The Fed Just Acknowledged Its Too Big To Jail Policy

WASHINGTON — The federal government until recently shielded big banks from criminal prosecution out of concern that convictions may damage the financial system, a top Federal Reserve official said Friday, explicitly acknowledging a policy long denied by the Obama administration.

The admission came during a tense exchange between William Dudley, president of the Federal Reserve Bank of New York, and Sen. Sherrod Brown (D-Ohio) at a Senate Banking Committee hearing meant to explore the cozy relations between federal regulators and the banks they supervise.

Until May, large financial institutions investigated for wrongdoing had dodged criminal prosecution under the Obama administration, despite evidence from federal regulators and prosecutors showing that big banks had, for instance, laundered money for suspected terrorists and drug cartels; manipulated interest rate benchmarks; rigged various commodities markets; mislead investors in mortgage-linked securities; duped homeowners into taking out expensive mortgages; manipulated municipal debt markets; and broke state and federal rules when attempting to seize homes after borrowers fell behind on their payments, a scandal that became known as “robosigning.”

Link (Huffington Post)

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