Credit Suisse, the enormous Swiss bank, pled guilty to criminal conspiracy on May 19 and was fined $2.6 billion for helping American clients evade U.S. taxes. The outcome was good for the American taxpayer. But it was also good for the bank's top executives, who escaped prosecution.
The bank's shares even rose after the guilty plea.
Still, Attorney General Eric Holder proclaimed a victory. "When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible," he declared.
But Mr. Holder also went out of his way to ensure that the bank's regulators - the Federal Reserve and the New York State Department of Financial Services - would not seek to revoke the bank's charter or shut it down.
Thus, Credit Suisse avoided the fate of firms, including accounting giant Arthur Anderson, that collapsed after criminal convictions.
Earlier, Mr. Holder scoffed at critics who found him too easy on banking crimes, declaring, "There is no such thing as 'too big to jail.' "
But Credit Suisse is not going to jail and neither are any of its top bankers despite well-documented abuses.
The Senate Permanent Subcommittee on Investigations reported earlier this year that Credit Suisse bankers selling illegal tax shelters traveled secretly to the U.S. on tourist visas and hid incriminating documents. They signed up more than 20,000 Americans for secret offshore accounts to evade taxes amounting to more than $670 million.
Federal authorities indicted eight Credit Suisse employees, but none of the top officials. In the plea agreement, Credit Suisse promised to fire three of the eight employees. But it did not give up the names of U.S. citizens who used Credit Suisse to evade taxes.
Sen. Carl Levin, D-Mich., head of the Senate investigation, said Credit Suisse should have been required to "cough up" the names of those tax evaders.
Sen. John McCain, R-Ariz., raised a pertinent question when he asked whether the failure to "hold any officers, directors or key executives individually accountable for wrongdoing" will "sufficiently deter similar misconduct in the future."
The Justice Department's plea agreement with Credit Suisse acknowledged that unnamed high-level employees of the bank "participated in, or condoned" the bank's illegal activities.
Corporations do not commit crimes. Their agents do. Credit Suisse's top officers got off easy.
If the U.S. government wants to deter foreign banks from engaging in such underhanded conduct, it should bring a few top bankers up on criminal charges.
Because as long as those bankers remain strong in their confidence that they are too big to jail, their incentive to obey our laws remains weak.
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