Summary
American Banker’s transcript of the Senate Judiciary Committee exchange on March 6, 2013 between Senator Chuck Grassley (R-Iowa) and Attorney General Eric Holder. The exchange is the cleanest public articulation of the Obama DOJ’s position that some financial institutions were too systemically important to be criminally charged. Holder’s direct words on the record — that the size of some institutions makes prosecution difficult because of potential economic consequences — became the defining shorthand “too big to jail” for the Obama-era Wall Street non-prosecution posture.
Key Points
- Grassley’s opening frame: a “too big to jail mentality” was “spreading from fraud cases to terrorist financing to money laundering cases,” citing HSBC’s admission that it had laundered money for Mexican drug cartels, helped rogue regimes evade sanctions, and aided Saudi banks with terrorism ties. HSBC had paid a fine and entered a deferred prosecution agreement — no criminal charges.
- Holder’s direct response: “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 we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large.”
- When Grassley pressed further, Holder added: “The concern that you have raised is one that I, frankly, share.”
- On individual accountability, Holder acknowledged: “The greatest deterrent effect is… to prosecute the individuals in the corporations that are responsible for those decisions.” No senior HSBC executives were prosecuted. No senior Wall Street executives were prosecuted for 2008-era conduct during the Obama administration.
- Holder and DOJ spokespeople attempted to walk back the “too big to jail” framing in subsequent weeks (covered separately by Frontline). The walk-back did not change the underlying enforcement pattern.
Newsletter Angles
- The Democratic AG on record: the Obama administration’s most senior law-enforcement official testified to Congress that prosecution is calibrated to institution size and macroeconomic risk. For any argument that institutional non-accountability is cross-partisan, this testimony is the foundational quote.
- Grassley as an early articulator of institutional gaslighting: his “too big to jail mentality” framing, describing the pattern spreading across fraud, terror finance, and money laundering, is the institutional-gaslighting thesis five years before the Trump administration made the pattern visible at the executive level.
- The walk-back matters less than the testimony: the backtracking confirms the testimony revealed something the department hadn’t intended to acknowledge publicly. The underlying enforcement record (zero senior Wall Street prosecutions) matches the testimony, not the walk-back.
Entities Mentioned
- Eric Holder — Attorney General; testified to “too big to jail” reasoning
- Chuck Grassley — Senator (R-Iowa); asked the defining question
- HSBC — the specific institution referenced as having escaped criminal charges
- Lanny Breuer — DOJ Criminal Division Chief under Holder; handled the HSBC deferred prosecution
- Barack Obama — President during Holder’s tenure
Concepts Mentioned
- Institutional Gaslighting — the structural non-prosecution pattern articulated here
- Too Big to Jail — the shorthand that emerged from this testimony
- State Power Without Accountability — procedural grounds overriding individual prosecution
Quotes
“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 we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large.” — Eric Holder
“The concern that you have raised is one that I, frankly, share.” — Eric Holder, when pressed
“We have a mentality of too-big-to-jail in the financial sector.” — Chuck Grassley
Notes
American Banker transcript. March 6, 2013 Senate Judiciary Committee oversight hearing. Pairs with PBS Frontline’s “The Untouchables” (Jan 22, 2013) as the two foundational cross-partisan sources for Obama-era Wall Street non-prosecution.