anti-money laundering laws and regulations, 

through civil actions. And we have a clear record of aggressively pursuing investigations and 

enforcement actions in those areas. 

Your letter references recent testimony by Treasury Under Secretary David Cohen before the 

Senate Judiciary Committee. In response to questions about DOJ's investigation ofHSBC, 

Under Secretary Cohen stated: 

[T]he Justice Department contacted us, asked whether we could provide guidance 

on what the impact to the financial system may be of a criminal disposition in the 

HSBC case. We infonned the Justice Department that given the complexity of 

the potential dispositions, given the fact that we're not the prudential regulator, 

given the fact that we're not privy to the different charges that the Justice 

Department may bring and we're not privy to the responses that the regulators 

may have to the variety of different ways that the Justice Department may resolve 

the case, that we were not in a position to offer any meaningful guidance to the 

Justice Department in that matter. 
69 


81760.024

Your letter asks us to identify the offices within Treasury that "were involved in conducting the 

requested analysis" for the DOJ. As Under Secretary Cohen noted above, Treasury considered 

DOJ's request and concluded that we could not offer any meaningful guidance. Treasury did not 

conduct any economic analysis regarding a potential criminal prosecution ofHSBC, nor did we 

provide any such analysis to the DOJ. 

Thank you for your letter. Treasury strongly supports vigorous enforcement of the law, and we 

look forward to working with you in the future. 

Sincerely, 

l~tJ/« J~ hkrlM..-

Alastair M. Fitzpayne 

Assistant Secretary for Legislative Affairs 

cc: The Honorable Al Green 
70 


81760.025

JEB HENSARL!NG. TX . CHAIRMAN lllnitrd ,states '!fIollsc of'Rrprcstnt9ti\l[s 

Q:ommittrc on jfinancial ~Cr\)i(t5 

2129 'Ragburn '!fIousc <Bffirc lSuilding 

illnshinyron. B.Il:. 20m 

March 20, 2013 

The Hon. Ben S. Bemanke 

Chairman 

Federal Reserve Board of GovernOTs 

20th Street and Constitution Ave, NW 

Washington, D.C. 20551 

Dem' Chairman Bernanke: 

MAXINE WATERS, CA. RANKING MEMBER 

I write today to obtain additional information about the economic analyses relied upon by 

the Department of Justice in making prosecutorial decisions in cases involving large, 

complex financial institutions supervised by the Federal Reserve Board ("Federal Reserve"). 

On December 19, 2012, in announcing the Justice Department's settlement of a criminal 

case with a large financial institution, the Attorney General noted that the Justice 

Department was relying on outside experts in making prosecutorial decisions. Then, when 

appearing before the Senate Judiciary Committee on March 6, 2013, the Attorney General 

testified that the size of certain financial institutions made them difficult to prosecute 

because such prosecutions could have "a negative impact on the national economy. perhaps 

even the world economy." A day later, on March 7, 2013, before the Senate Banking 

Committee, Federal Reserve Governor Jerome Powell testified that the Justice Department 

asked representatives of the Federal Reserve to provide information about, among other 

things, whether certain statutes would inhibit investment activity in a company that has 

been convicted of a felony offense." Governor Powell further testified that he could not 

recall whether the Justice Department asked the Federal Reserve to provide information 

detailing the impact on the economy of prosecuting large financial institutions. 

To assist the Subcommittee in its investigation of this matter and to prepare for potential 

hearings, please provide the nrunes of the persons who contacted the Federal Reserve on 

behalf of the Justice Department and the names of the persons who responded to the 

Justice Department on behalf of the Federal Reserve. If these requests and replies are in 

writing, please provide copies of all such requests and replies. If there are no written 

communications on this matter, please so state in your response. 

1 For purposes of this letter, "Federal Reserve" means the Federal Reserve Board of Governors and 

any Federal Reserve Bank as well as any persons employed by, or working on behalf of, those 

entities. 
71 


81760.026

JE8 HENSARLING, TX , CHA!RMAN tinitrd ,g;tatrs iitous£ of'Rrpf£srntatillcS 

([ommitm on .financial ~crlJicrs 

2129 'R911burn i:lousr effi[r JSuiltling 

Washington. '!il.Il:. ,OJ!) 

MAXINE WATERS. CA. RANKING MEMBER 

Please provide the requested infonnation as soon as practicable but not later than April 3, 

2013. I appreciate your prompt attention to this matter. Any questions regarding this 

request should be directed to Joseph Clark of Committee staff at (202) 225-7502. 

Sincerely, 

/PATRICKMCHEN~ ~1 Chairman 

Subcommittee on Oversight and Investigations 

cc: The Han. AI Green, Rankiug Member 
72 


81760.027

BOARD OF GOVERNORS 

OF THE 

FEDERAL RESERVE SYSTEM WASHINGTON, 0, C. 205S1 

April 22, 2013 

The Honorable Patrick McHenry 

Chairman 

Subcommittee on Oversight and Investigations 

Committee on Financial Services 

Washington, D.C. 20515 

Dear Mr. Chairman: 

BEN 5. BERNANKE 

CHAIRMAN 

Thank you for your letter, dated March 20, 2013, concerning cooperation between 

the Federal Reserve and the Justice Department in enforcement cases involving large 

complex financial institutions supervised by the Federal Reserve. The Federal Reserve 

works very closely on its enforcement matters with a number of Federal and State 

agencies with mutual supervisory and prosecutorial interest, including the Department of 

Justice, the Department of Treasury, the Office of Foreign Asset Control, the Financial 

Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Federal 

Deposit Insurance Corporation, and various state supervisory and law enforcement 

authorities (the "Agencies").' In addition, the Federal Reserve often coordinates its 

activities with foreign regulatory authorities such as the U.K. Financial Services 

Authority. 

As Governor Powell emphasized during his testimony on March 7, 2013, before 

the Senate Banking Committee, the Federal Reserve believes that no fmancial institution 

is above the law. Indeed, the Federal Reserve, which has authority to impose only civil 

penalties and orders, has on its own and in coordination with the other Agencies imposed 

a number of substantial fines against the largest financial firms using the enforcement 

authorities granted the Federal Reserve by Congress. The Department of Justice has 

exclusive authority to impose criminal penalties, and the Federal Reserve works closely 

with the Department to share information and coordinate our respective activities. 

Your letter noted Governor Powell's testimony in March responding to a question 

relating to the recent criminal settlement with HSBC Holdings, PLC. He indicated that 

he did not recall whether there were specific discussions with the Justice Department 

about HSBC, but believed there had been conversations between the Federal Reserve and 

the Department in which questions were asked about how a statute might apply, for 

I ~ ~ Board ofGovemors of the Federal Reserve System (2012), "Federal Reserve Board issues 

consent cease and desist order, and assesses civil money penalty against HSBC Holdings PLC and HSBC 

North America Holdings Inc.," press release, December II. 
73 


81760.028

The Honorable Patrick McHenry 

Page Two 

example, whether a statute might prevent persons from investing in a company that had 

been convicted of, or pled guilty to, a felony. 

We have confirmed that Justice Department personnel did not seek the views of 

the Federal Reserve on the collateral consequences of a decision to prosecute HSBC. As 

Governor Powell indicated, Federal Reserve staff did participate in a meeting with senior 

staff of the Justice Department's Criminal Division, at the request of the Department, to 

discuss in general terms ways in which criminal prosecutors and banking regulators could 

better coordinate information sharing in order to assist the Justice Department in 

assessing the collateral consequences of the criminal conviction of banking organizations. 

This meeting did not include discussion of the views of the Federal Reserve on collateral 

consequences of prosecuting any institution, either specifically or as a general matter. 

Moreover, no written materials were provided by the Federal Reserve to the Justice 

Department in connection with this meeting. 

I hope you find this information helpful. 

Sincerely, 

/J(}L---
74 


81760.029

JEB HENSARLING, TX, CHAIRMAN 'ilnitrd ~tatrs lJlOUSC of'Rrprmntatillcs 

Q:ommittfC on .financial ~tr\Ji(ES 

2)29 'Ra~burn !louse effin JSuitdinll ~ushillgton, lEI,\!:, iOjli 

March 20, 2013 

The Hon. Thomas J. Curry 

Comptroller of the Currency 

Office of the Comptroller of the Currency 

250 E Street SW 

Washington, D.C. 20219 

Dear Mr. Curry: 

MAXINE WATERS. CA, RANKING MEMBER 

I Wl~te today to obtain additional information about the economic analyses relied upon by 

the Department of Justice in making prosecutorial decisions in cases involving large, 

complex financial institutions. 

On December 19, 2012, in announcing the Justice Department's settlement of a criminal 

case with a large financial institution, the Attorney General noted that the Justice 

Department was relying on outside experts in making prosecutorial decisions. Then, when 

appearing before the Senats Judiciary Committee on March 6, 2013, the Attorney General 

testified that the size of certain financial institutions made them difficult to prosecute 

because such prosecutions could have "a negative impact on the national economy, perhaps 

even the world economy." A day later, on March 7, 2013, before the Senate Banking 

Committee, you testified that the Justice Department contacted the Office of the 

Comptroller of the Currency ("OCC") to determine the circumstances in which the OCC was 

authorized to revoke a financial institution's bank charter, thus preventing the regulated 

entity from carrying out business activities permitted by virtue of the chartor and 

potentially impacting the financial system of the United States. You further testified that 

the process to revoke such a charter "would be initiated by the Comptroller's office, but ouly 

upon a conviction for any money laundering charges" and that the institution would receive 

notice that it was subject to a charter revocation proceeding and a hearing before the OCC. 

To assist the Subcommittee in its investigation of this matter and to prepare for potential 

hearings, please provide the names ofthe persons who contacted the OCC on behalf of the 

Justice Department and the names ofthe persons who responded to the Justice 

Department on behalf of the OCC. If these requests and replies are in writing, please 

provide copies of all such requests and replies. If there are no written communications on 

this matter, please so state in your response. 
75 


81760.030

JEB HENSARLING, TX , CHAIRMAN 'll1nitcd ,l3tatcs t'lousc of'Rcpf[smtatiucs 

Q::ommittrf on j'immci(]\ ~rr\Jiccs 

2l291RQ~burn t'lousc cElm(r JSuilding 

llJ"hington, D.I!:. 2lJjij 

MAXINE WATERS, CA, RANKING MEMBER 

Please provide the requested information as soon as practicable but not later than April 3, 

2013. I appreciate your prompt attention to this matter. Any questions regarding this 

request should be directed to Joseph Clark of Committee staff at (202) 225-7502. 

Sincerely, 

~ fALL .. ,- / f:~ICK MCHENRTtT 

Chairman 

Subcommittee on Oversight and Investigations 

cc: The Hon. AI Green, Ranking Member 
76 


81760.031

c) Office of the Comptroller of the Currency 

April 8, 2013 

The Honorable Patrick McHenry 

Chairman 

Subcommittee on Oversight and Investigations 

United States House of Representatives 

Committee on Financial Services 

Washington, D.C. 20515 

Dear Chairman McHenry: 

Washington, DC 20219 

Thank you for your letter dated March 20, 2013, in which you request information pertaining to the 

Justice Department's prosecutorial decision concerning a criminal case with HSBC Holdings pIc and 

HSBC Bank USA, N.A. With regard to this decision you request: (I) the names of pcrsons who 

contacted the OCC on behalf of the Justice Department; (2) the names of persons who responded to 

the Justice Departmenl on behalf of tile OCC; and (3) any written cOllllllunications on this maHer. 

Thl! following is responsive to each of these items: 

(I) Prior to the December 11,2012 settlement datc, forl11er Assistant Attorney Gelleral Lanny Breuer 

contacted Ille via telephone to discu,s the acC's statutory "mhority concerning this particular 

matter. Mr. BrclIer is the only Department of Justice oftkial to comact the oce on this matter. 

(2) I am the only OCC person to respond to the Department of Justice on this matter. During our 

discussion, I explained the charter revocation process to Mr. Breuer. 

0) There are no \vrittcn communications concerning thi~ matte-I'. 

If you have questions, please contact me or Carrie Moore. Director for Congressional Liaison. at 

202-649-6737, 
77 


81760.032

JE8 HENSARLING. TX , CHAIRMAN 'lanitcd .stutts !l ouse of 1Rrprmntati\)[s 

~ommittn on j~imlfi(illl ~f:rbi(r!\ 

2l291Re)lburn !lOUSE efficc J3uilding 

ililQsliington. 'i!l.€. 20515 

The Honorable Eric H. Holder, Jr. 

Attorney General 

U.S. Department of Justice 

950 Pennsylvania Avenue, N.W. 

Washington, D.C. 20530 

Dear Attorney General Holder: 

April 3, 2013 

MAXINE WATERS, CA, RANKiNG MEMBER 

This is to obtain additional information about the economic analyses relied upon by the 

Department of Justice in making prosecutorial decisions in cases involving large, complex 

financial institutions. 

On December 19, 2012, in announcing the Justice Department's settlement with a large 

financial institution for manipulation of the London Inter-Bank Offered Rate and the guilty 

plea of one of its subsidiaries, you stated that the Justice Department was relying on 

outside experts in making prosecutorial decisions: 

The impact on the stability of the financial markets around the world is something 

we take into consideration. We reach out to experts outside of the Justice 

Department to talk about what are the consequences of actions that we might take, 

what would be the impact of those actions if we want to make particular prosecutive 

decisions or determinations with regard to a particular institution. 

Emphasis added. 

In a letter dated March 28, 2013, the Treasury Department informed the House Financial 

Services Committee that it is not one of the outside experts actually relied upon by the 

Justice Department. Accordingly, to assist the Subcommittee in its investigation of this 

matter and to prepare for potential hearings, please provide the identities of the "experts 

outside of the Justice Department" referenced by you on December 19, 2012. Please 

provide this information no later than April 17, 2013. I appreciate your prompt attention to 

this matter. Any questions regarding this request should be directed to Joseph Clark of 

Committee staff at (202) 225-7502. 

Subcommittee on Oversight and Investigations 

cc: The Hon, AI Green, Ranking Member 
78 


81760.033

JES HENSARUNG, TX , CHAIRMAN 'li:lnitEd ~t.tES 'lilOU5£ of 1RrprEscntatillrs 

itommitm on jfinenciel.5cfllim 

2l291RQ!!burn i'louse ernrr Building 'li!lgsltin~ton. lPl.l!. 20jlj 

The Honorable Eric H. Holder, Jr. 

Attorney General of the United States 

U.S. Department of Justice 

950 Pennsylvania Avenue, NW 

Washington, DC 20530 

Dear Attorney General Holder: 

April 26, 2013 

MAX1NE WATERS, CA, RANKING MEMBER 

The Subcommittee on Oversight and Investigations (the "Subcommittee") of the 

Committee on Financial Services will hold a hearing on Wednesday, May 22, 2013, at 2:00 

p.m. in Room 2128 of the Rayburn House Office Building. I am writing to request that you 

make Deputy Attorney General ("DAG") James M. Cole available to appear at this hearing 

as a witness. 

This hearing will examine how and under what authority the Department of Justice 

(the "Department") consults "experts" to evaluate whether to prosecute persons or entities 

involved in the financial services industry. In testimony on March 6, 2013, before the 

Senate Judiciary Committee, in response to a question from Senator Grassley regarding the 

Department's prosecution of high-profile financial companies or individuals, you testified 

that the size of certain financial institutions was hindering the Justice Department's ability 

to prosecute: 

I am concerned that the size of some of these institutions becomes so large 

that it does become difficult for us to prosecute them 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. And I think that is a function of the fact that some of these 

institutions have become too large .... I think it has an inhibiting influence -

{anl impact on our ability to bring resolutions that I think would be more 

appropriate, 

And on December 19, 2012, in announcing the Department's settlement with a large 

financial institution for manipulation of the London Inter-Bank Offered Rate (LIBOR), you 

noted that the Department was relying on outside experts in making prosecutorial 

decisions: 

The impact on the stability of the financial markets around the world is 

something we take into consideration. We reach out to experts outside of the 

Justice Department to talk about what are the consequences of actions that 

we might take, what would be the impact of those actions if we want to make 

particular prosecutive decisions or determinations with regard to a particular 

institution. 
79 


81760.034

Hon. Eric H. Holder, Jr. 

April 26, 2013 

Page 2 

Your statements raise important questions about how government agencies interact 

with experts to make significant decisions within our judicial and financial systems. I 

request that you confirm the DAG's ability to testifY not later than Friday, May 3. Then, in 

the DAG's written testimony for this hearing, please provide the identities of the "experts 

outside of the Justice Department" to which you referred on December 19, 2012, and 

address: (i) under what authority the Department requests such expertise; (ii) how and to 

what extent the Department uses analysis provided by such experts; (iii) the matters in 

which the Department has sought or otherwise received such expert analysis; (iv) the cost 

to the Department of obtaining such expert analysis; and (v) the guidelines the Department 

has developed with respect to the criminal prosecution of financial institutions, their 

directors, officers, and/or employees. 

Please read the following material carefully. It is intended as a guide to your rights 

and obligations as a witness under the rules of the Committee on Financial Services. 

The Form of your Testimony. Under the Rules of the Committee on Financial 

Services, each witness who is to testifY before the Committee or its subcommittees must file 

with the Clerk of the Committee a written statement of proposed testimony of any 

reasonable length. Please also include with the testimony a current resume summarizing 

education, experience and affiliations pertinent to the subject matter of the hearing. This 

must be filed at least two business days before your appearance. Please note that changes 

to the written statement will not be permitted after the hearing begins. Failure to comply 

with this requirement may result in the exclusion of your written testimony from the 

record. Your oral testimony should not exceed five minutes and should summarize your 

written remarks. The Chair reserves the right to exclude from the printed record any 

supplemental materials submitted with a written statement due to space limitations or 

printing expense. 

Submission of your Testimony, Please submit at least 75 copies of your proposed 

written statement to the Clerk of the Committee not less than two business days in 

advance of your appearance. These copies should be delivered to: The Committee on 

Financial Services, Attn: Committee Clerk, 2129 Rayburn House Office Building, 

Washington, DC 20515. 

Due to heightened security restrictions, many common forms of delivery experience 

significant delays in delivery to the Committee. This includes packages sent via the U.S. 

Postal Service, Federal Express, UPS, and other similar carries, which typically arrive 3 to 

5 days later than normal. The United States Capitol Police have specifically requested that 

the Committee refuse deliveries by courier. The best method of delivery of your testimony 

is to have an employee from your organization deliver your testimony in an unsealed 

package to the address above. If you are unable to comply with this procedure, please 

contact the Committee to discuss alternative methods for delivery of your testimony. 

The rules of the Committee require, to the extent practicable, that you also submit 

your written testimony in electronic form. The preferred method of submission of 

testimony in electronic form is to send it via electronic mail to 

fsctestimonv@maiI.house.gov. The electronic copy of your testimony may be in any major 
80 


81760.035

Hon. Eric H. Holder, Jr. 

April 26, 2013 

Page 3 

file format, including WordPerfect, Microsoft Word, or ASCII text for either Windows or 

Macintosh. Your electronic mail message should specifY in the subject line the date and the 

Committee or subcommittee before which you are scheduled to testifY. You may also 

submit testimony in electronic form on a disk or CD-ROM at the time of delivery of the 

copies of your written testimony. Submission of testimony in electronic form facilitates the 

production of the printed hearing record and posting of your testimony on the Committee's 

Internet site. 

Your Rights as a Witness. Under the Rules of the House, witnesses may be 

accompanied by their own counsel to advise them concerning their constitutional rights. I 

reserve the right to place any witness under oath. Finally, a witness may obtain a 

transcript copy of hislher testimony given in open, public session, or in a closed session only 

when authorized by the Committee or subcommittee. However, by appearing before the 

Committee or its subcommittees, you authorize the Committee to make technical, 

grammatical, and typographical corrections to the transcript in accordance with the rules of 

the Committee and the House. 

The Rules of the Committee on Financial Services, and the applicable rules of the 

House, are available on the Committee's website at http://financialservices.house.gov. 

Copies can also be sent to you upon request. 

The Committee on Financial Services endeavors to make its facilities accessible to 

persons with disabilities. If you are in need of special accommodations, or have any 

questions regarding special accommodations generally, please contact the Committee in 

advance of the scheduled event (4 business days notice is requested) at (202) 225-7502; 

TTY: 202-226-1591; or write to the Committee at the address above. 

Please note that space in the Committee's hearing room is extremely limited. 

Therefore, the Committee will only reserve one seat for staff accompanying you during your 

appearance (a total of two seats). In order to maintain our obligation under the Rules of the 

House to ensure that Committee hearings are open to the public, we cannot deviate from 

this policy. 

Should you or your staff have any questions or need additional information, please 

contact Joseph Clark of Committee Staff at (202) 225-7502. 

~hJl /" l~f~~~C!Mtrr'~ Subcommittee on Oversight and Investigations 

cc: The Honorable AI Green, Ranking Member 
81 


81760.036

Offit:.:' ofthe Assistant Attorney General 

The Honorable Patrick McHenry 

Chairman 

Subcommittee on Oversight and Investigations 

Committee on Financial Services 

U.S. House of Representatives 

Washington, D.C. 20515 

Dear Mr. Chairman: 

U.S. Department of .Justice 

Office of Legislative Affairs 

Washington, UC 20530 

May 16,2013 

This responds to your lettcr to the Attorney General, dated April 3,2013, regarding the 

Department of Justice's enforcement efforts to combat corporate and financial crime. [n 

particular, \ve understand that you are seeking information about consultations with experts 

outside of the Department regarding the potential consequences oflaw enforcement actions 

involving large, complex financial institutions, as referenced in the Attorney General's statement 

on December 19,2012. We appreciated the opportunity to brief Committee staff on May 13, 

2013, about this and other matters. 

As we indicated in the briefing, we are not currently aware, based on the inquiries we 

have conducted, of any consultations with private, non-governmental third party entities on the 

potential collateral consequences of prosecutorial actions the Department might take with respect 

to any large, complex tinancial institution. At times, the Department has, however, contacted 

relevant goveoul1cntal agencies to discuss such issues. Those governmental agencies include 

domestic regulators, as well as foreign regulators where the financial institution is multi-national 

or is otherwise based abroad. Domestic and foreign regulators are the subject matter <:xp<:rts 

outside of the Department that the Attorney General was referring to in the statement quoted in 

your April 3rd letter. 

Also, as we described to Committee staff: the Department, in limited circumstances, has 

contacted such regulators, for example, to seek an understanding of potential regulatory 

responses to possible law enforcement actions, and to try to draw on the knowledge of subject 

matter experts at the regulatory agencies to assess the nature and extent of potential collateral 

consequences from actions we may take, including evaluating arguments that a subject bank may 

have made. In some instances, regulators are able to provide the Department only with limited 

infonl1ation, such as the regulatory process that would or could occur in response to a potential 

enforcement action. Other regulators may indicate that they are unable to provide any view on 

collateral consequences as part of our consultation. Some regulators, by contrast, have provided 

us with their views on issues such as potential collateral consequences that may affect innocent 
82 


81760.037

The Honorable Patrick McHenry 

Page Two 

individuals, other institutions, andlor markets, OUf discussions with regulators do not by 

themselves detennine the outcome, but rather are among the mix of factors that we may consider 

in determining the appropriate resolution of a matter. 

We hope this information is helpful. We appreciated the opportunity to brief your stalf. 

and we remain available to confer further about these matters. 

cc: The Honorable Al Green 

Ranking Minority Member 

Sincerelv. 0' 

\~~ \!.~ Peter J. Kadzik 

Principal Deputy Assistant Attorney General 

81760.038

Institution Name Title Status Date Announ

UBS Securities Japan Co. Guilty plea agreement Dec. 19,

Ltd. 

RES Securities Japan Guilty plea agreement Feb. 6, 2

Limited 

Goldman Sachs Rajat Gupta Board Member Sentenced to prison (2 Oct. 14,

years) 

Credit Suisse Kareem Serage1din Global Head of Structured Pleaded guilty April 12

Credit 

Credit Suisse David I-Iiggs Managing Director Pleaded guilty Feb. 1,2

Credit Suisse Salmaan Siddiqui Vice President Pleaded guilty Feb. 1,2

UBS Tom Hayes Senior Trader Charged Dec. 19,

UBS Roger Darin Senior Trader Charged Dec. 19

o Morgan Stanley Garth Peterson Managing Director Sentenced to prison (9 Aug. 16

months) 

Galleon Management, LLC Raj Rajaratnam Managing Member Sentenced to prison (11 Oct. 13,

years) 

Stanford International Robert Allen Chairman of Board of Sentenced to prison (110 June 14, 

Bank Stanford Directors years) 

Stanford International James Davis Chief Financial Officer Sentenced to prison (5 Jan. 22, 

Bank years) 

Stanford International Laura Pendergest- Chief Investment Officer Sentenced to prison (3 Sept. 13

Bank Holt years) 

Colonial Bank Catherine Kissick Senior Vice President Sentenced to prison (8 June 17,

years) 

Taylor, Bean & Whitaker Lee Bentley Farkas Chairman Sentenced to prison (30 June 30, 

years)