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By Sarah N. Lynch
WASHINGTON, May 22 (Reuters) - A Justice Department officialinsisted on Wednesday that no financial company is too big tojail, in the department's latest effort to backpedal fromstatements made in March by Attorney General Eric Holder.
"No institution and no individual is immune from prosecutionbecause of its size," Mythili Raman, acting assistant attorneygeneral in the Justice Department's criminal division, said intestimony before a U.S. House of Representatives panel.
The financial services committee's oversight panel calledWednesday's hearing in response to Holder's comments in March,in which he told a Senate committee that it can "becomedifficult" to prosecute major financial institutions that havebeen accused of wrongdoing because they are so large that acriminal charge could pose a threat to the economy.
Many lawmakers interpreted the remark to mean that somebanks were "too big to jail;" the 2010 Dodd-Frank law was meantto solve the problem of "too big to fail."
Holder backtracked earlier this month from his comments, butDemocrats and Republicans still have asked whether thedepartment has been aggressive enough in pursuing criminalcharges in connection with the financial crisis and othermatters, such as money laundering.
Many members of the panel on Wednesday said they still hadlingering questions about the process that the JusticeDepartment follows when determining whether to chargecorporations and individuals.
"Isn't the attorney general implying that some of theseinstitutions are so large, it is very difficult to make adecision to prosecute them?" asked North Carolina RepublicanPatrick McHenry, who chaired the hearing.
"I don't think that is what the attorney general was saying,Mr. Chairman," Raman said.
She added that the department weighs a number of factorswhen making prosecution decisions, with "collateral consequenceson innocent third parties" being one of them.
She said that no single factor, including collateralconsequences, prevents the department from filing criminalcharges.
Concerns about the impact of criminal prosecutions on largecompanies can be traced back to the 2002 indictment and eventualdemise of accounting giant Arthur Andersen.
That prosecution led to the loss of about 25,000 jobs and agreater consolidation in the accounting industry. In light ofthat, the Justice Department stepped up its use of deferred andnon-prosecution agreements.
More recently, the department has faced criticism by somefor not bringing many criminal cases against banks andhigh-powered executives in connection with the financial crisis.
Critics also point to the department's decision last yearnot to prosecute British financial group HSBC Holdings Plc in a case involving allegations of laundering drugmoney from Mexico.
The company instead entered into a deferred prosecutionagreement and paid $1.92 billion to the U.S.
Several Democrats said on Wednesday that they feared bigbanks are allowed to buy their way out of trouble by payingfines.
"When we hear that none of the Wall Street culprits havegone to trial, it contributes to this feeling out there that ifyou have money, you can get off," said Representative EmanuelCleaver, a Democrat from Missouri.
"If you rob a convenience store, you will go to jail. If you rob the nation, you just get richer and you pay a fine," hesaid.
"I can assure you, Congressman, that our career prosecutorsand investigative agents are absolutely tenacious about gettingto the bottom of criminal wrongdoing at any entity, includinglarge financial institutions," Raman replied.
